The Coming Capitalist Consensus

Dec 25

Not surprisingly, the swift unraveling of the global economy combined
with the ascent to the U.S. presidency of an African-American liberal
has left millions anticipating that the world is on the threshold of a
new era. Some of President-elect Barack Obama’s new appointees – in
particular ex-Treasury Secretary Larry Summers to lead the National
Economic Council, New York Federal Reserve Board chief Tim Geithner to
head Treasury, and former Dallas Mayor Ron Kirk to serve as trade
representative – have certainly elicited some skepticism. But the sense
that the old neoliberal formulas are thoroughly discredited have
convinced many that the new Democratic leadership in the world’s
biggest economy will break with the market fundamentalist policies that
have reigned since the early 1980s.

One important question, of course, is how decisive and definitive the
break with neoliberalism will be. Other questions, however, go to the
heart of capitalism itself. Will government ownership, intervention,
and control be exercised simply to stabilize capitalism, after which
control will be given back to the corporate elites? Are we going to see
a second round of Keynesian capitalism, where the state and corporate
elites along with labor work out a partnership based on industrial
policy, growth, and high wages – though with a green dimension this
time around? Or will we witness the beginnings of fundamental shifts in
the ownership and control of the economy in a more popular direction?
There are limits to reform in the system of global capitalism, but at
no other time in the last half century have those limits seemed more

President Nicolas Sarkozy of France has already staked out one
position. Declaring that “laissez-faire capitalism is dead,” he has
created a strategic investment fund of 20 billion euros to promote
technological innovation, keep advanced industries in French hands, and
save jobs. “The day we don’t build trains, airplanes, automobiles, and
ships, what will be left of the French economy?” he recently asked
rhetorically. “Memories. I will not make France a simple tourist
reserve.” This kind of aggressive industrial policy aimed partly at
winning over the country’s traditional white working class can go
hand-in-hand with the exclusionary anti-immigrant policies with which
the French president has been associated.

Global Social Democracy

 A new national Keynesianism along Sarkozyan lines, however, is not the
only alternative available to global elites. Given the need for global
legitimacy to promote their interests in a world where the balance of
power is shifting towards the South, western elites might find more
attractive an offshoot of European Social Democracy and New Deal
liberalism that one might call “Global Social Democracy” or GSD.

Even before the full unfolding of the financial crisis, partisans of
GSD had already been positioning it as alternative to neoliberal
globalization in response to the stresses and strains being provoked by
the latter. One personality associated with it is British Prime
Minister Gordon Brown, who led the European response to the financial
meltdown via the partial nationalization of the banks. Widely regarded
as the godfather of the “Make Poverty History” campaign in the United
Kingdom, Brown, while he was still the British chancellor, proposed
what he called an “alliance capitalism” between market and state
institutions that would reproduce at the global stage what he said
Franklin Roosevelt did for the national economy: “securing the benefits
of the market while taming its excesses.” This must be a system,
continued Brown, that “captures the full benefits of global markets and
capital flows, minimizes the risk of disruption, maximizes opportunity
for all, and lifts up the most vulnerable – in short, the restoration
in the international economy of public purpose and high ideals.”

Joining Brown in articulating the Global Social Democratic discourse
has been a diverse group consisting of, among others, the economist
Jeffrey Sachs, George Soros, former UN Secretary General Kofi Annan,
the sociologist David Held, Nobel laureate Joseph Stiglitz, and even
Bill Gates. There are, of course, differences of nuance in the
positions of these people, but the thrust of their perspectives is the
same: to bring about a reformed social order and a reinvigorated
ideological consensus for global capitalism.

Among the key propositions advanced by partisans of GSD are the following:

  • Globalization is essentially beneficial for the world; the
    neoliberals have simply botched the job of managing it and selling it
    to the public;
  • It is urgent to save globalization from the
    neoliberals because globalization is reversible and may, in fact,
    already be in the process of being reversed;
  • Growth and equity may come into conflict, in which case one must prioritize equity;
  • Free
    trade may not, in fact, be beneficial in the long run and may leave the
    majority poor, so it is important for trade arrangements to be subject
    to social and environmental conditions;
  • Unilateralism
    must be avoided while fundamental reform of the multilateral
    institutions and agreements must be undertaken – a process that might
    involve dumping or neutralizing some of them, like the WTO’s
    Trade-Related Intellectual Property Rights Agreement (TRIPs);
  • Global social integration, or reducing inequalities both within and across countries, must accompany global market integration;
  • The
    global debt of developing countries must be cancelled or radically
    reduced, so the resulting savings can be used to stimulate the local
    economy, thus contributing to global reflation;
  • Poverty
    and environmental degradation are so severe that a massive aid program
    or “Marshall Plan” from the North to the South must be mounted within
    the framework of the “Millennium Development Goals”;
  • A
    “Second Green Revolution” must be put into motion, especially in
    Africa, through the widespread adoption of genetically engineered seeds.
  • Huge
    investments must be devoted to push the global economy along more
    environmentally sustainable paths, with government taking a leading
    role (“Green Keynesianism” or “Green Capitalism”);
  • Military
    action to solve problems must be deemphasized in favor of diplomacy and
    “soft power,” although humanitarian military intervention in situations
    involving genocide must be undertaken.


The Limits of Global Social Democracy

Global Social Democracy has not received much critical attention,
perhaps because many progressives are still fighting the last war, that
is, against neoliberalism. A critique is urgent, and not only because
GSD is neoliberalism’s most likely successor. More important, although
GSD has some positive elements, it has, like the old Social Democratic
Keynesian paradigm, a number of problematic features.
A critique might begin by highlighting problems with four central elements in the GSD perspective.
First, GSD shares neoliberalism’s bias for globalization,
differentiating itself mainly by promising to promote globalization
better than the neoliberals. This amounts to saying, however, that
simply by adding the dimension of “global social integration,” an
inherently socially and ecologically destructive and disruptive process
can be made palatable and acceptable. GSD assumes that people really
want to be part of a functionally integrated global economy where the
barriers between the national and the international have disappeared.
But would they not in fact prefer to be part of economies that are
subject to local control and are buffered from the vagaries of the
international economy? Indeed, today’s swift downward trajectory of
interconnected economies underscores the validity of one of
anti-globalization movement’s key criticisms of the globalization
Second, GSD shares neoliberalism’s preference for the market as the
principal mechanism for production, distribution, and consumption,
differentiating itself mainly by advocating state action to address
market failures. The kind of globalization the world needs, according
to Jeffrey Sachs in The End of Poverty, would entail “harnessing…the
remarkable power of trade and investment while acknowledging and
addressing limitations through compensatory collective action.” This is
very different from saying that the citizenry and civil society must
make the key economic decisions and the market, like the state
bureaucracy, is only one mechanism of implementation of democratic
Third, GSD is a technocratic project, with experts hatching and pushing
reforms on society from above, instead of being a participatory project
where initiatives percolate from the ground up.
Fourth, GSD, while critical of neoliberalism, accepts the framework of
monopoly capitalism, which rests fundamentally on deriving profit from
the exploitative extraction of surplus value from labor, is driven from
crisis to crisis by inherent tendencies toward overproduction, and
tends to push the environment to its limits in its search for
profitability. Like traditional Keynesianism in the national arena, GSD
seeks in the global arena a new class compromise that is accompanied by
new methods to contain or minimize capitalism’s tendency toward crisis.
Just as the old Social Democracy and the New Deal stabilized national
capitalism, the historical function of Global Social Democracy is to
iron out the contradictions of contemporary global capitalism and to
relegitimize it after the crisis and chaos left by neoliberalism. GSD
is, at root, about social management.
Obama has a talent for rhetorically bridging different political
discourses. He is also a “blank slate” when it comes to economics. Like
FDR, he is not bound to the formulas of the ancien regime. He is a
pragmatist whose key criterion is success at social management. As
such, he is uniquely positioned to lead this ambitious reformist
Reveille for Progressives

While progressives were engaged in full-scale war against
neoliberalism, reformist thinking was percolating in critical
establishment circles. This thinking is now about to become policy, and
progressives must work double time to engage it. It is not just a
matter of moving from criticism to prescription. The challenge is to
overcome the limits to the progressive political imagination imposed by
the aggressiveness of the neoliberal challenge in the 1980s combined
with the collapse of the bureaucratic socialist regimes in the early
1990s. Progressives should boldly aspire once again to paradigms of
social organization that unabashedly aim for equality and participatory
democratic control of both the national economy and the global economy
as prerequisites for collective and individual liberation.
Like the old post-war Keynesian regime, Global Social Democracy is
about social management. In contrast, the progressive perspective is
about social liberation.
Copyright © 2008, Institute for Policy Studies
Walden Bello is a columnist for Foreign Policy In Focus, a senior
analyst at the Bangkok-based Focus on the Global South, president of
the Freedom from Debt Coalition, and a professor of sociology at the
University of the Philippines.

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