Friday, May 1, 2009

Mayday, mayday, we're bailing out!

It's May Day, the day of the workers. Well, it will be on Monday - the workers of the UK are united today in hoping the nice weather will last until the Bank Holiday. What does May Day mean in our post-socialist, but now also post-capitalist, world?

I've no idea, of course. Almost as distressing as the collapse of the free market model of free-wheeling finance is the failure of the Left in the West to say anything very much about it. The Labour party in the UK timidly pushes up income tax - from 40% to 50% for the top 1% of earners - but is otherwise mainly concerned with piecing back together the financial system so it can carry on as before. Obama is certainly a departure in the US, but his main radical goals are not particularly revolutionary: universal healthcare, achieved everywhere else in the West half a century ago, and a tax system which will remain less redistributive than it was under Ronald Reagan. The left in continental Europe halfheartedly adopts liberalizing reforms, whilst clinging on to the 'conquests' of protected 'insider' workers and pensioners.

There is only one clear beneficiary of this confusion: the racist extreme right (and the utopic extreme left, in the case of France). The Left's pathetic response to the collapse of a model of capitalism it had ended up accepting is a serious problem. People feel cheated and exposed, and seek protection. Protection can be progressive and egalitarian - the post-war Keynesian welfare states - but it can also be reactionary, regressive and violent.

Karl Polanyi
's masterpiece 'The Great Transformation' interprets the rise of Nazism and Fascism as a response to the threats free markets posed to the livelihoods of the masses. Only after the catastrophe of war did Western governments discover a way of providing protection without foreign aggression or the scapegoating of ethnic minorities. 'Embedded liberalism' (as John Ruggie defined it) involved liberal trade between nations under stable exchange rates and capital controls, with welfare provision inside the nation state to insure workers against social risks. This model was a triumph, delivering growing living standards and social equality for the best part of half a century. But the moment it ran into trouble the assault began, and the various components of embedded liberalism have been steadily dismantled over the past couple of decades.

We need to put embedded liberalism back again, adapted to new circumstances (a bigger world market and a disintegrating environment top of the list). And who else will do it, if not the democratic Left?