"If one takes into account that 99% of their transactions have to do with financial derivatives that have no relation to the real economy, then the Leftists are not completely wrong, when they talk about casinos"
- W. Schäuble 12/10/2011
"The problem is not new. Karl Marx oversold socialism, but he was right in claiming that globalization, unfettered financial capitalism, and redistribution of income and wealth from labor to capital could lead capitalism to self-destruct."Hard Times
- N. Roubini 14/10/2011
Quite a lot of ink (and sometimes tears) has been spilled about the so-called "crisis of the Left" during the last 30 years in Europe, in a few words the shift of social democracy towards liberalism and the confinement of the rest of the Left to the sidelines of the political scene. Many analysts attributed the crisis to bad handling, poor leadership, divisive tendencies, etc, but ignored the fact that the crisis was almost universal (it occurred in pretty much all European countries) and therefore structural. The most pragmatic leftists admited, albeit tentatively, that the type of capitalism, founded by the Right-wing Thatcher and Reagan and completed by the Leftists Blair and Clinton, supported by a comprehensive system of social benefits, seemingly worked: there were poor, there were inequalities and unemployment but to an extent tolerated by most people, who enjoyed a constantly improving standard of living. Some countries even managed something that seems paradoxical: to reduce inequalities while liberalizing their economy.
In politics and public opinion the ideas of the Left were constantly losing ground. Concepts such as "Marxism," "socialism," "socialization of the means of production" were heard as old-fashioned anachronisms. The complete collapse of the Soviet bloc in 1989-91 reinforced these trends. There followed a time when many socialists, some because they wished not to be considered backward and others that did not want to be connected with the ever changing social democracy turned into simply "democrats" or "leftists." One can remember that one of the issues raised in 2004, when Mr Papandreou assumed the leadership of PASOK, was changing the name of the party so that it does not contain any term linked to the concept of socialism. The academic world was dominated by the same trends, with the economic and societal proposals of socialism being met with irony and sarcasm. Some even argued that, with capitalist globalization, humanity was approaching the "end of history" that would bring prosperity to all. The ideology of radical liberalism with minimal regulation reached a point that was almost considered a natural law. Its victory was such that it emerged as virtually the only way, minimizing the programmatic differences between parties in power. The Greek voters from 1996 and forth were asked to vote for the best "management team" rather than political agendas.
The (non-social democratic) Left, what remained of it, was being ideologically "persecuted". These developments forced it to abandon in practice its economic program by simply advocating an even more generous social capitalism, and to focus on issues such as protection of human rights, "the weak", immigrants, minorities, etc (a kind of political charity one might say), but with views that could be adopted even by a liberal center-right party. The coveted "unity of the Left" became a central objective as it was considered key to survival. In the name of this unity alliances were formed that integrated political currents that differed significantly both in their political aspirations, as well as their strategy and methodology. This castrated their political efforts so they could not present a convincing alternative to a system that seemed successful anyway.
Year 1990 for neoliberalism
The ongoing crisis that began in 2008 came to dramatically change this landscape. Suddenly the world discovered that unfettered markets were not only incapable of self-regulation, but operated with exaggeration and panic, exacerbating distortions and problems instead of solving them. This has led many influential economists to recognize the "Instability of Inequality" or the "Ideological Crisis of Western Capitalism", recognizing that the crisis of western economies is systemic and is caused by the overaccumulation of wealth by the few. Even more important perhaps is the fact that even Right-wing politicians in key positions, like Mr. Schäuble, admit that most of the financial transactions are dominated by a gambler's mentality and thus harm rather than help the real economy and consequently society. What was previously regarded as "natural law" is losing ground on a technical, as well as on a moral level.
Of course there are fanatical liberals who insist that liberalism itself did not fail, but was instead badly implemented. This attitude is inevitably reminiscent of communists who refuse to admit that the system they promised had structural problems, blaming its failure to its implementation, and they ignore that political ideologies are judged mainly by their practical results rather than their theoretical basis. Moreover, even in theory, it is easy to observe that if the threefold freedom - equality - fraternity summarizes the principles of a progressive society, the two systems are just partial solutions: liberalism focuses on freedom at the expense of equality while communism has the opposite effect.
The ecological factor
In the decades that followed the 1990, the notion that we live in a "finite planet" has been established in the perception of most Europeans. The ecological factor became important in daily life, politics and the economy. This increased environmental awareness led to the conclusion that continuous and intensive growth is impossible since natural resources are finite or have finite capability of renewal and the challenge now is to seek societies of "Prosperity without Growth". This conclusion undermines a key argument of neoliberalism, which is based on the assumption of continuous development in a society that everyone has the opportunity to profit either more or less. In other words, we realize that the cake has a limited number of pieces, and the problem is how they will be distributed.
The Left of the day after
The first concern of the governments of the Eurozone is to prevent violent and uncontrollable developments because they will seriously undermine social cohesion within countries and the solidarity between them. The general direction is towards a wider fiscal homogenization, with the technical details (the level of permissible deficit, the role of the ECB, the European Commission, etc) being a major issue of negotiation of the current months.
It is clear however that a technical solution would be temporary. The crisis experienced by European economies is related to their post-war creation, social capitalism, which is under very strong pressure from factors such as the ageing population, the ecological crisis and the competition from Asian economies. Consequently, the controversy of the next day will (and has to) deal with how to reform the capitalist system in Europe (and the Western world in general) in order to adapt to the new realities. Filings of such reform proposals have already been expressed, such as the abolition of naked CDS, or the taxation of financial transactions. The crisis, however, is such that these technical arrangements may be proven inadequate. It is also obvious that it is not possible to return to the Europe of late 1990 or 2000 since the global environment has changed dramatically. The debate is likely to reach a much greater depth, revising key organizational elements of European society, such as the welfare state as it was developed primarily after the war.
The Socialist Left should not only be ready, but to take the initiative in this debate. Continued defense of a generous social capitalism may prove to be a lost battle. It is therefore time for it to recall its economic programs and boldly assert a range of topics such as:
- European citizens should be assured that whatever change is made, the game of the next day will be fair. Any austerity imposed by the new conditions, should be beneficial and not at the expense of social equality. The example is given by the successful recipes of some European countries during the crisis. Most of these are countries are characterized by low inequality.
- Progressive equality and failures of neoliberalism impose a revision of how the right both to property and possession and management of capital is perceived. Abolishment of unreasonable financial products, targeted taxation of wealth, control of capital mobility and socialization of its management through state or cooperative banks are potential solutions. Healthy competition should be strengthened to combat all types of monopolies. The European economies must be transformed from capital-intensive economies to economies of intensive production and creation.
- Treatment of unfair competition on the part of Asian countries, caused by reduced labor costs and unacceptable working conditions. We all know that apart from Asian companies, the situation greatly benefits Western multinational companies, which European governments must negotiate with.
The historical circumstances make the responsibility of the Socialist Left for the day after extremely great. If there are any who can offer substantial and clear solutions to the impasses of the current situation then these are the Socialists, not the until recently preachers of liberalism.
