So is liberal capitalism dead?

Sure enough, the columnists are having a field day. If tweets are narrow- focus and the medium of choice for Trump and the alt-right, ( I don’t mean you dear),  those prophetic souls who are favoured with space are laying it on thick with the broadest of  brushes. Right now  this is preferable  to the pointillism  of shifting policy. Hillary was always yesterday’s woman ; the Donald, monster that he is, tapped into reality.

Oh,  and “liberal capitalism” is dead.

Just a tad  over the top,  I say, unless we lose it entirely and want a world depression.  In the late nineteenth and the early twentieth centuries, the struggles between protection and free trade  led to armageddon. That would do the rust bowls from Pittsburg  to Middlesborough no good at all.

With all the glaring faults that are continually be identified since 2008 if  not all yet rectified,  we nevertheless have a greatly improved world system today that is flexible enough to respond, with prodding.    Nevertheless, what are columnists for, except to broaden the horizons?   Here is a small selection of some of the best food for thought today.

Patrick Cockburn in the Indy, writing from near Mosul

Nation states are returning to relationships based on rivalry and friction when the trend was meant to be in the opposite direction. The internal unity of country after country is under stress or has already broken down. Governments and universities used to set up institutions to study greater integration and cooperation, while in fact they might have been better looking at how things fall apart.

It is an age not just of disintegration but of extremes, with proponents of the status quo either weakened or discredited, as shown by the Brexit vote in Britain. The beneficiaries are mostly on the right: from the 1980s on, the mainstream left in Britain, France and Germany abandoned socialism for liberal free market capitalism as the proven recipe for human happiness, which meant that after 2008 they had no alternative system to advocate and could no longer provide a credible vehicle for protest. The political beneficiaries of disillusionment with things as they are have almost invariably been on the right as with Trump who, along with other rightist insurgencies, can plug into resurgent loyalty to the nation state in the wake of discredited globalisation.

There is no consensus on what to do. Travelling to Britain from the Middle East, it is striking how the political, social and geographical divisions expressed by the Brexit vote have only deepened with time, whatever pretences there are to the contrary. Political commentators in the UK and US who endlessly proclaimed that, whatever the rhetoric, elections were won by those who seized the centre ground turned out to be wrong because there was not much centre ground to seize.

Jenni Russell in the Times (£)

It wasn’t the quality of the candidates or the prejudices about gender that mattered most in this campaign. It was the message. Our lives matter. That is the message of the Trump revolution, delivered with a roar of anger by people who have had enough of seeing their jobs, communities, identities and futures torn apart by the rapacious currents of unfettered capitalism.

For 40 years they have been sold the promise that free trade deals and the flows of people and capital around the world will bring them prosperity. Instead their incomes have stalled, industries have collapsed, towns and cities have decayed, unfamiliar faces and cultures have appeared in their streets, and the rich have got much, much richer. Yet no one prioritised their loss and anguish until a billionaire channelled their voice.

This is a seismic change because it means the age of liberal internationalist capitalism is coming to an end

The system is rigged, Trump told them, and the truth is that it is, although not perhaps in the sense he meant. Since the 1970s American society has grown radically more unequal, as union power has collapsed, competition increased and shareholders and managers awarded themselves the lion’s share of income. Workers’ pay has risen by 11 per cent in real terms in that time, while CEO pay has risen by almost 1,000 per cent. Workers no longer get the rewards from increased productivity. The top 1 per cent are taking 95 cents in every dollar, compared to 50 cents just 20 years ago.

The price that people are paying isn’t just a financial one. It is psychological and cultural, which is why the voters who backed Trump go all the way up the income scale. Brexit times ten was what Trump promised, and now he has delivered it. Just as in Britain, this is a vote to reject an economy that prioritises turmoil and profits over the human need for stability, meaning, community and hope.

This is a seismic change because it means the age of liberal internationalist capitalism is coming to an end.

Polly Toynbee in the Guardian,  for the defence, her version.

Social democracy is not dead because it remains the only way to live in decent, peaceful reasonably fair societies. The NHS, decent housing, infrastructure investment, good schools, good jobs and social security are essentials to be paid for from taxes, the best off-shouldering most. Climate change will fry us unless the world works together. These bedrock ideas proved the most economically effective as well as the most socially productive way forward. But in Britain, as in the US, the state is in retreat on every front, cutting and undermining the basics of civilisation.

Paul Mason, neo-Marxist and the most radical, but a humanist.

The US “won” the global recovery after 2008. It stabilised its banks and opted strong and early for monetary expansion. Real wage growth has wavered around the 4% line for the past five years.

And that was not the only source justifying confidence for Hillary Clinton. Her pollsters noted the inexorable demographic surge supporting liberalism: huge numbers of single-female households, rising black and Hispanic populations, gay marriages, historically high numbers of college graduates.

What they underestimated was the fragility of their own ideology and the deep reserves – even among educated men in crisp, white shirts – of fear and hatred.

This is not some two-dimensional revolt against poverty and wage stagnation. It is a three-dimensional revolt against the impacts of neoliberalism – both positive and negative.

But neoliberalism no longer works. It is broken. If it survived it would have delivered at best zombie growth fuelled by central bank money and at worst stagnation. But it will not survive. Last summer I predicted that if we do not break with the economics of high inequality, high debt and low productivity, populations will vote to dismantle the global order. With Brexit and Trump that process is inexorable – and the next wave of the tsunami will hit Italy and Austria in their plebiscites on 4 December.

In the next weeks, our denial reflexes will be in full swing. Like Auden’s generation we will “cling to our average day”. But one set of people now faces a moment where only honesty will suffice. It is the economists, journalists, civil servants, bankers and policy wonks who have rubbished the idea of the existential threat.

They claimed the capitalism of the past 30 years was merely the inner essence of the system revealed, unimprovable unless by the privatisation of the last hospital and the decline of union density to zero. They were wrong; they need to place their intellectual firepower and resources – as their counterparts did in the era of Keynes and Roosevelt – in the service of designing an alternative system.

An FT editorial, (£),  with the mainstream defence for liberal capitalism- with changes

Donald Trump’s victory
 marks a thunderous repudiation of the status quo. The most powerful nation on Earth has elected a real estate mogul with no experience in government, a self-styled strongman, contemptuous of allies, civil discourse and democratic convention. Barring a protean change of personality, Mr Trump’s victory represents, at face value, a threat to the western democratic model..

There is an alternative narrative that highlights the resilience of the US economy, its capacity to innovate and produce world-class winners, especially in technology as epitomised by Silicon Valley. But Mrs Clinton, remote and often robotic, failed to counter with a compelling vision of change.

There is also a more accurate story to tell about American openness to the world. The global security order is underpinned by clear US commitments to its allies. The Nato Alliance in Europe, the US-Japan Security Treaty, and the US commitment to South Korea are backed by both law and US troops stationed abroad. Bringing these commitments into question, as Mr Trump has done, recklessly ignores 70 years of relative peace and stability over large parts of the globe.

Similarly, the free movement of capital, goods, and labour is one of the great achievements of the postwar era. Globalisation has lifted millions out of poverty, especially in Asia. The US has been a mainstay of the multilateral trading system since the end of the second world war. TTP is dead. If Mr Trump, as he has threatened, turns his back on the World Trade Organisation and Nafta, starting tariff wars with global partners, the world will be poorer as a whole. The effects on inequality are unlikely to be the ones that Mr Trump’s working-class supporters expect.


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  • hgreen

    I think Jenni Russell pretty much nails it. Liberal capitalism or neoliberalism is in it’s death throws. As we saw with the banking bail outs the system is indeed rigged. Trump partially tapped into this but also sadly appealed to the base instincts of voters (looking for a simple answer to a complex problem) by incorrectly blaming immigration.

    From a Labour party perspective the hilarious thing is that the Labour MPs don’t get this. They think neoliberalism has only suffered a flesh wound and can be reinvigorated.

  • terence patrick hewett

    The world that we live in emerged from British and Irish slavery, genocide, piracy and continental wide land theft: Liberal certainly Brian: Liberty fecking Hall.

    I shall postulate two propositions: one unpleasant, one less so: in the grand abstract terms of the Enlightenment, the legitimacy of government derives from the consent of the governed: the result of two centuries of political struggle for the rights and liberties of ordinary citizens and of governance “of the people, by the people and for the people.” The Anglo-Saxon tradition of liberal democracy, hammered out in the United Kingdom after 1688 after much cruelty, and in the United States after 1776.

    But in the formative years of the American colonies it was freedoms for only one sort of people: for the blacks and the indigenous in America there was only slavery and genocide: for ironically the US was founded on, and derived its wealth from, slavery, land theft and genocide. The ‘founding freedoms’ were in many respects the freedom to pursue these goals without interference.

    The concept of ‘terra nullius’ was used to justify land theft on a continent-wide scale: those whose land which was stolen didn’t become citizens until 1924. The 1763 Royal Proclamation drew a boundary along the Appalachian Mountains which forbade settlers stealing any more land to the West of the line. This, together with “writs of assistance” was one of the major causes of the War of Independence.

    While slavery was never legal in GB (Ref. the Somerset case 1772) it was the basis of the North Atlantic economy, with New England providing the goods and services for the American tobacco and West Indian sugar plantations: we the British fuelling the whole lot by operating the Golden Triangle slave route, which was finally run through companies in London and Liverpool: the Scots dominating the slave plantations of the West Indies but also heavily investing in the Triangle from companies in London.

    The failed 1690’s colonisation scheme of the Isthmus of Panama on the Gulf of Darién which bankrupted parts of Scotland was an attempt by the Kingdom of Scotland to become a world trading nation and was the driver for the 1707 Acts of Union. The Scottish landed aristocracy and mercantile class saw that their best chance of being part of a major trading power would be to share in the growth of the English Empire and that Scotland’s future would lie in Union. Much is made of Scottish influence in the United States Declaration of Independence but a major driver of Scottish involvement was the fact that the English had cut them out of the Golden Triangle slave trade; instead, allowing them to control the more onerous West Indian slave plantations: they wanted a bigger slice of the (blackbird) pie.

    Four of the first five presidents owned slaves while in office. Four of the next 5 owned slaves, 2 while in office. Of the next 5 – two owned slaves while in office. Of the next 5 – two owned slaves but not while in office. And fully half the delegates at the Constitutional Convention were slave owners. The US was founded and run by slave owners and even the non-slave owning citizens in the North owed their prosperity to slavery.

    And it was pressure from the despised Christian anti-slavery movement on both sides of the Atlantic that enabled the Royal Navy to finally put a stop to it.

    The terms “American” and “British” were at that time in the process of being formulated. “Writs of Assistance” were another cause of discontent: “the rights of Englishmen” were the perceived traditional rights of English and British subjects. Many of the colonists argued that their traditional rights as Englishmen were being violated. This subsequently became another of the primary justifications for the American Revolution of 1775. The American Revolution is better understood as the Fourth English Civil War and the Virginia born Englishman George Washington, in common with the Connecticut born Englishman Benedict Arnold, served both sides at one time or another; GW displaying the better judgement in choosing the winning one. Initially, the rebels wished that if they were to be taxed they should have representation in the Westminster Parliament, something that Britain with its recent history of republican civil war could not risk. The old aristocratic society and the army suffered a defeat from which they never fully recovered and power passed to the middle classes; the merchants and industrialists of the emerging Industrial Revolution who went on to create the empire with which Britain will be always be associated.

    After the American Revolution, Horace Walpole stated that a new chapter had been opened in the history of their country; what America would now become it was impossible to say but that a new nation had been born and that the old world by its creation had been changed forever.

    And changed it was: historian Alan Macfarlane argues that England never had a peasantry in the way that other European countries did, or as extensive an established church, or as powerful a monarchy. English society thus had a more individualistic cast than the rest of Europe which was centralised, hierarchical and feudal; and sowed the seeds of our constitutional conflict with the EU of today

    It was the most individualistic elements of English society; the most liberal fringe of English political thought, the Whig and Republican theorists such as James Harrington who came to predominate. The liberal tradition of Edward Coke, John Hampden, James Harrington, Algernon Sidney, John Milton, John Locke, Pitt the Elder, Edmund Burke, Earl Grey, Viscount Palmerston, Richard Cobden, John Bright and of Benjamin Franklin and Thomas Jefferson.

    All of this made America an outlier compared with England, which was an outlier compared with Europe. The US was the offspring of English liberalism and carried it out to its logical conclusion to become the freest and most liberal country ever known to man.

    Of course the conflict did not end at Yorktown. It continued with The War of 1812: a 32-month military conflict between the United States of America and the United Kingdom of Great Britain and Ireland, together with its North American colonies and its American Indian allies.

    The outcome resolved many issues which remained from the American War of Independence, but involved no boundary changes. The United States declared war against Britain in 1812 for several reasons, including trade restrictions brought about by Britain’s continuing war with France, the impressment of American merchant sailors into the Royal Navy, British support of American Indian tribes against American expansion, outrage over perceived insults to US national honour after humiliations on the high seas, and American interest in annexing British North American territory (part of modern-day Canada) which had been denied to them in the settlement ending the American Revolutionary War.

    47 years later in 1861 the American Civil War began: many historians regard Gettysburg as the deciding battle of the English Civil War which began in 1642.
    But if the Confederacy lost the war; it won the peace: the Jim Crow laws began to be enacted in 1876 and only came to an end in 1965.

    Don’t touch my tomaytoes:

    Max Bygraves:

  • Zorin001

    Its not yet dead, there’s too many vested interests keeping it on life support. But the past 25 years of increasing automation, combined with a rising Global population have thrown up challenges that its supporters have been slow to react to. So now its not just the working class who suffer (and we may have to reassess that label as there are fewer jobs to work on) but the middle class have seen the squeeze.

    Of course rather than blame the system its been easier for politcos and the media to point to the “others”, the dreaded Migrants and say “there’s your problem, coming over here and taking our jobs and wrecking the county”, because theres a cosy club at the top who have done well out of Neo-Liberalism and the system must be protected at all costs, no matter wht happens to progressivism and social cohesion.

    But the tipping point is coming where the system can’t keep on moving in the direction it has been, and if they want to save it they had better reform it, before we all get sick of it and tear it out roots and all.

    No true social justice without economic justice.

  • Kevin Breslin


    1. anti-liberal capitalism is just feudalism, fascism even corporatism … enforcing the wealth division with the capitalism state government enforcing property rights protections for itself and corporate allies above that of its citizenry.

    2. liberal anti-capitalism is just voluntary socialism … there’s nothing that stops it from allowing for a sort of champagne socialist Clintonite Third Way.

    3. Anti-liberal anti-capitalism is just idealized communism.

    The bigger question is whether multiparty democracy is allowed to be permited.

  • notimetoshine

    Just remember however that without bailouts there wouldn’t be a system rigged or otherwise now!

  • hgreen

    Of course there would.

  • notimetoshine

    I’m not sure how. The financial crisis of 2007 onwards risked a total systemic failure of the entire banking system. Had there not been any bailout, AIG would have fallen hard, taking down the rest of the already shaky banks that still stood, with a run on most financial institutions whether over leveraged or not, even if they had limited exposure to the origin of the infection. The infection would have spread.

    This would cause many of the largest companies to go under (GE was already feeling the strain), then middle and smaller business would end up the same. A run on the dollar and other western currencies, investors would flee New York, London and Frankfurt, and we would at best have ended up in a situation of the great depression on steroids and at worst a total breakdown of the economic and social fabric of many countries.

    The bailout had to happen. It wasn’t nice, it wasn’t pleasant, but there was no alternative. Years of deregulation and excessive borrowing and lending had forced us into the situation where financial institutions dominated the economic landscapes of the West, but what was there to be done? Cut our noses off to spite our faces?

  • hgreen

    Public ownership of the bankrupt banks.

  • notimetoshine

    Still a bailout, after all that’s what the bailout packages did, a matter of words mainly but one and the same

  • hgreen

    Nope. Shareholders would have lost all of their money the way capitalism is supposed to work. Tax payers would have only had to protect savers (which we also ended up doing anyway). To describe that as a bailout similar to what was done is nonsense.

    “A matter of words”? Laughable, bloke down the pub analysis.

  • notimetoshine

    Well you said public ownership, and didn’t elaborate so what I said was perfectly valid, as the US and UK government took varying stakes in the banks, to give them the liquidity to see themselves through the crisis.

    In the US for example government took a stake in banks.

    The reason for that was to engender confidence in the financial system as a whole as opposed to those banks being insolvent. Now had the US for instance waited until the banks ran out of money, and then nationalised them it would have been too late. The damage to the economy would have been huge, possibly even fatal.

    Talking of bloke down the pub analysis (since you opened the door), you seem to forget that these banks had become so big and so central to the economy that injecting liquidity was the only way to go, short of waiting for them to go under, when as I said it might be too late. I suggest you do some reading. Too big to fail by Aaron Sorkin is a good start, though I prefer Joseph Stiglitz in Free fall. Fixing global finance and Timothy Geithner’s book is also good.

  • hgreen

    I’d suggest you think a bit before you type. No one was suggesting waiting until the banks ran out of money. Transfer into public ownership would have immediately protected savers and ensured the cash machines remained open. No major injection of liquidity would have been required as they’d have been underpinned by the public purse.

    To big to fail? Indeed, however by switching to full public ownership they wouldn’t have failed.

  • BonaparteOCoonassa

    My money is with Paul Mason. The whole system is rotten and will inevitably collapse. But I’ll go further: If it doesn’t happen soon, when there is some chance of re-building things, then within 30 years or so, as widespread water, food and finally energy resources fail and mass movements of global populations really start. (With my tinfoil hat off, that’s the reason governments just now are putting efforts into internet and any other surveillance systems they have).