Obama Says Inequality Led to Rise of the Right, but Takes No Responsibility for It (2/2)
Prof. Leo Panitch and Paul Jay discuss Obama’s Mandela lecture where he describes how globalization led to the politics of fear and resentment, but won’t acknowledge how global capitalism and his presidency created the conditions for it
PAUL JAY: Welcome back to The Real News Network. I’m Paul Jay.
We’ve been discussing President Obama’s speech he gave at the 2018 Nelson Mandela Lecture, which is a defense of globalization, of global capitalism, of its great achievements. On the other hand, President Obama sees the inequality that has increased under this expansion of globalization and global capitalism. He doesn’t say under his watch, but as we know there’s a great deal, a great deal of expansion of inequality during the Obama years. I don’t think you can lay this just at the feet of President Obama. This is where the system itself is at; enormous amount of wealth being accumulated concentrated in fewer and fewer hands. And that process has its own dynamic, whoever is president. On the other hand, President Obama policies did not reduce that inequality much at all. And of course, President Trump is doing his best, and the people with him, to make that inequality even greater; great tax cuts, and so on.
Well President Obama, in his speech, he does see how this expansion of globalization and the inequality therefrom gave rise to the rise of the right. And here’s a segment of that speech.
BARACK OBAMA: Within the United States, within the European Union, challenges to globalization first came from the left, but then came more forcefully from the right. As you started seeing populist movements- which, by the way, are often cynically funded by right-wing billionaires intent on reducing government constraints on their business interests. These movements tap the unease that was felt by many people who lived outside of the urban cores; fears that economic security was slipping away. That their social status and privileges were eroding, that their cultural identities were being threatened by outsiders, somebody that didn’t look like them or sound like them, or pray as they did. And a politics of fear and resentment and retrenchment began to appear. And that kind of politics is now on the move. It’s on the move at a pace that would have seemed unimaginable just a few years ago. I am not being alarmist, I am simply stating the facts.
Look around. Strongman politics are ascendant suddenly, whereby elections and some pretense of democracy are maintained, the form of it. But those in power seek to undermine every institution or norm that gives democracy meaning. In the West you’ve got far right parties that oftentimes are based not just on platforms of protectionism and closed borders, but also on barely hidden racial nationalism. Many developing countries now are looking at China’s model of authoritarian control combined with mercantilist capitalism as preferable to the messiness of democracy. Who needs free speech, as long as the economy is going good. The free press is under attack. Censorship and state control of media is on the rise. Social media, once seen as a mechanism to promote knowledge and understanding and solidarity, has proved to be just as effective promoting hatred, and paranoia, and propaganda, and conspiracy theories.
PAUL JAY: Now joining me again to further discuss President Obama’s speech is Professor Leo Panitch. He’s Professor Emeritus at York University and co-author of The Making of Global Capitalism: The Political Economy of American Empire. He’s also editor of the Socialist Register; the next issue is titled A World Turned Upside Down. Thanks for joining us again, Leo.
LEO PANITCH: Glad to be here, Paul.
PAUL JAY: So, as we said in the first segment, he gets a lot of what is wrong and what’s happening, but he doesn’t seem very, to get the role of this liberal elite that he represents played in creating the conditions for the rise of all of this.
LEO PANITCH: No, he doesn’t admit that at all. That’s very true. As we said in the previous segment, he goes so far as to recognize that the previous reforms, the previous democracy, were sedimented with the power of the old ruling classes, whose privileges were never done away with, whose position of control was ever done away with. He says that. But he doesn’t take, go to the next step, which would be precisely to say that the fears that, the insecurities that are being appealed to, as he says, by the far right, by the xenophobic right, the reason that they are open to these appeals is that they were abandoned by the very political parties which offered to protect them, which have been their parties.
So what turned the election in the United States was precisely that counties in Michigan and Ohio and Pennsylvania, et cetera, which had unfailingly voted Democrat since the New Deal, finally said, what the heck. These guys promised us that we would not have job security under NAFTA. And you know, we lost four and a half million jobs in the manufacturing sector since 2000. And I should point out the majority of them were lost before 2008, and Obama benefited from those jobs having been lost before 2008. Now, Trump benefited from the additional 1 and a half, 2 million that were lost after 2008. But this is true around the world. It’s even more grotesquely true, of course, of the social democratic parties, the workers parties, in Europe, which were more explicitly working-class organizations in their origins and for a large part of the 20th century.
So you see in that context the delegitimation by virtue of the contradictions of neoliberal globalization. And he himself uses the term, astonishingly, ‘contradictions.’ By virtue of those contradictions they, having embraced, promoted, facilitated capitalist globalization, are now finding that their own constituency is walking away from them. Some of them are walking to the right, and that’s tragic. But some of them are supporting movements to the left. And he even hinted at that a little. And we see that, of course, most particularly with the movement in the Democratic Party towards supporting socialists. And you see it in Britain, with the largest political party in Europe is the British Labour Party under Corbyn. And it is the largest only because they have elected a socialist as leader of the Labour Party.
PAUL JAY: It’s not like there wasn’t another model, American model, for Obama to follow in the crisis of ’07-’08. This deep recession, rising unemployment, whole sections of the population losing their houses and bank savings and such.
LEO PANITCH: Well, I’m not sure.
PAUL JAY: Let me finish the point. Because the Rooseveltean model is a response, a capitalist response, to a somewhat similar crisis, even a deeper crisis. What I would argue is the reason why he doesn’t even reference that as a model, as a rational choice, as we talked in part one, is that the balance of forces now, the power of finance- and this happened spontaneously, it happens out of a system that so much wealth has been accumulated in so few hands that the power of that top elite is more than it was, that I’m not suggesting Obama actually could have done these things in these conditions. But he could have, what you said, rallied people, if there is really progressive instincts there. He could have said to these millions of people that got so excited about his presidency, this is the kind of road we need to go down and fought that fight. But he’s not the product of that he’s the product as we said earlier of Wall Street.
So these are his pragmatic decisions, is to essentially stop the recession from turning into a great depression. And that’s better than than not. Like, if it had been Trump, who knows what the hell would have happened in ’07-’08. And more people would have suffered. On the other hand, the system is saved in a way that the top tier elites not only benefit more than anyone else, but take off like a rocket into the stratosphere in terms of their accumulation of wealth.
LEO PANITCH: Yes. And he promotes that. I mean, and leaves out the Silicon Valley side of his politics, which was precisely to promote and be very close with the heads of those corporations, of the [Fangs]. He was in their pocket and they were in his pocket. And they are now, of course, at the pinnacle of global wealth and power. So it’s not just, you know, the Wall Street establishment, but it’s the new technology giants that he is so close to and promotes so much. I totally agree.
That said, I do think that the real thing that he’s guilty of is that the one thing Roosevelt did, although he had of course a lot of fire underneath him coming from below to do it, was to enhance trade union power. He was reluctant to do in his first term, but to pass the type of labor legislation that sedimented the kinds of power that had been built in the strikes and the unemployed marches, et cetera, of the early 1930s- much with the help of the Communist Party, one should point out. That was probably the most important thing in terms of shifting the balance of class forces. In a certain way, although Roosevelt closed down the banks, ended the gold standard, et cetera, he also saved the banks. He split up commercial banking from investment banking. But he didn’t bring banking into the public control, make it a part of the system of economic planning.
And what happened under the Obama administration was a saving of the banks, as well. But it went along with a great deal of regulation precisely defined to reproduce the role of finance at a global level, with American finance at its center, in global capitalism. But this involves a lot of supervision, a lot of regulation, Federal Reserve supervisors in every bank every day. Some of this is being undone. The irony is that you’re actually now getting even more intrusive regulation from the Trump administration; much more than you got under the Obama administration with Dodd-Frank. But it’s the type of regulation that is intervening in every firm, with regard to the tariff policy. So every firm is appealing to the Department of Commerce to get themselves exempted from the increase in tariffs. Sixty thousand applications are sitting backlogged at the Department of Commerce. Individual enterprises are going nuts about the amount of red tape they’re going through.
Of course, at the same time, in the department of the environment, the EPA, they are being removed of regulations in the area we need it most. The contradictions of this irrational capitalism- in which the state is embedded, of course. It’s not something outside of it. This capitalism only exists insofar as it is embedded in states. It’s always been the case. You can’t have property without laws that protect property. You can’t have banks without central banks that backstop private banking. It’s- the definition of capitalism entails that role of government, of state. And that’s what we’re seeing. We’re seeing the contradictions that he was so much- and he refers to, subjected to, being played out in a new way, where American capital is. No more know what’s going to go on tomorrow than do the heads of state of Canada or China. They don’t feel they control Trump. They probably felt they controlled Obama more; at least the Silicon Valley guys do.
PAUL JAY: Just a note. You said that what he could have done is strengthen the role of unions. Well, in fact, he campaigned in support of a piece of legislation called the Employee Free Choice Act, which was supposed to actually make it easier to organize unions, and then never brought it forward to Congress to actually pass. So it’s-.
LEO PANITCH: But you know, it’s within those pragmatic calculations.
PAUL JAY: I was about to say that this isn’t just about Obama. Obama’s this, was the leader, manager, and now I would say the primary spokesperson for a whole class of this meritocracy/new billionaires. So we’re not- in discussing this speech and Obama we’re not trying to demonize Obama. In fact, if anything we were saying before, you know, as an individual personality with individual qualities, he’s head and shoulders above really any other politician in sight. But that just makes him even all the more valuable to capital.
LEO PANITCH: All the more frustrating. But it also indicates that he’s sitting on top of the Democratic Party and a Democratic Party establishment that is very much part of the problem.
PAUL JAY: And he’s very much involved in actively managing- I was saying off camera, I’ve been told by many people who know the story that when Perez was fighting with Keith Ellison for being head of the DNC, Obama was actively working the phones to defeat Keith Ellison. Did not want the progressive candidate to be head of the DNC. So he’s not just out there as, you know, [inaudible] and all this. He’s, he’s in the pits fighting. And Thomas Frank, the author who did What Happened to Kansas, he made an interesting comment in one of our interviews where he says, you need to understand, the corporate Democrats don’t dislike the left of the party. They hate the left of the party. Yes. And this is because this is a class contradiction. It’s not just some difference of opinion.
LEO PANITCH: Well, it’s because they’ve decided that they’ve got to be pragmatic with capital. They need to live with capital. They think that socialism is a bad thing. They think that capitalism is the best of all possible worlds. Although they think you can- stupidly, they think it can be a humane capitalism.
PAUL JAY: Well, actually, let me, let me play a clip of Obama right here, that he speaks to the point you’re just making.
BARACK OBAMA: But we can learn from the last 70 years that it will not involve unregulated, unbridled, unethical capitalism. It also won’t involve old-style command and control socialism from the top. That was tried. It didn’t work very well. For almost all countries, progress is going to depend on an inclusive market-based system. One that offers education for every child. That protects collective bargaining, and secures the rights of every worker. That breaks up monopolies to encourage competition in small and medium-sized businesses. And has laws that root out corruption, and ensures fair dealing in business. That maintains some form of progressive taxation. So that rich people are still rich, but they’re giving a little bit back to make sure that everybody else has something, to pay for universal health care, and retirement security, and invest in infrastructure and scientific research that builds platforms for innovation. It involves promoting an inclusive capitalism both within nations and between nations.
PAUL JAY: So this seems to be the nub of the problem with President Obama. The rich, and one should say the super rich, can still be rich and super rich. And if only they give up a little everything will be OK.
LEO PANITCH: You know, I keep referring to these guys as pragmatists. And it’s true, they are. That that’s what drives them. They’re pragmatic, unlike me and you who are, indeed, idealists. That said, you listen to those words and you think, what a romantic. What an idealist. You cannot have what he’s talking about within capitalism. The room for reform within the system as it’s evolved does not allow for that any more. That is what one needs to learn.
And we’ve seen the failure not only of his but of Blair’s and the Third Way’s politics, of Schroder’s, et cetera. Of a whole range of them who said that we can have all these things while riding with the wind of global competition and accumulation. And that’s simply proven not to be the case. And much of his speech makes that case. So for him to then turn around and say, well, we want to have all these things within an inclusive capitalism, there’s no grounds for it. He’s standing on no ground. And in that sense, I think the fact that he points to how this has all evolved in such an ugly way, in my view this actually helps make the case of the socialist left. Moreover, insofar as he says we’ve tried top-down socialism and it didn’t work, that leaves space to say, well, we haven’t tried bottom-up socialism. We tried social democracy, but we haven’t tried democratic socialism. We’ve tried authoritarian communism, but we haven’t tried democratic socialism. And the first thing we need to do in democratic socialism is turn the financial system into a public utility. The second thing we need to do is fundamentally transform the institutions of the state so they aren’t organized and structured so as to reproduce private property, and reproduce the power of the very people that he says are the greedy bastards they are.
So I think one can do something with this. And I think- you know, we were saying this off-camera as well. His rhetoric in the run up to the 2008 election, and then the disappointment that it was already felt by 2010, is what I think contributed to creating Occupy. And what created Occupy, since Occupy with its anarchistic impulses meant you could protest forever but not change the world, quickly lead- the bridge was very short- quickly led to the candidacy of a democratic socialist within the Democratic Party that almost turned American politics on its ears as much as the Trump one did.
PAUL JAY: But I think the speech and Obama as the preeminent spokesperson for this whole class of meritocracy, and billionaires in the tech sector, and Wall Street who are somewhat liberal; if that class gets to pick the next president after Trump, and again we get lots of nice words over here but even more growing inequality over there because that’s how the system is built, to create such more inequality, then the problem is going to be the next round will be another Trump except this time it won’t be a clown. This time the deep economic crisis, the challenge, the threat of the climate crisis, and the geopolitical rivalries that are being spurred by the current state of capitalism, it’s going to be a far more dangerous situation. Which makes this 2020 election so decisive.
And that’s a topic for another segment, which I’m not sure we’re going to do today, but we’re going to do soon. So thanks very much for joining us, Leo.
LEO PANITCH: Great to talk to you, Paul. A very good topic.
PAUL JAY: Thank you, and thank you for joining us on the Real News Network.