The Coming Political Revolution

By William Greider, The Nation. Posted June 19, 2006.

Momentous change is approaching in American politics. Conceivably, the turning point has already arrived, too indistinct to recognize. We are witnessing the demise of the reigning economic ideology. A deep shift of this kind is a very rare event, one that comes along only every thirty or forty years. Economic disorders accumulate that the orthodoxy cannot answer and may even have caused. Eventually, the ideological presumptions are discredited by real-world contradictions.

The last time this happened was in the 1970s, when economic liberalism foundered and collapsed. Ossified intellectually, unable to adjust to changed circumstances, the liberal order did not know how to deal with economic consequences like inflationary stagnation. As the long postwar prosperity lost its energy, so did liberal politics.

Something similar is happening now to the Republicans. Their problem is the underperforming economy, which must borrow to stay afloat and, roughly speaking, lifts only half the boats. The conservative order -- inspired two generations ago by Milton Friedman and Friedrich von Hayek and brought to power by Republican ascendancy -- pushed government aside so business and capital would be free to generate more lasting prosperity. But their utopian promise was not fulfilled. Instead, the right's principal product, one can say, was economic inequality.

The breakdown won't necessarily produce an immediate shift in power. When the bottom fell out of liberal doctrine thirty years ago, what first unfolded was confusion and political paralysis, then an awkward retreat by the Democrats until they were finally displaced by the aggressive new conservatives under Ronald Reagan. But it does mean that Republicans have lost the political cohesion to advance their more extreme measures (privatizing Social Security, freeing capital entirely of taxation).

More to the point, the way is now open for alternative thinking: the new ideas that can lead to a new governing order. These ideas must be grounded in a determination to give people back their future. The strange paradox of our times is that despite America's fabulous wealth, most people's lives are shadowed by economic anxieties and real confinements, the wounds that market ideology has imposed. They fear that much worse is ahead for their children. Reform must re-establish this fundamental principle: The economy exists to support society and people, not the other way around. Only government can liberate them from the harsh rule of the marketplace, the demands imposed by capital and corporations that stunt or stymie the full pursuit of life and liberty in this complex industrial society. This very wealthy country has the capacity to insure that all citizens, regardless of status or skills, have the essential needs to pursue secure, self-directed lives. This starts with the right to health, work, livable incomes and open-ended education, and to participate meaningfully in the decisions that govern their lives. The marketplace has no interest in providing these. It is actively destroying them.

A coherent alternative agenda that will fulfill these principles does not yet exist. Nor will a liberal-progressive program emerge miraculously if the Democratic Party should somehow regain power in the next few years, since many Democrats in Congress have internalized the market ideology and collaborate with the right. But elements of that alternative agenda are already ripe for discussion. Before we explore some of them, however, we should examine the economics of why the right failed.

The economic engine is running on empty. It looks robust only if you ignore the underlying conditions. Household savings were negative last year for the first time since 1933; that is, families kept up by spending more than they earned and by borrowing to do so. The national economy, encompassing private-sector business and government as well as households, also had negative savings in the fall quarter of 2005, despite bountiful corporate profits.

The household accounting reflects a common reality: Wage incomes, adjusted for inflation, are stagnant or falling. The weekly wage for 92 million people in nonsupervisory jobs (82 percent of the private-sector workforce) has declined for three consecutive years, largely because total working hours shrank across the economy. Even per capita income -- a broader measure that includes the billionaires -- declined for four years in a row under Bush. One in six manufacturing jobs has been lost since 2000 (39 percent in communications equipment, 37 percent in semiconductors). These losses are explained as free-market "efficiencies" but mainly represent the global relocation of American production.

The cumulative effect is an economy that doesn't produce enough to pay for what it wants and needs. The conservative order, notwithstanding its proclaimed values, makes up the difference by borrowing. In five years, Bush has added $2.5 trillion to the federal debt with more to come (thanks to his regressive tax cutting, deficit spending, the war in Iraq and the subpar economy). In the same five years, the national economy as a whole took on even more debt -- $2.9 trillion -- to pay for the ever-swelling trade deficits. The creditors are our trading partners, led by China and Japan. The collective indebtedness is growing much faster than the nation's collective income -- always an ominous sign for a debtor. George W. Bush may wind up as history's goat because he had the bad luck to inherit the effects of 25 years of rightward governance (including Bill Clinton's tenure). Government shifted tax burdens downward, favored military spending over productive domestic investment, encouraged multinationals to disperse jobs and production overseas and embraced the Federal Reserve's hard-money monetary policy, which suppressed working-class wages. Fortunes were shifted upward, fabulously.

William Greider is the author of, most recently, "The Soul of Capitalism" (Simon & Schuster).

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