Friday, 20 April 2012

Review of Thomas Frank's Pity the Billionaire, Part Deux

For a book about the intellectual contortions of conservatism, there is a strange and incongruous presence haunting the pages of Pity the Billionaire – Marxism.

There is the “reverse Marxism” of the Tea Party and Glenn Beck which regards bond traders as the silent majority and those who try to regulate markets as elitists.

There is the new fandom for Ayn Rand’s “Marxism of the master class” with its solidarity for billionaires and contempt for the exploiting masses.

There is the new conservative obsession with the “ruling class”, the intellectuals who control the government and hand out bail outs to big business, and who look down their very long noses at virtually everyone else, the long-suffering “country class”.

“There is no escape from the conflict between the classes,” writes a retired professor of international relations in the conservative journal, The American Spectator.

“It was a strangely bolshie line for a conservative hero,” muses Frank, “weirdly akin to Marx’s dictum that ‘the history of all hitherto existing society is the history of class struggles.’”

Here is Frank speaking again: 

Conservatives, says Cory Robin in The Reactionary Mind, are often “the Left’s best students”. They have known for two centuries that in order to defeat a revolution you have to become like the revolutionaries themselves. But the revolution was defeated decades ago. Now you have to invent enemies.

One could invoke Freud’s return of the repressed to explain this curious phenomenon, the insight that the effort to banish basic aspects of your psyche never works, they are always come back, although not in the original form.

The right stuff

But psychoanalysis aside, one thought does arise in response to this constant inversion, although not one pursued by Frank. That possibly, heaven forbid, the proper riposte to “reverse Marxism” is actual Marxism.

Not the political, gulag-filling Marxist constructions of Lenin, Trotsky and Mao or “cultural Marxism” whatever that is, but the unadulterated economic thought of Marx. When you are employed you are exploited, your work creates surplus value and that surplus enables profit to be made and capital – money invested to make more money – to be accumulated. The basic working arrangement, said Marx, is a smokescreen that is presented as a freely negotiated contract but is, in reality, a form of theft. Employees are portrayed as free and independent but, in reality, they are “wage slaves”

But while the mirror-image Marxism of the Right makes hay, poisonous hay, the real stuff is an ideology that dare not speak its name. Of the dissonance between the conceptions of conservatism and the reality of the way the world works, Frank writes, “Essence was in such violent disagreement with appearance that the force of it seemed likely to snap one’s neck”.

This is an oblique reference to Marx. His philosophy was an attempt to make essence – if you work you are exploited – coincide with appearance – everyone is free and employment is a natural exchange because it is “bilaterally voluntary” in Milton Friedman’s words.

But now appearance is in such conflict with essence that it is powerful enough, in Frank’s words, “to snap one’s neck”.

"In all ideology men and their circumstances appear upside down as in a camera obscura," Marx said in The German Ideology in 1845.

To the political class in Britain and US thinking the right way up is like speaking a foreign, or rather forbidden, language. Which goes a long way to explaining why, in “hard times,” the Right is predominant. You might not like it, they say, but only the one per cent has the power to create jobs and wealth and the money for public services. So you’d better keep them happy. The last thing we need, says the UK government’s chief tormentor of the sick, Chris Grayling, is “swinging taxes on wealth creators”.

This, to call it by its real name, is a form of blackmail. “One reason the Right fastened on the “job creator” line so avidly,” says Frank, “is because it allowed them to flip the script of the hard-time scenario. When people were out of work, they insisted, the important thing was not stimulus packages or public works or social insurance: it was giving small-biz trade associations every last item on their legislative wish list. The nation’s job creators had to know they were loved. Their confidence had to be carefully built up; their biases had to be catered for: their every caprice had to be enshrined in state policy.”

Government cannot create jobs, the Right says, “only business can”. This has become the common sense of this strange age, despite its gross historical illiteracy. There is a note in Frank’s book of the GDP growth achieved in the US during Roosevelt’s New Deal, a time when the government directly employed 11 million people because the private sector “couldn’t or wouldn’t” on public works, conservation and cultural projects. The figures are 11 per cent in 1934, 9 per cent in 1935 and 13 per cent in 1936 (page 132). Slightly higher than the anaemic growth achieved now we have accepted the obvious lesson that only business can create jobs.

The absence of a Left has given the Right a free pass on the seminal issue of who really creates wealth and jobs. The “left of centre” is morally outraged by growing inequality and £20 million salaries for CEOs, but it can’t take the obvious next step. People are literally being ripped off. They give their employers something, not the other way round. The wealth, and ensuing power, they create are appropriated by small elites.

A breath of intellectual fresh air

When someone breaks through this self-imposed intellectual barrier, the effect is like opening all the windows in an airless and suffocating house. “We have to smash this prejudice that the rich are useful just because they are rich,” says the French Presidential, Front de Gauche, candidate Jean-Luc Mélenchon. “For too long people have been made to feel that they were some kind of drain or problem for expecting free education, free healthcare or being able to stop working when they were old and spent.”

Take a deep breath. It feels good.

Politics is about assumptions. Actual policies follow from these original assumptions. If you assume that wealth and jobs are the result of confidence among, to use the Ayn Rand description, “producers”, their confidence has to be somehow engineered by government. And we should all be grateful if we manage to convince an employer to hire us. Being grateful is an emotion today’s leaders want to impart.

If you assume that wealth depends on the engineering of confidence among employers, then your attention naturally shifts to how to satisfy the markets by cutting public spending and slashing “red tape”.

And this assumption of a unity of interest between employer and employee can lead to some very strange places indeed.

Horseshit creators

Frank relates the tale of a rally held on US Labor Day in 2009, paid for by Don Blankenship, mine owner and CEO of Massey Energy. He tells the crowd he is there to “defend American labor because no-one else will”. The government, through incessant environmental and safety regulations, is “American workers’ worst nightmare”, he says.

Eight month later, 29 workers were dead after a massive underground explosion at a Massey mine.

Now, when we find a mine operator claiming that his own struggles against regulation are actually the struggles of mine workers – workers who are then killed because mine regulations are not properly observed by said operator, “ writes Frank, “we have stumbled upon a nearly perfect example of what the sociologists call ‘complete horseshit”’.

But horseshit has plenty of exponents these days. Take this article by this blog’s favourite conservative intellectual, Jesse Norman, with its Randian references to “producers” and the creation of products and the eliding of the huge class difference between those applying to work for companies and those who own and run them. There is an utter refusal to recognise that employees have to live with the consequences of decisions made by employers, but no opportunity to participate in their making.

Conservatives must, by their very nature, pretend that class differences, economic rather than cultural class differences, do not exist. “We are all in it together” is a phrase that contains so many fictions for just six words. But the real tragedy is our time is not that conservatives say that class differences don’t exist, but that what amounts to the Left can’t say that they do.

In his previous book, What’s the Matter with America, about why the poorest county in the US voted for George Bush, Thomas Frank lambasted the “gigantic error” made by the Democrats. “People don’t spontaneously understand their situation in the great sweep of things,” he wrote. “They don’t automatically know the courses of action that are open to them, the organisations they might sign up with, or the measures they should be calling for.”

Conservatives speak to those at society’s bottom on a daily basis, wrote Frank. “From the left they hear nothing, but from the Cons they get an explanation for it all.” Any alternative explanation, like the Occupy movement, has to come from nowhere.


Frank has spent two books documenting that failure of the “left of centre” and can appear nostalgic for a vanished time, the “middle class Republic” that America was after World War Two, but that has now become a plutocracy.

Nostalgia can mean an attachment to old fashioned solutions that don’t work anymore. “The age of the giant corporation is here to stay of course and as long as it is, big government must on hand to curb its abuses,” writes Frank. “When the system is corrupted … the obvious answer is to clean up government so it can perform its police function properly.”

The “government as policeman” solution is, to be frank, if you’ll pardon the description, not good enough. Leaving aside the fact that corporations have captured the political system and nobbled the policeman, the abuses of giant corporations require more drastic treatment than a healthy dose of good, old fashioned regulation.

There a You Tube video, highlighted by Frank, of a Republican Congresswoman, trying to placate some of her constituents, livid that their jobs have been outsourced by the corporation Verizon, with a homily about small businesses. It is worth watching for its comic value. But how exactly would a Rooseveltian liberal have responded? How would they have stopped the jobs disappearing to India or China? This isn’t 1965 anymore.

And, in any case, why make the assumption that the giant corporation is “here to stay”?

Another American writer, Gar Alperovitz, author of America Beyond Capitalism, laments the fact that traditional reforms, and lots of taxed funded inducements, have failed to lure major corporations to depressed areas. A full employment Keynesian strategy could work, in theory, he says, but in the real world the decay of “progressive political power” and its trade union base, means that, in practice, it won’t achieve the desired results.

“Given the inability of politics to provide meaningful solutions to the problems facing millions of Americans,” Alperovitz writes, “creating new institutional [my italics] forms appears as the only positive option available, difficult as this may be.”

But that difficulty will be the subject of a later review.

Thursday, 12 April 2012

Review of Thomas Frank's Pity the Billionaire, Part One

If you gathered the world’s teenaged anarchists together in a huge international congress, imagines Thomas Frank, and asked them to design the perfect crisis, they couldn’t have discredited market-based civilisation more completely than did the actual crash of 2008.

But discredited, as we now know four years on, doesn’t mean change or reform. Actually what discredited means is intensified. Discredited means working harder for less (if you’re needed at all), paying more tax, watching your pension shrink and public services dwindle. When David Cameron, borrowing a line from Barack Obama’s 2008 election campaign, says “We’re all in it together”, you have to query what “it” actually is, quite apart from whether you are graced by the company of the wealthy.

Frank’s book, Pity the Billionaire, the Hard-Times Swindle and the Unlikely Comeback of the Right, is about the way that ideology, in America, has justified and made sense of that intensification. Right from the beginning, from the moment a TV reporter, speaking from the Chicago Trader’s Floor invited “all you capitalists” to a Tea Party, it was about “redirecting public ire” – away from banks and corporations towards unaffordable government spending, and the guilty, reckless ones whose homes were being repossessed.

Just Pay Up

The deck is shuffled, writes Frank, and “before our eyes, imaginary terrors have been substituted for real ones. All that remains is for the nation to pay up.”

Here is Frank, one of the most eloquent non-fiction writers around, speaking:

(and he's really angry. Actually, he's the one with the light brown hair)

Frank captures the spirit of masochism that has infected Britain as well as the US. Seven lean years, he writes, are regarded as proper redress for seven fat years, a “deserved doomsday” to the borrowing way of life. We have all maxed out on our credit cards, government as well as people. And now we must pay the price.

In the US the imaginary terrors emerge from the wilds of a vivid imagination. One former Marine becomes an instant hero of the conservative movement after he declares the Democrats uncannily similar to the Nazis, both incurably Leftist. They were the National Socialists after all. As his star rises he writes a satirical children’s Christmas book featuring a German-speaking jackbooted elf who bullies the other elves into joining a union. “I have to go now,” as Woody Allen once said, “because I’m due back on Planet Earth”.

British Tea Party

Even though what happens in Britain is a dull echo of American innovations, these kind of fevered heights are not reached. We have Jeremy Clarkson rather than Glenn Beck. Conservative MP Douglas Carswell did try to start a Tea Party in Britain, in Brighton of all places, but only about 12 people showed up. You can’t seriously rant about the iniquities of socialism when everyone knows it was banished years ago.

But public ire is similarly diverted. In the US, the newest Right stoked fears of internment camps for conservatives, rampant state socialism and the demise of an idealised free market that never existed outside of the pages of economics textbooks. In Britain, tabloids urge readers to shop benefit cheats while 32 people die every week after they fail to convince government’s work capability test they are ill enough for sickness benefit. The “volcanic disgust” of which Frank writes hasn’t subsided, but it is channelled so that the blameless suffer while the real culprits get a pay rise.

Even right-wing legerdemain can’t hide the fact that something went very wrong in 2007-8. Yet in the conservative imagination, the flaw is not capitalism, but “crony capitalism, an unholy alliance of government and big business, that excludes the little guy. The problem is not in the market as such but that business is insufficiently capitalist. So the solution becomes, you guessed it, more capitalism. Forget the car crash, just press your foot down even more firmly on the accelerator.

The Concept

Friedrich Engels defined ideology as “the deduction of reality not from itself but from a concept”. And here the concept is unerringly the same. Whatever the problem, the solution is always ‘x’. The world could be sucked into an economic dark age (which seems imminent actually), whole regions engulfed by rising sea levels, and natural resources exhausted, but the solution will always be ‘x’, more capitalism. As long as you understand the concept.

The ideological thought process, and its departure from reality, is not subtle. Crony capitalism is capitalism. That the free market is a gigantic myth is not something the newest Right has an easy time appreciating. It is apparently impolite to point out that the large corporations dominating the economy don’t believe in capitalism, markets or competition, merely their bottom line. And if they feed on the state, on taxpayers, as opposed to customers, so be it.   

To anti-Soviet socialists, socialism was a perpetual virgin, the Right used to say in the ‘80s. Socialism was never the real thing. Now the Right has become its own caricature. Actual, existing capitalism is never the real stuff. However much reality disappoints, the theory of the free market remains unscathed. In fact it is emboldened by failure.

Alice's Adventures in Wonderland 

But whatever this ideology’s Alice in Wonderland quality, it has the freedom to wonder and to wander. In Britain, that freedom extends to advocating votes for corporations and that poor people should be denied the franchise.

If these claims sound ridiculous, outrageous even, bear in mind that many of the seemingly immutable features of today’s political landscape – privatisation, contracting out, compulsory workfare for unemployed – would have been considered unthinkable in the 1970s. As Frank says, America is currently experiencing the fourth conservative uprising in the last half century, each one building on the successes of its predecessor. It was not for nothing that a history of free market think tanks in the UK was entitled Thinking the Unthinkable. The unthinkable has an unpleasant habit of transforming itself into the normal.

So why can’t the other side think? This failure is what Frank’s book ultimately ponders. While the conservatives “organise discontent” in the name of an idealised, atavistic vision of the free market, the other side, what amounts to an official American Left, believes in consensus. 

Forbidden Thoughts

“They,” Frank says of the Democrats, “could not summon an ideology of their own”. Conservatives wanted to speak about the grand philosophical issues, but American liberals could not even recount the memory of Roosevelt’s New Deal. “It was as though the old-schools liberal catechism has become forbidden language, placed on some index on prohibited thoughts.”

In 1999, Tony Blair told the Labour Party Conference, “My friends, the class war is over”. Seven years later, the world’s richest man, Warren Buffet, observed, “There’s class warfare all right, but it’s my class, the richest class, that is making war and we’re winning.” You can’t win a war if you think it doesn’t exist.

In the 1930s the cultural critic, Walter Benjamin, who later died fleeing the Nazis, remarked, “Every Fascism is a sign of a failed revolution”. The aphorism needs a little updating. Now we can see that every free market revival, however absurd, is a sign of a vanished Left.

The ramifications of that absence and how the Left can regain the freedom to think, are the subject of the second part of this review.

Saturday, 7 April 2012

You supply the "reforms", we'll demand the revolution

There is a word that has been clasped with ideological zeal in the response to the current economic impasse, yet one with a decidedly retro feel: supply.

“It has now been more than thirty years since the supply-side revolution conquered Washington,” writes Thomas Frank in Pity the Billionaire, a book about the resurgent Right in the US. “And yet, as I write this, the most effective political response to these events is a campaign to roll back regulation, to strip government employees of the right to collectively bargain and to clamp down on federal spending.”

In Britain, there are the same rejuvenated supply-side obsessions: make millionaires and corporations richer and make it easier for employers to fire workers. All that is missing is a Spandau Ballet revival.

Supply has its familiar counterpart, demand. In simple terms, supply means the regulations and taxation affecting employers. Demand is the ability of people, mainly employees, to spend and consume.

But like a neglected sibling, demand is left to make its own way. While supply is lauded with gifts, demand is confronted with insurmountable obstacles. In the UK, real wages are dropping, benefits and tax credits are being cut and public spending is being slashed. The cost of gas and electricity has more than doubled in the past five years.

Only four years ago, demand, which had developed a chronic borrowing habit to keep pace with supply, faltered, plunging the Western world into economic crisis. But after a bracing cold shower, it obviously won’t make the same mistake again.

In economics, the conviction that if you nurture supply, demand will obediently follow, has a very long history. Back in the 1820s, it was known as Say’s Law – “supply creates its own demand”. But repetition doesn’t make it true. “All the supply-side solutions in the world will do little to aid recovery in the absence of growing demand for goods and services,” said the economist Ann Pettifor of George Osborne’s budget. “Nothing will happen if customers (of banks, firms, shops) simply cannot or will not walk through the door.”

The supply reflex is unfortunately not an Anglo-American delusion. Both Spain and Italy, aside from demand-choking austerity, are changing their labour laws to bring about more “flexibility”, a classic supply-side measure.

In Spain, labour market “reform” is taking place amidst some of the lowest wages in Europe and a 23 per cent unemployment rate (almost the same as the US during the Great Depression). “There's little doubt that in the context of a downturn, more flexibility means more lay-offs, more short-term contracts and lower wages,” writes one Spanish commentator, Miguel-Anxo Murado. “This will have the immediate effect of increasing earnings for employers, but this will come back to haunt them as households will have less disposable income. The employer's "wish-list" may turn into an employer's last wish.” A perfect example of supply-side reforms strangling demand - in economic terms, eating your own tail.

If a historical case-study was required, the same newspaper, The Guardian, provided one. The economist Ha-Joon Chang wrote of what happened in his home country, South Korea, in the aftermath of the Asian financial crisis of the late ‘90s. Economic deregulation was combined with a relaxation of labour laws. Employers, writes Chang, gained “a decisive upper hand over their workers. Many employees were sacked and re-hired as "agency" workers, doing the same jobs at lower wages.” Economic growth slowed from 6-7 per cent a year to under 4 per cent.

If another supply-side revolution makes no economic sense, then why do it? Murado believes that Spain’s newly elected right-wing government has to be seen to be doing something, even if that something is completely counter-productive. The familiar is a refuge from the unknown. The UK Conservative government has embraced again the prized policy of the 1980s, the “Right to Buy” council houses. The fact that now only 20 per cent of council house tenants are in full-time employment and it has been only five years since the sub-prime mortgage disaster hasn’t acted as a deterrent. It speaks, to put it politely, of an unwillingness to get to grips with reality.

But from the point of view of the controllers of this society, the senseless is also dangerous. If capitalism ceases to deliver rising living standards, its intrinsic features – a slave-like work discipline and exploitation (you work, they get) – will appear less and less tolerable. The management consultant Peter Drucker said in 1939 that “depression shows man as a senseless cog in a senselessly whirling machine which is beyond human understanding and has ceased to serve any purpose but its own”.

A system that has ceased to serve any purpose but its own, is an apt description of contemporary capitalism.