We, on the Canadian left, have to screw our heads back on when it comes to the interaction between the global financial system and the making of social democratic government budgets. We also have to screw our heads back on when it comes to the very real physical limits to industrial production and extraction. We need to talk sensibly and realistically about borrowing, economic growth and the legacy of liberal economist John Maynard Keynes.
And we have to hurry this up because, right now, we are carrying a bunch of water for Justin Trudeau and Stephen Harper in their attempt to prevent the election of Canada’s first social democratic government. But don’t feel bad. As Antonio Gramsci says, this is just how hegemony feels.
Right now, the Liberal Party of Canada, whose main political asset these days is a kind of public discourse that David Axelrod has termed “the audacity of sheer audacity,” has decided to haul its last Prime Minster out of cold storage to say some outrageous bullshit. Apparently, Paul Martin, the finance minister who balanced the budget by declaring that shelter and food were no longer rights, stealing everybody’s Unemployment Insurance premiums and cutting federal participation in health care from 50 cents on the dollar to eight, has decided to lecture us on how deficit financing is the bee’s knees.
The NDP, Martin’s audacious tale goes, has lost its way, not in the usual ways, like letting petty personal jealousies paralyze a whole government and destroy a major national institution, or shoveling hundreds of millions of dollars into friends’ shell companies and crime lords in the name of combatting separatism, but by suggesting that our nation should go back to balancing its books. Apparently, that’s only a principled thing to do if you’re Paul Martin; and Martin is pretty clear that he and Tom Mulcair are not the same guy.
Of course, there is some good timing from which the Liberals are benefiting. An old video has been found of Mulcair praising Margaret Thatcher, allowing some sort of threadbare case to be made that the NDP is now an extreme right party.
Now, far be it from me to suggest that criticizing the NDP during an election is the wrong thing to do. Until recently, I was on the supply side of this sort of thing. Just last year, I spoke out against Andrea Horwath referring to big business and members of the investor class as “job creators” on the front page of her platform. And, lest the party get too enthusiastic and lift the ban on me seeking a nomination, I could do that again.
But right now, I am going to offer a full-throated defense of Mulcair’s commitment to balance our national budget and, if necessary, slow the implementation of our spending program in order to do so. After all, the 1933 Regina Manifesto, the founding document of our political movement, promised a program of public health insurance yet, it took Canada’s first NDP government two decades to launch that program. That’s because not only does the Manifesto say:
With the advance of medical science the maintenance of a healthy population has become a function for which every civilized community should undertake responsibility. Health services should be made at least as freely available as are educational services today. But under a system which is still mainly one of private enterprise the costs of proper medical care, such as the wealthier members of society can easily afford, are at present prohibitive for great masses of the people. A properly organized system of public health services including medical and dental care, which would stress the prevention rather than the cure of illness should be extended to all our people in both rural and urban areas. This is an enterprise in which Dominion, Provincial and Municipal authorities, as well as the medical and dental professions can cooperate.
It also says:
An inevitable effect of the capitalist system is the debt creating character of public financing. All public debts have enormously increased, and the fixed interest charges paid thereon now amount to the largest single item of so-called uncontrollable public expenditures. The CCF proposes that in future no public financing shall be permitted which facilitates the perpetuation of the parasitic interest-receiving class; that capital shall be provided through the medium of the National Investment Board and free from perpetual interest charges.
My grandfather Harry V. Jerome, father of the more famous Harry Jerome, attended that convention representing the railway porters’ union; and you can see him in those photographs of the front rows of the convention hall. For my granddad, saving pennies in a jar was a way he understood himself to be modeling socialism for me, not the capitalism of easy credit, instalment plans, company store accounts and payday loans through which he had lived in the 1920s before the Crash.
As a man whose family had escaped North from Redemption in the American South, my granddad had deeper reasons for distrusting such instruments. The Great Migration, of which he was part, did not take place immediately after the American Civil War, when black Americans achieved freedom. Reconstruction, the era from 1865-1880 was a time in which a new economic order was in effect in the South. With federal troops from the North occupying the Confederacy, freedmen struck new deals with their former owners, deals based agreements around credit. Sharecropping, the system under which land was rented on credit that was paid back through cotton sales during the harvest was not, initially, unjust and was a system under which former slaves could and did make money.
But something changed in 1876: the federal troops went home and sharecropping began its inexorable descent into peonage. Debt and credit agreements between tenant and landlord tied black people back to the land in ways that remade most of the institution of slavery. Legislatures, courts, sheriffs and marshals that had once been friendly and sympathetic in their reading of these agreements became punitive, draconian and biased. The spirit in which those agreements were interpreted was no longer the spirit of the Radical Republicans and their occupying army but the spirit of the proto-fascist, paramilitary irregulars who ran the “Redeemed” governments of the South, known as the Klan.
Agreements that, one year, said that a landlord could not prevent a tenant selling cotton to a competitor, the next year said the very opposite, not because their wording changed but because the interests of the people charged with their interpretation had.
If you want to understand how the left has lost its way when it beats the drum for big deficits to finance big, generous programs, it is in this way: we have lost sight of the danger of making deals with powerful people when the arbiters of the meaning of those deals are against us.
The reason leftists should not borrow from private lenders and right-wing governments; the reason leftists should not issue bonds that are to be rated by Standard and Poors and the various other private bond-raters whom even Germany’s conservative chancellor Angela Merkel indicts for their market fundamentalism and extreme-right politics is so simple that it does not even rate as a question of economics. It is just plain stupid to make agreements with people who are against you, especially when the jury of appeal for the meaning of those agreements are people who are even more opposed to you. This is not an Economics 101 lesson; this is the lesson you learn when you play Monopoly with your older cousin at the age of eight.
I once had the good fortune to enjoy a nice beverage or nine with the former finance minister of a social democratic government and talk about her experiences of meeting bond-raters in New York after her government began work on launching a childcare program. The economists at the table informed her bluntly that their jurisdiction’s credit rating would suffer a punitive downgrade if such a program were launched. So she quickly pivoted to explaining how her government had crunched the numbers and how, once established, the macroeconomic effect of the program would actually increase government revenues and repayment rates in the medium term.
The bond-raters and bankers were completely uninterested. Had she not heard them? They didn’t like socialist governments launching new entitlement programs. So why was she continuing to talk? These lenders and raters were financially secure, representing America’s “too big to fail” club on the eve of the second Bush presidency. This was not a conversation about what was profitable. This was not a conversation about what made economic sense. This was a conversation about what kind of society should exist, what kind of values people should live by. This was a conversation about ideology, not an essay in bean-counting.
Now, had this finance minister been a liberal and not a socialist, if her long-term romantic relationships were with Fortune 500 CEOs and not trade union leaders, if their kids were in the same college or prep school classes as the arbiters on the other side of the table, maybe things would have gone differently. Because even when social democrats manage to perform like Tony Blair or Mike Harcourt and mouth the correct words about sharing the values of the global capitalist class, questions of class, culture and lineage provide the structuring substratum for the conversation. A member of a multigenerational liberal lineage, representing a venerable liberal party can be understood as trustworthy in ways that a socialist doing downmarket right-wing populism is viewed with as much credibility as any other sort of apostate braggart, inevitably requiring concessions and abasement on the grand scale.
The delusional belief, on the part of the alleged left of social democratic parties, especially in Canada and the UK, that bond-raters, bankers and the investor class work to maximize profits and will choose good business over spite shows the extent of capitalist ideological hegemony. If you think those guys are honest brokers, the Kool-Aid Man is about to burst through your duodenal wall. There can be no more convincing sign of just how far up capitalism’s ass we have stuck out own heads than the members of various left fronts and socialist caucuses ranting about how, because Keynesian economics works, Standard and Poors will see what a good business case there is for borrowing to recreate a national housing program and will totally not bring down the hammer on the Canadian economy.
Even as we watch the global investor class destroy the Greek economy and, hence, any chance of getting paid their money back and, any chance of a healthy enough Greek economy for their other private investments to pan out, entirely out of spite, as some effort to make a global example of Greece, we cling to the outrageous proposition that those who hold the levers in present-day global capitalism are fair and dispassionate brokers who will happily facilitate the creation of a national energy program administered by an avowedly socialist party. And it is not like we need to look as far away as Greece. The efforts to destroy Ontario’s NDP government under Bob Rae, the capital strikes, the credit rating downgrades, the punitive FTA lawsuit against public auto insurance: we lived through those things just one generation ago.
Those who oppose socialism remind us all the time that “socialism never works,” by which they mean, “we will prevent socialism from working, through a program of interest rate hikes, capital strikes, media denunciations and dirty tricks.”
Now, some people will argue that it is really quite unfair that global financial elites are so mean and arbitrary and are willing to forego billions of dollars in potential profits and interest payments just to prevent social democratic parties from gaining too much power or legitimacy. I agree. Here’s my plan for what to do when somebody is planning to do something really unfair: come up with a scheme to stop or mitigate the effects of them doing it. But what I keep hearing from all kinds of alleged leftists is that the correct plan should be to pretend that the unfair thing isn’t going to happen and then act surprised and outraged when it does.
It’s almost as though those people don’t want the responsibility of taking power at the national level. Or something.