When the world financial system looked as if it might collapse in the autumn of 2008, many people assumed that there would have to be drastic changes in the wake of the crisis. Nothing would ever be the same again: the neoliberal philosophy which had spawned the financial meltdown was now irreparably damaged, and a shift to the Left in western politics would be sure to follow.
Barely a year later, things appear in a very different light. The political and media establishment in Ireland have managed to shift the focus of public debate away from the bankers and property developers who gave us the recession: instead of asking whether we should be forking out billions to cover the gambling losses of a wealthy elite, we spend our time discussing ways to reduce public spending, while the option of raising taxes on wealth is not even mentioned. Across the Irish Sea, the Tories look set to win power as they promise a similar jihad against the public sector. The financial system has brushed aside calls for tight regulation and continues to dispense bonuses that would give you vertigo if they were stacked up in a pile of dollar notes.
Those who expected wholesale reform to follow the crisis must find this picture both confusing and demoralising. But before we throw in the towel and decide that the Left has missed the opportunity of a lifetime, we should ask ourselves if there might be a faulty assumption at work here. Does a major economic crisis always and inevitably benefit the Left? History would suggest not. Just consider the Great Depression of the 1930s – so far, the biggest economic crisis the capitalist world has had to grappled with – and recall the effect it had on four of the biggest capitalist states: Germany, Britain, France and the USA.
Germany: a strong if bitterly divided labour movement found itself in a much weaker position after the Wall Street Crash, as soaring unemployment reduced the ability of those workers who still had jobs to take effective strike action. A general strike by German workers had defeated the attempted far-right putsch of 1920. But when Hitler came to power in 1933, there was no organised resistance by the left-wing parties, which were completely annihilated within a matter of months.
Britain: the Labour Party found itself in office as the crisis took effect. Its prime minister, Ramsey MacDonald, and his chancellor of the exchequer, George Snowden, went along with the conventional economic wisdom, which prescribed huge cuts in public spending as the solution (sound familiar?). MacDonald and Snowden came up against fierce opposition from Labour MPs and activists, who asked why a party meant to uphold the interests of the working class was now going to slash the already-pitiful levels of unemployment benefit. Rather than abandon their plans, the two Labour leaders defected to form an alliance with the Tories – the so-called “National Government”. They were able to get their pound of flesh from unemployed workers, as the Tory-led coalition went on to thrash the Labour Party in a subsequent general election. The “National Government” held power easily for the rest of the decade.
France: there was no immediate shift to the Left as a result of the Depression. But having seen what happened to the German Left in 1933, activists from the left-wing parties demanded a united response to the threat of fascism in France. This call for unity led to the formation of the Popular Front alliance, which won the 1936 election. After the left-wing electoral victory, millions of French workers went on strike and occupied factories: the negotiations between employers, government and trade unions which followed led to major social reforms, including the first mandatory paid holidays (the upper crust who lived on the French Riviera were horrified when trainloads of Parisian workers descended on their favourite sunbathing spots the following summer).
USA: in the first presidential election after the Depression bit home, Franklin Roosevelt defeated the Republican incumbent Herbert Hoover. Although the electorate had rejected Hoover’s commitment to liberal, free-market economics as they watched bread queues and soup kitchens sprout all over the richest country in the world, it was to be some time before the Roosevelt administration set about implementing the programme of change which became known as the New Deal. Pressure from below – in particular, the mobilisation of the trade union movement across the industrial heartlands of the USA, with firms that had never been unionized rocked by strike waves – was crucial.
From that brief survey, it should be clear that there was no automatic rise in support for left-wing parties and ideas as a result of the 1930s crisis – never mind a direct translation of those ideas into government policy. The political impact of the Great Depression could not be simply read off the developments in the economy: it was filtered through the existing political context in each country. If the Left benefited from the crisis in one country or another, it was because there were parties and social movements in a position to seize the opportunity. The lessons for today should also be obvious: we can’t expect the current economic depression, by itself, to solve the problems which have bedeviled the Left for at least a couple of decades. There is no substitute for the hard work of coming up with strategies for change that are both radical and realistic, and building movements that can put those strategies into effect.
That doesn’t mean that the crisis hasn’t changed anything for the Left. Although it may take a while for this to filter through, even to left activists, we are now dealing with a completely different terrain that offers new opportunities that could barely have been imagined just a couple of years ago. John Lanchester put his finger on it when he reflected on the immediate cue for the global depression, the collapse of the US investment bank Lehman Brothers:
“The most important lesson of Lehman was that it established, irrefutably, the fact that the big Western banks are now Too Big to Fail. Their size, and their interconnectedness, is such that these institutions can’t be allowed to die a natural death, whatever happens. These banks have an implicit guarantee that if they ever get sufficiently deeply into trouble, the taxpayers will be there to bail them out … There was a brief moment when the general horror at the new state of affairs seemed likely to lead to change; but as stock markets and liquidity have recovered, that moment is receding, and we seem to be settling back into the status quo ante, with a few cosmetic changes about bonuses. It has been a masterful fight-back by the big banks. We the paying public can’t do anything much except admit defeat and settle back for the next set of bills.”
It doesn’t seem likely that the “paying public” will do anything of the sort, once they have found their balance again after the hurly-burly of the last year and a half. Sooner or later, people will realise that they are now expected to provide a financial guarantee to the entire banking system, no matter how many trillions the “masters of the universe” piss down the drain. In return, the bankers are prepared to offer precisely nothing: they have to be allowed to carry on doing what they’ve been doing without any interference. Even if a new system of regulation was imposed by governments, it surely wouldn’t be long before the banks and hedge funds found a way around it.
The conclusion is staring us in the face: the only way to end the practices that gave us the great financial meltdown is to bring the whole banking system under social ownership and control. If the Left is looking for a demand to put at the heart of its agitation, this should be it: the point where a populist, tub-thumping issue that strikes an immediate chord with millions can open up the prospect of a complete transformation of our economic system.
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