By Ian Shapiro
If you are a student of political economy, or interested in politics, public policy, international relations or history, this is an excellent read. Shapiro has put together an excellent, concise, and readable history of the past, nearly half-century neo-liberal consensus, which has been and continues to tear apart the social fabric of Western nations. This book could have as easily been sub-titled: Saving Democratic Capitalism, Part Two (Part One having been the Depression-era New Deal, and its short-lived continuation). However, there is a fair amount of pessimism in this book, given that current European attempts at economic expansion may take too long to make a difference, politically. In other words, just as Joe Biden’s infrastructure bill had little impact on the 2024 race, Shapiro fears the clock may very well have run out on the European progressive efforts now underway to counter the damage done by neoliberalism.
The overarching theme of this book is that short-sighted, bumptious arrogance brought on by the collapse of communism in 1989 caused us to miss opportunities to create a more equitable society and to develop a rules-based world order that would have pre-empted the rise in authoritarianism and the escalating cold war we are currently experiencing.
Regarding the potential new world order, the author begins his review in the aftermath of the fall of communism with the outsized effort made by the first President Bush, not only to gain international support and UN approval for militarily removing Iraqi invaders from Kuwait, but to have the self-discipline not to go beyond the UN’s approved action and “finish the job” by invading Iraq, as pushed by many neocons. He praises Bush One throughout the book for this effort but then blames him for missing an opportunity to bring a flailing Russian state into the Western group of developed nations by helping to rebuild their economy. This failure was then exacerbated by Clinton, Bush Two, and Obama who continued to advocate for and approve the inclusion of former Soviet satellite nations into NATO, while further isolating Russia. The result was an unfettered United States that began taking unilateral actions (Kosovo, Libya, Iraq) with ad hoc “coalitions of the willing” and a renewed Cold War. Regarding unilateralism, Trump has taken this to the next level, not telling Congress, not telling the American people, not collaborating with allies, and not allowing any form of scrutiny to forestall his decision to invade Iran. The cumulative result of all of this suggests, having not learned the lessons from the aftermath of the First World War, and having ignored the lessons learned from the aftermath of the Second World War, history may be repeating itself, analogous to the 1920s and 1930s.
Meanwhile, once communism collapsed, neoliberals (having already successfully scuttled Keynesian economics), seized the opportunity to push their privatization, free trade, profit maximization and austerity (for you) agenda without fear of reprisal. They concluded that without Communism “There is no Alternative,” so accept the ineviable and learn to live with it. Meanwhile, Democratic Party adoption of Clinton’s Triangulation approach to electoral politics resulted in center-left politics consistently being pushed to the right. The result was a Democratic Party that became the party of well-educated elites, while the Republicans became the party associated with business. But that changed with Trump. “The rise of far-right populism has revealed that alternatives do exist – ones that people left behind by neoliberalism can be mobilized to support.” Trump, and his MAGA phenomenon, is one example of this.
The author extends his analysis to what is going on around the world, particularly in Europe. He reviews how these nations have drifted right, with many trying to maintain social safety nets while also practicing austerity. He bemoans the possibility of “too little to late” European attempts to recapture the lost loyalty and support of the traditional working class. He goes into some detail in describing the tensions created throughout Europe due to attempts to accommodate free markets, privatization and social supports. Interestingly, in his survey of the experiences of different nations, he points to the relative success experienced over the last few decades by Spain. Shapiro’s assessment of why Spain has enjoyed better outcomes than other Western economies is mostly based on luck. Apparently, far-right groups in Spain cannot stand one another, keeping them fractured and unable to unite politically, reminding me of the Monty Python segment in Life of Brian where a leader of the People’s Front of Judea is offended when asked if his group was the Judean Peoples’ Front, not to be confused with the Judean Popular Peoples’ Front. Good to see this is not just a leftist phenomenon. Regardless, this fracturing has helped the Sanchez governing coalition continue its work, but the author does not go into much detail about what that actual work is. Instead, he simply labels the success as “idiosyncratic,” due to the far-right’s dysfunction, assisted by a government implementing a mostly open border policy. Quoting Sanchez, “Spain needs to choose between being an open and prosperous country, or a closed-off poor country.” But Sanchez heads up the Socialist Workers’ Party. I would have liked to have read more about the author’s assessment of policy successes, not solely dependent on having a more far-sighted, liberal policy regarding immigration. Spain is famous for the Mondragon Cooperatives. How pervasive is the cooperative model in Spain generally? Has the government been able to implement socialist programs in Spain? What are those programs? What specific policies have assisted in keeping the fractured political right in check?
Another disappointment is the treatment of the “old-age dependency ratio” that plagues the northern hemisphere, particularly the west. Shapiro suggests the need to take advantage of the surplus labor market in the Southern Hemisphere. “As in the rest of Europe, without significant increases in the working-age immigrant population, Denmark will have to tax itself at ever-higher rates to sustain [its social programs].” This makes sense, but earlier in the book Shapiro talks about the destruction of private sector unions, the loss of living wage jobs, and the elimination of the post-war middle class. Jobs that are available are mostly unskilled labor, and low paying service, jobs. Meanwhile, AI is threatening jobs in the services sector and within the professions as well. Shapiro makes little to no reference to how artificial intelligence will impact an economy while presuming (or allowing the inference that) adding more immigrants will allow us to support post-retirement aging populations. Under our current system, even with adjustments, given the prevalence of low wage jobs, along with potential loss of jobs to AI, it is hard to see a scenario where increased immigration will provide enough government revenue to provide even basic support to the unemployed, not-employed, under-employed, unhealthy and retired baby boomers. Something else is needed, namely a change in our political economy.
Shapiro recommends abandonment of supply-side economics, which has never delivered on its “trickle down” promises. He suggests a “predistributive” approach rather than a “redistributive approach,” the former of which will “foster human capital.” He includes in this approach job preparation and training, education, nutrition, day care, public works projects, and a form of guaranteed employment. He is looking to save the system, which he knows is threatened, in many ways more severely than in the thirties. He defines that system as Democratic Capitalism. Granted, that is a more accurate characterization than Liberal Democracy. But there is nothing liberal about our so-called democracy, where agency is undermined in every aspect of our lives, replaced with a debilitating form of illusory individualism. But even his characterization leaves much to be desired. I would characterize our political economy as Capitalist Democracy, a democracy where corporations are constitutionally protected “persons,” the expenditure of money is constitutionally protected “free speech,” and the average citizen is a disposable production variable and part of a crop of consumers in constant need of tending, weeding, trimming and harvesting.
Going back to the “more” that is needed, it seems that Shapiro stops short of advocating a form of Social Democracy. For example, none of his proposals includes a wealth tax, an indispensable necessity to reverse rampant inequality, allow people to be productive members of society, and fund necessary social programs. A prescriptive policy is just not enough. Using Shapiro’s excellent historical account as a platform, I would suggest consideration of proposals put forward by Thomas Piketty in his book, Capital and Ideology and by Murray Bookchin in his books, The Ecology of Freedom and The Next Revolution. Their analyses hold much in common, such as the basis for current political trends of nativism and indentitarianism.
Piketty is more detailed than Shapiro in his proposals for a more just and equitable society, which he captions as “participatory socialism,” complemented by “a form of “social federalism.” Essentially, he uses history to build on the social democracy of European nations and proposes a kind of social democracy on steroids. The components of this participatory socialism can be outlined as follows:
- Co-Management structures for corporations that include 50% worker voting privileges, regardless of equity. Also, this recommendation looks to eliminate the “one share/on vote” rule, opting instead for progressive voting rights. Note: Pinketty make no provision for local/community voting privileges, a considerable oversight given capitalism’s habit of setting up shop, exhausting and/or polluting local resources, and then moving on.
- Progressive Tax System, which includes income, inheritance and wealth taxation. He makes the point strongly that all property, not just real estate, must be subject to ongoing taxation. Based upon this expansion of the tax base, he proposes to use the increased government revenue for an annual guaranteed income, a one-time payment (“capital endowment”) of 60% of average income to every citizen upon reaching maturity age, and more.
- Educational Reform, which stops paying teachers based upon the ability of localities to afford high salaries and provides opportunities for all to benefit from public education. One proposal he has would provide everyone without the means with an educational voucher, which could be used to complete tertiary education or be used for trade or vocational training.
- Voter Reform that includes vouchers to each voting citizen. Each voucher would have a certain value (Picketty proposes 5 euros as an example), and each citizen could donate that to a campaign or a cause to enable that candidate or group to fund their campaigns. This, in the author’s opinion, would give everyone a vested interest in the process. Note: this appears to be his attempt to make up for what still exists, in his proposed system, as a remote citizenry.
- Institutionalizing these and other reforms into nation-state constitutions so that they are embedded in the basic rights that citizens are endowed with, and written in such a way as to restrain personal judicial rulings based upon prejudices and biases of judges.
- Re-writing treaties to embody international cooperation through international assemblies, which can provide for common taxes (perhaps 5% of the 40-50% rates of national income that western governments currently tax) to enforce international or regional rules.
- Internationally establishing transparency protocols and setting up accounts to eliminate tax havens and to allow taxation based upon residency of shareholders and owners.
As noted above, there are problems with these prescriptions (as there would be with any prescribed system). Essentially, Piketty’s proposals still leave the citizen remote and removed from politics, apart from the proposal for campaign vouchers. It seems to me that the system would have greatest relevance if there was a way to reconcile Piketty’s formulation of what still amounts to state socialism, with Murray Bookchin’s decentralized Libertarian Municipalism. If the latter system could be made to work with some admixture of public, social and private ownership, but only to the extent that any private ownership was temporary, progressively taxed, and fostering social benefit while operating consistent with the demands of social ecology, we may be able to build a future where democracy, freedom and equality were not incompatible.
Shapiro’s book is brilliant in its historical analysis of the past half century. I highly recommend it.