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There’s no return to the ‘old normal’

Despite what some commentators might contend, Biden’s election represents no return to the liberal Third Way consensus, writes KEVIN OVENDEN

A RETURN to “normality” — even a “restoration.” Variations on that theme dominated coverage of Joe Biden’s inauguration.

It will have chimed with the immense relief of hundreds of millions of people in and beyond the US at Donald Trump’s ousting.

But among those millions are many, and not only on the radical left, who know full well that it was the “normal” that got us here in the first place.

Any tempted to triumphalism about a restoration after the chaos of “the populist years” or about the birth of a new gilded age would do well to consider this uncomfortable fact. 

Without the pandemic, Trump’s catastrophic handling of it and the resulting economic devastation it is more than probable that he would have squeezed a victory through the undemocratic electoral college.

There is an amalgam of Establishment responses. On the one hand is boosterism and talk of an epoch-defining moment comparable to Bill Clinton’s presidency with its Third Way varnish upon turbo-charging neoliberal globalisation and renewing the Reagan-Thatcher regime he inherited.

On the other, there is caution, with emphasis upon the scale of the crises miring the US and the global system: the pandemic, 1930s-style economic collapse and environmental destruction.

There’s more to this than tamping down expectations. Though some have set the bar extremely low in encouraging us to ululate that the new US president does not show signs of narcissistic personality disorder, will not always lie and will ensure that any violent incursions will be done by the state he commands and not by part of his political base.

You do not have to be a gnarled activist who came into the socialist movement opposing the Vietnam war to take proclamations of “truth returning to the White House” with a lorry-load of salt.

Former Labour prime minister Gordon Brown is among those serious people trying to balance urging Biden to restore the US to its “leading role in the world” with caution about the scale of the “triple crises” and recognition that the world has changed in the last 25 years.

In his advice this week to Washington, he wrote: “Nor should we expect any attempt by Biden to repeat Bill Clinton’s global Third Way of the 1990s — an over-triumphalist attempt, at a time of undisputed American hegemony, to lock every country into an updated ‘Washington consensus’.”

Calling that period “over-triumphalist” is quite an admission by a key figure in New Labour who announced back then from the Commons dispatch box that he had abolished boom and bust.

The gravity of today’s crises is all the greater because they build upon the unresolved discontents of the last one in 2008, when Brown was prime minister. 

They go further back to the Clinton-Blair period that some are hoping will be resurrected, not least leaders of ailing social democratic and Labour parties in Europe.

There is no ground for such hope. The Third Way spin on capitalist globalisation rested upon three things. 

First, there was the exhaustion and demoralisation of the left and labour movements on both sides of the Atlantic.

The centre left was losing elections everywhere — notably in Britain in 1992, despite Labour having purged the left in personnel and policy. That was supposed to be the path to victory.

Clinton’s success that year appeared to offer a panacea of political technique and policy triangulation that quickly spread throughout other centre-left parties, especially after Tony Blair’s victory in 1997.

Second, there was a popular swing from the early 1990s against Thatcher-Reaganism, even if it latched on to talk of “excesses” or of modernisation against old, conservative values.

In countries as varied as the US, Germany and Greece, mass opinion moved modestly yet broadly in a liberal, social democratic direction. 

On the way it met in the second half of the 1990s centre-left parties moving in the opposite direction. 

That was above all in abandoning the post-war social-democratic model that had been the earlier “third way”: between capitalism and socialism.

Third, despite a nasty but short recession at the beginning of the 1990s, the collapse of the other contender in the cold war, the Soviet Union, provided space for the expansion of the victorious side.

There was the two-step advance into eastern Europe, military and economic, Nato and EU. A meaning of Nato’s war on Serbia in 1999 was precisely that it was a Nato war, not under even the fig leaf of the United Nations.

Global trade agreements abroad that favoured the capitalists of the strong; privatisation and enhanced corporate power at home; the extension of US-led international institutions imposing the model almost everywhere.

It was not a return to the post-war boom. It came with a greater flow of wealth upwards. 

In the advanced capitalist countries bad jobs replaced good ones. There were increased pressures on working people, especially if needing welfare benefits. 

It also meant one financial bubble after another. That led ultimately to the crash of 2008.

The bank bailouts were used as justification for a decade of austerity. There was to be a return to “normal.” 

It widened the gulf between the rich and the rest and primed another round of financial speculation rather than productive investment.

This week the Financial Times newspaper confessed that it had been wrong to advocate the austerity that proved so disastrous. Its excuse was that it was only following the consensus.

The Keynesian economist Simon Wren-Lewis pointed out that that consensus was of institutions such as the IMF, World Bank, OECD and European Commission. Politically moderate but thinking economists argued against it.

The new institutional consensus is that at this time of emergency and still cheap money governments should borrow big and hold off trying to cut their deficits until a recovery is well under way.

There is scant capitalist objection to Biden’s Covid and stimulus spending plan that has been split into two phases to make it easier to get through partisan Republican and conservative-Democrat opposition in Congress.

The numbers sound big. But all the numbers have been big over the last 10 years. The bigger numbers are that US economic activity is a quarter down on last January. The economy is 5 per cent smaller. Employment has fallen by 25 per cent.

Meanwhile, enormous cash injections by the Federal Reserve Bank have not led to productive investment by companies but have fuelled a stock market surge instead, including of in-effect bankrupt companies, further widening class inequalities.

So just as with headlines about the “eye-watering” £400 billion borrowing by the Tory government in Britain, we should not be mesmerised by big budget announcements in Washington.

The reality is that these amounts do little more than provide a life-support machine for an extremely ill patient. 

The issue is whether there is to be truly radical change away from the conditions that cause the illness and in favour of working-class people.

Here Labour’s official response and its thinly veiled attempt to trail a Biden-Starmerism drawing upon 1990s Clinton-Blairism is incredibly slight.

Shadow cabinet members have written and briefed journalists that they are looking to learn from Biden’s electoral success. 

So far it boils down to the most light-minded of the thinking of 25 years ago. It seems trapped in trauma from the last five years at the near election victory of Jeremy Corbyn in 2017 and at the loss of seats in 2019 that was partly caused by Labour people wanting to stop him ever becoming prime minister. 

You can produce various analyses of how Biden was able to win rustbelt Pennsylvania and the new metro area of Georgia, and then project some political formula if you want. 

But the bottom line is that he did actually campaign in the rustbelt and Hillary Clinton didn’t. It isn’t that much of a mystery.

And concluding from it, as Labour seems to have done, that you need to adopt the US practice of being videoed in front of the national flag really does not do justice to any analysis useful for the labour movement. 

Nor is the pronouncement of holding off deficit reduction until a recovery is under way at all a radical response to the existential crises. It is the official consensus. Trump agreed with it. Just as the Third Way was the consensus and Labour embraced the austerity consensus a decade ago.

It is time to break consensus. It is the rage against the old normal that not only, unfortunately, produced Trump and similar characters. It was also reflected in the surge around Bernie Sanders and Jeremy Corbyn.

The hoped for liberal-capitalist restoration is predicated upon having first seen off that surge at least in electoral politics and at least for now.

But underlying that upswing of 2015-18 were two more fundamental things. There was and is increasing rejection of a failing system and openness to radical answers. There was also a desire for a different, insurgent politics arising from a succession of movements. Black Lives Matter stands out in the US.

The Democrat machine may spurn all that, but Biden largely owes his victory to it. For the working-class movement it remains central to winning a real transformation out of this crisis — now, not in 2024 or what have you. 

If that has to be done through the unions and social movements with the Labour leadership thinking it’s about waving a flag and a social media strategy, so be it. 

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