Is fascism inevitable?
Can Democracy Survive Globalised Capitalism?
By Charles Kuttner
Norton Publishers, May 2018 By Phil HearseMay 22, 2018 — Links International Journal of Socialist Renewal reposted from International Viewpoint — Since the global financial crisis in 2007-8, and the consequent anti-capitalist mobilisations like the Occupy! movement and the struggle against austerity in Greece, there have been a series of books arguing for major reforms to capitalism. . Charles Kuttner’s important new book is perhaps the most radical of these, making a trenchant critique of globalised capitalism and proposing sweeping reforms to rebuild a mixed economy which works in the interests of everyone (especially workers) and pumps life back into liberal demonocracy. Basing himself on the work of his hero Karl Polanyi  Kuttner’s basic message is that unless major reforms are made within capitalism, then fascism or right-wing authoritarianism is virtually inevitable. Like Polanyi, Kuttner is a radical Keynesian, while accepting the contemporary relevance of parts of the Marxist critique. The great merit of this book is that unlike some previous pro-capitalist critics of neoliberalism, he always links the economic aspects of his argument to the social and political catastrophe that neoliberalism has brought about. Charles Kuttner poses solutions to the current economic and political crisis that are in my view mainly utopian and unworkable, but poses questions that the radical and Marxist left also struggles to answer. Most of all, he argues that when capitalism abandons its social duties to the working class and the poor, the resulting political upheaval is more likely to benefit the extreme right and fascism than radical or socialist alternatives. This of course was Polanyi’s theorisation of the 1930s. Before looking at some of the major themes of his book we should note that his account of why and how Blairism and New Labour took over the British Labour Party is mangled and incoherent. But the nature of his account of Labour sheds light on the overall weaknesses of his argument, as I show below.
The Kuttner thesisKuttner’s basic thesis is that the social effects of the destruction of post-war mixed economy/welfare state capitalism is leading to mass disaffection, and that will mainly benefit the fascists and the hard right. The only way to stop this outcome is to rebuild the post-war social welfare capitalism, and that the best hope for that is for Bernie Saunders-style progressive Democrats to conquer the party, then get into office. Kuttner starts off with an impatient dismissal of the idea that globalised markets will automatically promote democracy; the unnamed polemical opponent here is Francis Fukuyama . who after the fall of the Berlin wall predicted the advent of benign capitalism and liberal democracy everywhere. Kuttner says:
“Instead, we are witnessing a primitive backlash against both the global market and liberal democracy. In the United States, the rise of Donald Trump revealed broad disaffection with both economics and politics. The British vote to exit the EU reflects a comparable spasm of right-wing populism. Ultra-nationalists who reject both the EU and the doctrine of liberal trade are now the second or third largest party in much of Europe, and some are in government. Democracy itself is under siege…. This ultranationalist reaction is driven by resentment of immigrants and resurgent racism. But the fundamental driver of these trends is the resurrection of heedless globalised capitalism that serves the few, damages the many and breeds antra-systemic politics.”What has led to this appalling outcome? There are four linked factors in Kuttner’s account, which are roughly as follows. First, exceptionally in the history of capitalism, in the post second world war period, enlightened capitalism, prodded by wartime radicalisation of the masses, a benign synthesis emerged which linked a mixed economy (part public, part private) with a welfare state. Crucially finance capital was severely restricted and regulated and became something approaching a public good, mainly aimed at productive investment rather than wild financial speculation. This went hand-in-hand with a progressive, redistributive tax regime that undermined privilege and promoted social mobility. He says:
“In the aftermath of World War 2, having learned the bitter lessons of the 1930s, enlightened leaders built a mixed economy whose broad prosperity would build support for liberal democracy and reduce the threat of war. The post-war social contract, with national variations, demonstrated that a social form of constrained capitalism could be successful economics. In that era the economy grew at record rates, even as it became more equal.”Second, the destruction of this post-war system was not automatic or an inevitable consequence of economic developments, but a wilful and deliberate act by right-wing forces. He says: “Nothing in the structure of late 20th century economy compelled a reversion to a nineteenth century unregulated market”. Third, contemporary globalisation is profoundly undemocratic, constraining the ability of national governments to tame capital. And fourth, the collapse of contemporary social democracy and other progressive forces (he includes here the Democrats from Clinton on) in front of neoliberalism is a “disgrace”. A lot hinges here on how and why the post-war Keynesian welfare state settlement collapsed. Kuttner quotes Michael Kalecki’s 1943 article The Political Aspects of Full Employment, where the author warns of the dangers of capitalist resistance to a social welfare economy. Kalecki argued that, because of this resistance, a managed capitalism was possible in theory, but unlikely in practice. Kuttner comments that during the long boom Kalecki’s argument looked decidedly pessimistic, but “has surely been vindicated in the years since 1973”. He notes that the argument about the residual power of capitalist inside a mixed economy is fundamentally a Marxist position. Is Kuttner’s account of the collapse of post-war regulated capitalism correct? There is absolutely no doubt that the rise of the neoliberal right was not ‘automatic’, but a function of the political fight of hard-right bourgeois politicians. However he glides far too easily over the uncomfortable fact that in the mid-1970s Keynesian-style capitalism did in fact go into crisis – crisis here meaning a collapse of profit rates and the advent of the ‘second slump’ in 1975. At the time Ernest Mandel commented at the time:
“The international capitalist economy is now going through its first generalized recession since the second world war. It is the first recession to strike simultaneously at all the great imperialist powers. While the recession may be a surprise to all those in bourgeois and petty-bourgeois circles and in the workers movement who had been taken in by the claim that the governments of Capital endowed with neo-Keynesian techniques would henceforth be in position to ‘control the cycle,’ it was foreseen and predicted by our movement, …”Moreover: “The principal method by which bourgeois governments sought to slow down crises of overproduction after 1945 (they were no more able to prevent the outbreak of such crises than they had been in the past) was the expansion of credit, that is, of paper money, that is, of inflation…Finally, to the same extent that the long phase of post-war expansion reached its end, that the principal motors of expansion began to run down, and that long-term growth in production had to slow down, the contradictions of the capitalist economy asserted themselves more seriously, both within each imperialist country and among all these countries taken together (as well as between these countries and the semicolonial countries). “Boom” phases are becoming shorter and more artificial (the 1972- 73 boom was speculative to a large extent). The phases of stagnation, and even recession, are beginning to be longer.”  Whether Mandel’s exact argument about the cause of the crisis is correct is not the point. There is no question that Keynesian inflationary, anti-recession techniques reached their limit, at least for a substantial period. Austerity and then neoliberalism became the dominant attempt by the bourgeoisie to fight its way out of crisis. In times of profound crisis, the post-war settlement was always open to renewed attack from the right, so long as capitalism and the capitalist class continued to exist.
Liberal democracy under attackOne of the strongest features of Charles Kuttner’s account is his explanation of the degradation of democracy and the rise of the authoritarian right in contemporary neoliberalism. For Kuttner this takes a number of forms, and on this his argument is very convincing. First is that in a number of countries liberal democratic forms subsist but are gutted of their content. He uses the examples of Russia, Hungary, Poland and Turkey, and explains inn detail how Turkey’s Erdogan and Hungary’s Orbán have used control of the state apparatus to systematically close down centres of opposition, in the media, politics and the education system. In the case of Turkey this has involved imprisoning tens of thousands, dismissing hundreds of thousands from their jobs, closing down option newspapers and TV stations, banning Kurdish-led opposition parties and promoting harsh nationalism and Islamism. These examples show that you don’t need a fascist counter-revolution to overthrow the capitalist state to start the process of establishing right-wing authoritarianism. Second, Kuttner spends a lot of space explaining the degradation of liberal democracy in the United States, the country that is the book’s main focus. He explains how in mid-20th century America the formal structures of liberal democracy were complemented by a host of voluntary organisations with mass participation, including trade unions, political parties and many local organisations. While trade unions have come under massive attack and declined, much of the structure of civil society has also atrophied. Third, anti-democratic judicial actions – for example against trade unions – are backed up by mass reactionary mobilisations which have many parallels with classic fascism in the 1930s. Kuttner is absolutely correct on a fundamental point – there is no automatic equals sign between democracy and capitalism. In fact liberal democratic capitalist regimes have been an exception, not the rule, and became generalised in the advanced capitalist countries only after 1945. But:
“Some have argued that capitalism promotes democracy, because of common norms of transparency, rule of law and free competition- for markets, for ideas, for votes. In some idealized world capitalism may enhance democracy, but in the history of the West democracy has expanded by limiting the power of capitalists. When this project fails, dark forces are often unleashed. In the 20th century capitalism nicely co-existed with dictatorship, which conveniently create business friendly environments and repress independent worker organizations...Hitler had a nice understanding with German corporations and bankers, who thrived until the unfortunate miscalculation of World War II”.Look at China, says Kuttner. Capitalism has hardly created democracy in a one-party dictatorship that represses independent work organisations. They are not becoming more like us. We are becoming more like them.
Explaining Trump and Hilary ClintonKuttner’s explanation of Trump and Hilary Clinton’s presidential race will cause some raised eyebrows. He argues that Hilary Clinton refused point blank to champion the interest of the working class, but instead put ‘easier’ issues of oppression to the fore and even counterposed them to workers’ interests. He quotes a rally with a Hilary-friendly audience in Henderson, Nevada where – taking aim at Bernie Sanders - she led an audience response session, asking:
“If we broke up the big banks tomorrow, would that end racism? Would that end sexism? Would that end the oppression of the LGBT community? Would that make people feel more welcoming to immigrants overnight?”To every rhetorical question the audience shouts ‘no!’ in response. Kuttner calls this ‘duelling’ (ie counterposing) the interests of class, race, gender and identity. He claims that identity issues and questions of sexism and racism have a ready audience among more liberal Democrats, including in the financial elites, than the straightforward issues of class exploitation and oppression. Once Bernie Sanders was defeated in the primaries, the Democrats abandoned bread and butter working class issues, like pay and jobs. This seems an entirely plausible argument. But Kuttner doesn’t at all carry out the opposite counterposition. No, he says, the Democrats were right to raise issues of racism and sexism but needed to articulate them with economic and social issues that affected every section of the working class. The figures are truly shocking. White working class voters supported Trump by a margin of 67% to 28%. Barrack Obama, because of his more critical profile, did much better among every section of the working class.