Wayne O'Leary

Stuck in Neutral

There’s a reason why the public is in what seems to be a permanently sour mood. The country has basically been in a political holding pattern for the past two decades, unable to move forcefully in any direction. Issues are raised, but are never addressed; problems are identified, but are seldom resolved.

This state of affairs is usually explained as a result of the US being a “50-50” country. If only the right (or the left) could be made to see the light, or forced to give in, progress could be made. But that never happens.

Instead, we fight the culture wars, which are, in a sense, proxy wars on behalf of opposing establishments. The establishments are economic, representing different aspects of American capitalism. The Republicans are stand-ins for the interests of older, traditional capitalism — the fossil-fuel industry, large manufacturing, agribusiness, et al.— while the Democrats represent newer capitalist enterprise — high-tech, communications, internationalized finance. Both are represented on Wall Street, formerly an exclusive GOP preserve, but one where Democrats are increasingly making inroads. Business, once allied with the GOP, now has a foot in each camp.

Fundamentally, both parties are political branches of the same economic system. As such, they each have an interest in diverting public attention from substantive economic issues. Distraction is the name of the game.

Distraction in this case takes the form of concentrating political energy on social issues, which, in the American context, means race and gender. Republicans campaign against the supposed threats posed by emergent Black and Brown populations, and by gay and transgender minorities, the latter group vastly exaggerated in number and evil intent in order to frighten stirred-up White majorities. Democrats also play the race and gender cards, promoting fears of an overblown White-supremacist bugaboo on the one hand and intractable male resistance to female aspirations on the other.

On the Republican side, nothing much has changed since the 1950s. Fascistic social conservatism has coexisted uneasily in the GOP with economic conservatism for years, dating back at least to the days of Joe McCarthy and Dick Nixon; it’s been there all along to be exploited.

For Democrats, the preeminence of social issues — what we now call identity politics — is a newer phenomenon; it’s an outgrowth of the noneconomic liberalism of the 1960s, which displaced economic populism in the post-New Deal party of Roosevelt during the last decades of the 20th century and reached full flower in the first decades of the 21st.

Portions of the Democratic Party (organized labor, for example) still pine for the long-lost heyday of anti-corporate populism, but in recent years, they’ve been outvoted or shouted down. These days, the corporations rule, so party activists put their energies into racial or sexual politics, where they feel they can have an effect. Democratic idealists no longer seriously try to reform Wall Street and corporate America; they work instead at ensuring that our corporate overlords employ and promote sufficient numbers of women and minorities. It’s a good look for the corporations and a feel-good alternative for the liberal political class.

Both major parties now do the bidding of the Fortune 500. Republicans subsidize the corporations; so do Democrats. Republicans deregulate the corporations; so do Democrats. Republicans cut corporate taxes; so do Democrats.

The corporations, meanwhile, exercise a form of public bribery. If their needs (or desires) are met, they will create jobs and hire the unemployed. Regrettably, however, those jobs will not provide the wages and benefits needed to keep up with the rising cost of living; the stock market in particular, sensitive to labor costs, would object. Workers, therefore, are always playing catch-up, and the comparative weakness of the union movement (In contrast to corporate management, it’s rarely given the full, uncritical support of government.) means it doesn’t have the economic clout to be an effective countervailing force.

Every administration, more or less, claims a unique answer to the inevitable dislocations of the capitalist system. Whether it’s Reaganomics in the 1980s, Clintonomics in the 1990s, Trumponomics in the 2010s, or Bidenomics today, presidents take credit for corrective adjustments to the natural workings of the economy. Usually, however, they are carrying out the wishes, explicit or implied, of the corporate establishment by subsidizing its reckless behavior and boom mentality. Typically, government initiatives bail out the modern owners of capital in bad times of their own making and clear the way for them to express their avarice during periods of euphoria. Workers, pawns in the game, are the losers.

One illustration of the foregoing scenario in action was Clintonomics, which revolved around low interest rates and free-trade expansion (NAFTA, pntr with China); it’s credited with producing 23 million jobs, but many paid low negotiated wages due to the intimidation factor of corporate outsourcing, and many others were just the temporary result of the dot-com and housing bubbles of 1997-2007. The latter was created by the simultaneous deregulation of banking and finance, done at the behest of corporate interests, which led to the subsequent financial crash and the Great Recession.

Trumponomics was much the same: massive, record-breaking tax cuts demanded by and received by corporations that then reciprocated with lots of jobs that paid relatively little, thereby institutionalizing inequality. The work of economists Thomas Piketty and Emmanuel Saez has recorded the steady erosion of worker incomes from Clinton to Trump (really, since Reagan) and the transfer of rewards to business and the upper classes. The onset of the latest iteration of American capitalism, Bidenomics, was supposed to change things. So far, it hasn’t.

Government economic policy is geared to producing jobs (considered an end in itself), which Bidenomics has sought to accomplish through stimulative spending. This has created millions of jobs and radically reduced unemployment, much of it through government-subsidized corporate hiring. Yet, wages (always the key variable) have remained static and insufficient, ceasing to grow after a brief upsurge during the pandemic worker shortage of 2021-22.

But if companies are no longer giving raises in a union-free environment, they are eagerly increasing retail prices and expanding profit margins, according to data from the research firm FactSet and the Producer Price Index. Moreover, they’re using the accepted existence of “inflation” (something they are primarily causing) as cover or justification.

Under American-style capitalism, some things never change.

Wayne O’Leary is a writer in Orono, Maine, specializing in political economy. He holds a doctorate in American history and is the author of two prizewinning books.

From The Progressive Populist, September 15, 2023

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