Since last week’s crash there have been increasing murmurs of dissent amongst the ruling class. In the face of dismal economic data throughout the advanced capitalist countries (even in Germany) the “cure” of austerity is looking worse than the disease of debt.
It is becoming increasingly obvious, even to the greed-addled minds of Wall Street, that the holy trinity of inflation, bond-vigilantes, and investor confidence with which the global austerity program has been justified are of less significance than the real problems of a liquidity trap and a lack of effective demand. The voices of dissent range from former US Secretary of the Treasury/Goldman Sachs partisan/TARP Orchestrator Henry Paulson, to banker and former treasury advisor Steven Rattner, to the sainted Warren Buffet, CEO of Berkshire Hathaway. With varying degrees of enthusiasm these dissenting voices argue that the Republicans’ anti-tax dogma has to be reconsidered if the US debt is to be repaid.
However the possibility of a change in the government policy of advanced capitalist countries still appears a distant prospect. A recent article in the New York Times reported on internal White House economic policy debates. The article describes how the pro-austerity camp, lead by campaign fundraiser and strategist David Plouffe and former corporate lobbyist and chief executive of JPMorgan Chase (now Obama’s Chief of Staff) William M. Daley, has maintained dominance over policy in spite of the arguments by anti-austerity members of the Obama administration such as Third-Way Democrat Gene Sperling. Given the continued dominance of the pro-austerity faction, a program of stimulus spending has “little support” within the administration.
The Plouffe-Daley faction justify their pursuit of austerity by pointing out that it is in agreement with the common sense of the “centrist” voter. Namely that the finances of the government are like those of a household, and that austerity will allow for a return to economic expansion. However these apparently shrewd judges of the public mood fail to seriously consider their own common sense assumptions, namely that austerity will actually lead to recovery, and that common sense is something set in stone. The first point is unsurprising given the dearth of economic expertise in the administration, and the right slant of those economists who remain. The second point is a less forgivable mistake to be found in a nest of spin-doctors and swindlers.
The concept of hegemony teaches us that common sense is not set in stone, but is instead an ideological battle ground which is not fought over on an issue-by-issue basis and judged according to the discerning faculties of the centrist voter, but is rather fought over years and decades, and is affected by powers of persuasion, class composition, levels of organization amongst the classes, inter-class alliances, and material conditions. The real issue is not that the centrist voter believes in austerity, but that the administration believes in that same common sense.
In Europe the situation appears little better. France and Germany’s leaders have called for a “Golden Rule” of austerity principles to be enshrined in the constitutions of european countries, a strengthening of the framework laid out when the euro and the ECB were created. This absurdity will certainly not be closely observed, except to be used a weapon of the powerful to bludgeon the poor at opportune moments. Any close adherence to the “Golden Rule” would effectively be a vote to end capitalism. Unlike the “Golden Rule” a eurozone-wide “Tobin tax” and a harmonization of corporate tax rates amongst Germany and France at least have the potential to improve the situation (whether this will be a harmonization downward remains to be seen).
Opposition to the austerity agenda amongst the ruling class is growing, yet this campaign to change common sense faces many uphill battles. If it truly becomes the case that to fight austerity is to fight a constitutional principle then the hard times are likely here to stay. The question is whether the ruling class will become sufficiently divided for the working class to exploit their divisions and move politics towards a more positive direction.