Will democracy survive?
It’s no spoiler to say that Robert Kuttner’s answer to the title of his book is yes, albeit a yes tempered with realism. As he judges it, the wave of global deregulation that began in the 1970s and accelerated until the crash of 2007–08 was not only catastrophic economic policy but also the first step on the long road toward illiberal leadership in the United States and Europe. Because Kuttner sees globalization primarily as a regulatory regime mostly benefiting financial institutions and big corporations, he thinks it has brought very little in the way of rising wages and improved living standards to most people.
To save democracy, Kuttner insists, the priorities of globalization must be reversed. But doing so will involve tackling institutions directly. As he warns, summoning the political will to make such change possible won’t be easy.
Cofounder and coeditor of The American Prospect and a Brandeis University professor, Kuttner begins his story shortly after World War II, when, in an effort to rebuild the West, the major powers practiced a form of managed capitalism. This facilitated collaboration and investment across borders when necessary, even while allowing each country to maintain its economic sovereignty. Applied alongside high tariffs and tight domestic controls on national currencies that obviated the need for devaluation, public international investment created a winning formula.
Until, bit by bit, it didn’t. In early 1971, as the Treasury found it increasingly difficult to honor convertibility between the US dollar and gold, the dollar fell in value. In late 1973, objecting to Western support of Israel in the Yom Kippur War, the Organization of Petroleum Exporting Countries levied an embargo that quadrupled the price of gasoline in the United States. The decades of delicate balance abruptly drew to an end, and the era of government austerity and privatization represented by Ronald Reagan and Margaret Thatcher would shortly follow. One crucial effect of the turmoil of the early seventies was that the financial industry—along with less than ideally democratic institutions such as the European Union, the World Bank, and the International Monetary Fund—grew at the expense of what might be called real democratic checks and balances to their authority.
Kuttner pulls no punches when dealing with Reagan and Thatcher, but he saves most of his ire for nominal liberals such as Bill Clinton, Tony Blair, Barack Obama, and Gerhard Schröder. Kuttner is willing to accept that the politics of the moment required Clinton’s reprehensible criminal justice reforms, but he says that when it came to the 1999 repeal of the Glass-Steagall Act, the uncritical endorsement of the North American Free Trade Agreement, or the “embrace of budget balance as an end in itself,” there was no broad democratic support for his actions. He further believes that these policies would, in turn, be key to making the 2007–08 collapse possible. And Schröder, the German chancellor who served from 1998 to 2005, governed similarly, notoriously supporting implementation of a welfare structure that drastically cut unemployment benefits.
The political establishment, Kuttner shows, has coalesced around an ideology that puts profits over general welfare. The globalization of finance has made rampant legal and illegal tax evasion by major corporations possible. People know when they’re being cheated, which Kuttner believes explains their anger at the status quo and their subsequent embrace of policies like Brexit and politicians like Jarosław Kaczyński in Poland, Viktor Orbán in Hungary, and, of course, Donald Trump in the United States.
Kuttner makes several policy proposals. What if, for instance, corporations paid the tax rates at the point where the sale of their final product occurred? Other suggestions include turning banks back “into something like public utilities,” adopting a multitrillion-dollar, eco-friendly infrastructure overhaul, aggressively enforcing antitrust law, and instituting a universal basic income. Still, on the economic front, the book leaves one question unanswered. If most of Kuttner’s fixes amount to rewinding the tape back to the early post–World War II era, what’s to prevent the same political turn that occurred in the seventies from happening again?
Another problem, more serious, has to do with Kuttner’s analysis of issues of justice and equality that are not purely financial. He initially skates over the inherently racist and exclusionary structure of many New Deal programs—for instance, by referring to them as “incomplete.” Only later does he acknowledge that they were wrongheaded. Although there is dubious empirical evidence that the white working class was actually Trump’s base, Kuttner takes it as fact. And like many critics of the Democratic establishment, he faults it for its having prioritized “bathrooms” over “wage-earning people generally.”
But appealing to the working class—which is not exclusively white, after all—does not require a program that has the effect of shunting marginalized and vulnerable people to the side. Economic and social inequalities are tightly related, and the arguments for advancing both can and should be made simultaneously.
Will democracy survive? With Kuttner, I’d like to answer yes. But returning political power to the people will require more than a warmed-over New Deal. To challenge the current status quo, we need to do more than look to the past. History can tell us how we got where we are, but it can’t provide us a foolproof guide to where we need to go. Unfortunately, neither can Kuttner.