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The New Depression

The business and political elite are flying blind. This is the mother of all economic crises. It has

We are living through a crisis which, from the collapse of Northern Rock and the first intimations of the credit crunch, nobody has been able to understand, let alone grasp its potential ramifications. Each attempt to deal with the crisis has rapidly been consumed by an irresistible and ever-worsening reality. So it was with Northern Rock. So it was with the attempt to recapitalise the banks. And so it will be with the latest gamut of measures. The British government – like every other government – is perpetually on the back foot, constantly running to catch up. There are two reasons. First, the underlying scale of the crisis is so great and so unfamiliar – and, furthermore, often concealed within the balance sheets of the banks and other financial institutions. Second, the crisis has undermined all the ideological assumptions that have underpinned government policy and political discourse over the past 30 years. As a result, the political and business elite are flying blind. This is the mother of all postwar crises, which has barely started and remains out of control. Its end – the timing and the complexion – is unknown.

Crises that change the course of history and transform political assumptions are rare events. The last came in the second half of the 1970s, triggered by the Opec oil price spike and a dramatic rise in inflation, which marked the end of the long postwar boom. Its political consequences were far-reaching: the closure of the social democratic era, the rise of neoliberalism, the discrediting of the state, the embrace of the market, the undermining of the public ethos and the espousal of rampant individualism. For the next 30 years, neoliberalism - the belief in the market rather then the state, the individual rather than the social - exercised a hegemonic influence over British politics, with the creation of New Labour signalling an abject surrender to the new orthodoxy.

The modalities of this present crisis are entirely different. Extreme as they may have appeared to be at the time, the economic travails of the 1970s were progressive rather than cataclysmic. The old system did not hit the wall, but became increasingly mired and ineffectual. What swept the social democratic era away was not the force de frappe of an irresistible crisis but that it was accompanied by the steady rise of a new ideology and political force in Thatcherism - and Reaganism in the United States - and its victory in the 1979 general election.

In contrast, the financial meltdown of 2007-2008 demolished the neoliberal era and its assumptions with a suddenness and irresistibility that was breathtaking. The political class, from New Labour to the Conservatives, is standing naked. They are still clinging to the wreckage of their old ideas while acknowledging in the next breath that these no longer work. The financial crisis is a matter of force majeure; political ideas and discourse change much more slowly, even when it is obvious that the old ways of thinking have become obsolete. Meanwhile, there is no political alternative waiting in the wings, refining its radical ideas in think tanks ready to storm the citadels of power as there was in the 1970s, notwithstanding the fact that think tanks are now far thicker on the ground. Instead, it has been the mainstream which senses that neoliberalism no longer works, fatally undermined by events and, ultimately, the author of its own downfall. This crisis will have the most profound and far-reaching political consequences and will in due course transform the political landscape, but it remains entirely unclear in what ways and when that might be.

In all these senses the financial meltdown has far more in common with the Great Depression than the Great Inflation. When the financial crisis consumed Wall Street in 1929 and proceeded to undermine the real economy, engulfing Europe in the process, it was not accompanied by a radical shift towards Keynesianism, but rather a reassertion of sound finance orthodoxy, followed in due course by the adoption of protectionism. The political mainstream as represented by Labour's Ramsay MacDonald and Philip Snowden and the Conservative Stanley Baldwin all sang from the same hymn sheet. Only Keynes and a faction of the Liberal Party enunciated a plausible alternative. Eventually a programme of fiscal deficits and public works was pursued by Franklin D Roosevelt in the United States, but in Britain Keynesianism was not properly embraced until rearmament and the approach of war. Indeed, it was not until 1945 that the combined legacy of war and the Depression belatedly resulted in a fundamental political realignment and the birth of the social democratic era.

The Grim Reaper has finally spoken:

a boom pumped up by credit steroids and a bust that takes us back to the 1930s

Since the financial meltdown dramatically intensified in September 2008, Gordon Brown has managed to ride the economic storm rather more successfully than the Conservatives, or, for that matter, than Tony Blair would have done. It is Vincent Cable, the Liberal Democrats' econo­mics spokesman, however, who has indubitably emerged as the political sage, unafraid of confronting neoliberalism's shibboleths, demonstrating a clarity of mind and the political courage to tell things as they are, in a way that has escaped all other prominent politicians. Although Brown was the economic architect of the past decade and was responsible, more than anyone else, for its excesses and was shaping up to be a rather disastrous Prime Minister, he displayed last autumn, at least initially, an agility of mind and nimbleness of foot that defied the expectations of those who believed he was capable of neither. He revelled in the sense of purpose and vision offered by the crisis, seemingly prepared to jettison the thinking that had imbued his previous decade as chancellor.

But Package Part I, widely hailed at the time and imitated elsewhere, proved woefully inadequate, and the financial system remains frozen. Meanwhile the waters are rising up the Good Ship UK, threatening to transform the banking crisis into a fiscal and currency crisis. It seems unlikely that, if that should happen, Brown will survive the next election.

Even if it does not happen, Brown faces a serious problem about his own past role, because Britain’s crisis has been greatly exacerbated by the soft-touch regulation, easy credit, runaway house inflation and overexpansion of financial services over which he presided and for which he is accountable. So far he has refused to admit or accept responsibility for his actions – he initially had the temerity (or foolhardiness) to argue that the UK was better placed than other countries to deal with the credit crunch, even though it has become abundantly clear since that the very opposite was the case. So while Brown remains in denial, the plausibility of his new turn, and his understanding of what is entailed, must be seriously doubted.

Indeed, after its initial boldness, the government now seems trapped by its past actions and its former ways of thinking. Brown's failure to accept the need to nationalise the banks suggests the limits of his new-found political courage, and his inability to embrace the logic and imperatives of the new situation. He is still a prisoner of his old timidity and his conversion to the neoliberal cause. It is his good fortune that the Cameron Conservatives have been hugely wanting in their response to the financial meltdown. Having spent his first years as leader of the opposition seeking to reassure the country of his centrist credentials, David Cameron, at the first whiff of gunfire, has turned on his heels, rejected Keynesianism and, at the very moment when events have shown Thatcherism to be deeply flawed and historically out of time, headed back to the Thatcherite womb of sound finance, arguing that a government must balance its books and that deficit financing, Keynesian-style, is reckless and irresponsible.

But all this, it must be said, is the small change of politics. The crisis threatens in time to sweep away the political world as we know it and those who fail to grasp its magnitude and meaning. Far more is at stake than the fortunes of a few leaders, be their name Brown or Cameron. Who knows where things will be this time next month, let alone next year or, indeed, in 2012? The financial meltdown now rapidly plunging the western world into what increasingly looks like a depression is the first great crisis of globalisation. There was plenty of warning. The Asian financial crisis of 1997-98 proved a salutary lesson about the dangers posed by huge capital movements that were subject to precious little regulatory control. Three economies capsized (South Korea, Thailand and Indonesia) and others stood on the brink.

There were other earlier warning signs, notably Mexico in 1995, when GDP fell by 9 per cent and industrial production by 15 per cent, following a run on the peso. These crises were blamed on the immaturity and fecklessness of national governments - in the case of east Asia on so-called crony capitalism (which, incidentally, prompts the question of how we should describe Anglo-American capitalism) - which the International Monetary Fund obliged to engage in swingeing cuts in public expenditure as a condition of their bailouts.

Yet what if such a crisis were to be no longer confined to the peripheries of global capitalism but instead struck at its heartlands? Now we know the answer. The crisis has enveloped the whole world like an uncontrollable virus, spreading from the US and within a handful of months assuming global proportions, at the same time mutating with frightening speed from a financial crisis into a fully fledged economic crisis. In so doing, it has undermined the foundations on which the present era of globalisation has been built, namely scant regulation, the free movement of capital, a bloated financial sector and immense reward for greed, thereby bringing into question the survival of globalisation as we now know it.

Enormous international flows of unregulated capital have capsized the international financial system - with disastrous consequences for the real economy - in a manner akin to the effect of a roll-on, roll-off ferry shipping too much water. We can now see the cost of free-market capitalism and light-touch regulation. Iceland may provide an extreme example of the consequences of the credit crunch but it also illustrates the dangers facing the more vulnerable economies, the UK included, in a deregulated world where the market rules: a small, open economy; a large, internationally exposed banking sector; an independent currency that is not a serious global reserve currency (of which there are only three); and limited fiscal strength. These propositions have constituted the core economic beliefs - from Thatcher and Lawson to Blair and Brown - that have informed policymaking over the past three decades and without which, it was claimed ad nauseam, an economy could not succeed. Heavy-handed regulation and an overbearing state would serve only to frighten off capital and condemn a country to slow growth, stagnation and global marginality. Now we know the fallaciousness of these claims and the consequences of "letting the market decide".

Like Iceland, albeit not as extremely, Britain has been living in a fool's paradise. A failure to regulate the banks and other financial institutions in any meaningful fashion allowed bankers to behave in a grossly irresponsible and avaricious fashion; a boom that was made possible only by a government-enabled credit binge in which people borrowed recklessly; a bloated financial sector that grew to represent over 8 per cent of the total economy and which was found to have been built on foundations of sand; an overvalued currency that made manufacturing exports uncompetitive and thereby resulted in an unnecessary and counterproductive contraction in the manufacturing sector which must now be reversed; an absurd belief that boom and bust had been banished for ever, allowing the banks to turn a blind eye to the inflating of various asset bubbles and display a profound ignorance of the history of capitalism; a persistently chronic current account deficit that can no longer be compensated for by inward capital flows; monstrous salaries for those at the top of the financial and corporate tree, which were justified in terms of a trickle-down effect that remained a chimera, and as the reward for risk which was, in fact, a reward for greed and failure; growing inequality, which was justified in the name of a more competitive economy accompanied by declining social mobility in the cause of an open and flexible labour market; and, finally, the mushrooming of what can only be described as systemic corruption on a mega-scale as the state ignored the gargantuan abuses of those who ran the banks and other financial institutions, while regulatory authorities willingly colluded in their excesses.

This is the sad story of the New Labour era.

The ultimate cost of this debacle as yet remains unknown. What began as a financial crisis is threatening, as the government seeks to bail out a bankrupt financial sector, to become a currency crisis, with foreign investors concerned about the effects this might have on the value of sterling, and perhaps even worse, ultimately a sovereign debt crisis, with growing doubts about the UK’s financial viability. Until there is some end in sight to the financial crisis, and a line can be drawn under the banks’ indebtedness, we will not know the answer to these questions. One thing is clear, however: whatever the limitations of the social democratic era, it was never responsible for such an all-enveloping and cataclysmic crisis as the one that the neoliberal era – and the Thatcherites and New Labour – have managed to produce. After all the boasting about the virtues of the Anglo-American model of capitalism, the Grim Reaper has finally spoken: a boom pumped up by credit steroids and a bust that takes us back to the 1930s.

There are two key aspects to this crisis: national and global, with the latter promising to be rather solutions are concerned, we are in uncharted territory, with close to zero interest rates, a Keynesian-style fiscal boost that may prove inadequate to the task and could well fail, a hugely indebted financial sector that threatens to leave us with an enormous future tax burden and a greatly expanded national debt. All of this, furthermore, must be addressed in the context of an open-market regime which is very different from those of previous eras, and which could render Keynesian-style national solutions ineffectual. What would greatly assist any national recovery is a co-ordinated global response to the crisis; in other words, global co-operation at the highest level. This cannot be ruled out, but it would be a brave person that would bet on it. It was exactly the lack of international co-operation that bedevilled recovery in the 1930s and eventually led to the Balkanisation of the world into regional currency and trading blocs.

The most important single question in this context is the relationship between the US and China. Will the Obama administration be able to resist the slippery slope of creeping protectionism? Will arguments over the revaluation of the Chinese renminbi be resolved amicably? If the answer is in the negative, then the global outlook will be very bleak indeed and so, also, as a result, will be the prognosis for national recoveries. Indeed, the prospects would look disturbingly like those of the 1930s, with growing international antagonism and friction and a continuingly intractable crisis at a national level, with only the very slowest of recoveries.

Around the world there is growing evidence by the week of a resort to national solutions at the expense of others: measures to subsidise industries that are in severe difficulties; the Buy American clause that was inserted by the House of Representatives into Barack Obama's latest package (though since weakened); the industrial action in Britain against foreign workers; the withdrawal of banks to their national homes; the attack by Timothy Geithner, the US treasury secretary, on China as a currency manipulator. No Rubicon has been crossed but the warning signs are clear. A retreat into protectionism and beggar-thy-neighbour policies will deliver the world into a second Great Depression.

So what will be the political effects of the financial meltdown? Some are already evident. Just as the Great Inflation of the 1970s played to the tunes and concerns of the right, with its invocation of the market, the New Depression suggests the opposite, the inherent limitations of the market and the indispensability of the state. Indeed, the speed with which the neoliberal refrains and invocations have unravelled has been breathtaking. The single most discredited aspect of the social democratic legacy was nationalisation, and yet the government, with the most extreme reluctance, has been obliged to nationalise Northern Rock and partially nationalise the Royal Bank of Scotland and the merged Lloyds TSB and HBOS. Who would have ever imagined, at any point during the past 30 years, that no less than the financial commanding heights of neoliberalism would have ended up in the hands of the state, with precious little opposition from anyone except a few disgruntled shareholders? Even now, however, the Labour government, still trapped in the ideological straitjacket of New Labour and displaying extreme timidity in the face of powerful vested interests, which has always been a New Labour characteristic, is running scared of the inevitable logic of the situation, namely that all the high-street banks should be taken into public hands until the mess is sorted out. Anything else leaves the public responsible for all the debts and risks, while the banks continue to be answerable to the very different interests of their shareholders. But such is the fury and depth of the crisis that this scenario is highly likely.

The state is experiencing an extraordinary revival. The credit crunch is the most catastrophic example of market failure since 1945. It became almost immediately obvious to wide sections of society that there was only one institution that could potentially sort out the mess: the state. Far from being a rational distributor of resources, the market had proved the opposite. Far from bankers and financial traders embodying the public interest, they have been exposed as irresponsible and dangerous risk-takers whose primary motivation was voracious greed. If trade unionists and the nationalised industries were the demons of the 1970s, bankers and the financial sector have assumed the mantle of public enemy number one in the late Noughties. In fact, the irresponsibility of bankers, and the damage they have inflicted on the economy, hugely exceeds anything that the unions could possibly be held responsible for in an earlier era. Meanwhile, the fallen heroes of the pre-Thatcher era, most notably Keynes, are duly being exhumed, restored to their rightful position, and pored over for their ability to throw light on the present impasse and what might be done; if the recession turns into a depression, Marx will once again become required reading.

This political shift is not just a British phenomenon, but a more general western one. The most striking feature of President Obama's inaugural speech was the way in which it embraced and legitimised African Americans for the first time in American history. But it also had another powerful theme, namely its invocation of the public interest and public service. After decades during which American political discourse has been dominated by the language of individualism and the market, it came as a shock to hear a US president articulate a very different kind of philosophy, renouncing private greed in favour of the public good. Obama's election can in part be seen as a response to the failure of the neoliberal era, as well as of Bush's neoconservative agenda; certainly his election represents a remarkable shift to the left in US politics, in contrast not just to Bush, but every recent US president, including Reagan, Bush Sr and Clinton. That Obama is the first African-American president also represents a remarkable redrawing of the political landscape. There is no more powerful - nor difficult - way of redefining society or to embrace a new form of representivity than to include a racial minority that has been excluded.

This brings us finally to what might be the longer-term global consequences of the crisis. Again, we are inevitably stumbling around in the dark because so much depends on whether the recession metamorphoses into a fully fledged depression and in what way and shape the world eventually emerges from the debacle. That said, two key points can be made. First, the credit crunch signals the demise of the Anglo-American, neoliberal model of capitalism, which has exercised a hegemonic influence over western capitalism and been the blueprint for globalisation since 1980. Because of its catastrophic failure there seems very little chance of its resurrection. The process of recovery - whenever that might be - will be accompanied by an overriding concern to ensure that the events of 2007-2009 are not repeated in the future, just as happened in the US in the 1930s with the strict regulatory framework that was introduced for the banks after their comprehensive failure in 1929. This will include the search for a new global regulatory framework that controls and constrains international movements of capital, as well as strict controls over the financial sector at a national level. A new set of political priorities - and with it a new political language - will be born.

Meanwhile, the influence and prestige that the US, and to a far lesser extent Britain, have enjoyed will vaporise in the same manner as their neoliberal model. Their 30-year project has failed and they will be obliged to pay the price in their reputation and the esteem in which they are held. The countries of the former Soviet Union and the casualties of the Asian financial crisis that were forced to swallow the neoliberal medicine will have good reason to feel aggrieved and resentful. The west has been forthright in accusing the non-western world of corruption. The financial meltdown suggests that the west has been guilty of huge hypocrisy. Systemic corruption has lain at the heart of the western financial system. An entirely disproportionate and extortionate level of bonuses has ensured the enormous enrichment of top executives in the financial sector, all in the name of reward for success, when in fact it was the reward for failure. In addition, we have had the collusion of the credit-ratings agencies; a regulatory system characterised by its failure to act as any kind of constraint; and governments that ensured the continuation of this web of relationships and applauded its achievements. The corruption was on a breathtaking scale as evidenced by the size of the bailouts required to rescue the banks. It will be difficult for western governments to make these kinds of accusations of others in the future. That Obama represents such a voice of hope will help to mitigate the inevitable ill-will towards the US, but this should not be exaggerated amid the euphoria surrounding developments in Washington.

The second point is more far-reaching. It is doubtful whether we can still describe ourselves as living in the American era or, indeed, the Age of the West. If not yet quite over, both are certainly drawing to a close, and it seems likely that the effect of the financial meltdown will be to accelerate the rise of China as a global power. The contrast between the situation in China and that in the US could hardly be greater, even though it has been partially obscured by the depressive effect of the western recession on Chinese exports and on China’s growth rate. While the US economy is contracting, China’s grew at roughly 9 per cent in 2008 and is projected to grow at about 6 per cent in 2009. Its banks, far from bankrupt like their US counterparts, are cash-rich. China enjoys a large current account surplus, the government’s finances are in good order and the national debt is small. This is a crisis that emanates from the US and whose impact on China has been essentially indirect, through the contraction of western markets. It is the American model that has failed, not the Chinese.

One of the factors that intensified the Great Depression, and indeed was part cause of it, was Britain's growing inability to continue in its role as the world's leading financial power, which culminated in the collapse of the gold standard in 1931. It was not until after the war, however, that the US became sufficiently dominant to replace Britain and act as the mainstay of a new financial system at the heart of which was the dollar. The same kind of problem is evident now: the US is no longer strong enough to act as the world's financial centre, but its obvious successor, namely China, is not yet ready to assume that mantle. This will undoubtedly make the search for a global solution to the present crisis more difficult and more protracted.

Martin Jacques's new column will be published fortnightly in the New Statesman. His book "When China Rules the World: the Rise of the Middle Kingdom and the End of the Western World" will be published in June (Allen Lane, £25)

the global downturn in numbers

    0.5%

    IMF prediction for global growth in 2009 - worst since WWII

    Up to 40 million

    Number of people who will lose their jobs this year, according to the International Labour Organisation

    $9.7trn

    Total pledged by the US alone towards solving the crisis

    3.6%

    Proportion of GDP pledged by the G7 and BRICs countries towards fixing the crisis (1.5% this year)

    2.3m

    Number of US properties that received a default notice or were repossessed in 2008. In the UK, 45,000 homes were repossessed - another 75,000 are expected to be taken in 2009

    14

    Number of major global banks which collapsed, were sold or were nationalised during 2008

    200,000

    Number of European companies expected to fail this year; an additional 62,000 are expected to fail in the United States. These figures represent record levels of insolvency

    52%

    Increase in UK company failures between late 2007 and late 2008

    14%

    Drop in level of Chinese exports during January

    1%

    Current UK interest rates (down from 5% in October 2008). In the US, rates have fallen to between 0 and 0.25%

How the crisis unfolded

13 September 2007 Run on Northern Rock begins when it is revealed that the bank has requested emergency support from the Bank of England

21 January 2008 FTSE suffers worst falls since 11 September 2001

February 2008 Northern Rock nationalised

17 March 2008 JP Morgan Chase takes over the US investment bank Bear Stearns

12 July Mortgage lender IndyMac collapses - second biggest US bank in history to fail

9 August 2007 European Central Bank pumps ?95bn into banking market

7 September Financial authorities step in to rescue Fannie Mae and Freddie Mac

9 September Bradford & Bingley becomes second British bank to be nationalised

15 September Lehman Brothers files for bankruptcy

16 September AIG, biggest insurance firm in the US, receives $85bn rescue package

3 October 2008 US government announces $700bn Troubled Assets Relief Programme

8 October UK launches its first bank bailout plan, making £50bn available

October 2008 Iceland's banks collapse. IMF extends £1.4bn ($2.1bn) loan a month later

24 November Alistair Darling announces a temporary cut in VAT from 17.5 to 15 per cent

23 January 2009 UK enters recession

28 January US Congress passes Barack Obama's $819bn stimulus package

5 February UK Monetary Policy Committee votes to cut interest rates to 1 per cent - the lowest in over three centuries

Michael Harvey

Martin Jacques is a journalist and academic. He is currently a visiting fellow at the London School of Economics Asia Research Centre and at the National University of Singapore. Jacques previously edited Marxism Today and co-founded the think-tank Demos in 1993. He writes the World Citizen column for the New Statesman. His new book on the rise of China, When China Rules the World, will be published in June.

This article first appeared in the 16 February 2009 issue of the New Statesman, The New Depression

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The prophets of Trumpism

How the ideas of two pre-war intellectual refugees – the radical Herbert Marcuse and the reactionary Eric Voegelin – are influencing the new culture wars among Trump and his acolytes.

Even after Donald Trump’s more conciliatory address to Congress, American politics seems set to become a battle between the president’s joyless autocracy and a carnival of protest that could end up evoking the anti-war movements of the 1960s. There will be more draconian executive orders and more marches in pink hats. There may well be violence.

The intellectual battle that will be played out in the months and years to come, however, was foretold by two German refugees from Nazi persecution: Eric Voegelin, the doyen of Cold War reactionary conservatives, and Herbert Marcuse, the inspiration behind the revolutionary student activism of the 1960s. Voegelin argued that society needed an order that could be found only by reaching back to the past. Marcuse argued that refusal to accede to tyranny was essential to give birth to a revolutionary politics that would propel progress to a new kind of society. Marcuse the radical and Voegelin the reactionary could not seem further apart, and yet they share a common intellectual root in Germany in the 1920s, from which came a shared critique of modern society. Their ideas may well inspire some of the political conflicts to come.

The culture wars of the 1960s are very much alive for Trump’s acolytes. Steve Bannon, the former executive chairman of the alt-right website Breitbart News and Trump’s chief strategist, blames the counterculture of the 1960s – the drugs, the hippies, the liberal reforms – for America losing its way and, eventually, succumbing to economic crisis in 2008. Bannon set out his ideas in Generation Zero, a 2010 documentary which blamed the financial crash not on greedy, under-regulated bankers but on the moral and cultural malaise that started in the 1960s. He is still fighting people who might have been inspired by Marcuse. “The baby boomers are the most spoiled, most self-centred, most narcissistic generation the country has ever produced,” he told an interviewer in 2011.

Bannon’s thinking, set out in several speeches over the past few years, is that America’s working and middle classes have been betrayed by an elite in Washington, DC (the “Imperial City”, he calls it) which oversees insider deals so that the insiders can profit from global capitalism. Bannon wants to return America to traditions rooted in Judaeo-Christian values and to reassert national sovereignty. Most worryingly, on several occasions he has said that the crisis will only be resolved through the catharsis of conflict and national mobilisation through war.

America has always been a work in progress. Ronald Reagan and Barack Obama were very different presidents but they shared a belief that progress was America’s calling. The reactionary turn in US politics is not just a shift to the right but an attempt to displace progress as the common creed.

Instead, Bannon and his ilk want America to become a work in regress, as the historian Mark Lilla argues in his recent book on reactionary philosophy, The Shipwrecked Mind. Much of the new reactionary thinking echoes Voegelin’s idea that, in order to renew itself, a society must first go backwards to find where and how it lost its way.

 

***

Eric Voegelin defies easy categorisation. Born in 1901 in Cologne and brought up in Vienna, he was brave and principled. After a visit to the United States in the 1920s, he wrote two books criticising Nazi racial politics, which got him sacked from his teaching position at the University of Vienna. When the Germans arrived in Austria following the Anschluss in 1938, Voegelin and his wife fled on a train as the Gestapo ransacked their apartment.

After a brief stay in Switzerland, he moved to America and in 1942 took up an academic post at Louisiana State University. He then embarked on a prolific career, the centrepiece of which was his sprawling, multi-volume work Order and History.

Voegelin’s philosophy gave expression to the dark and powerful forces that had shaped his life. He believed that modern society was prey to flawed utopianism – he called this “gnosticism” – in which an elite of prophets takes power, claiming special insight into how heaven could be created on Earth for a chosen people. Gnostic sects in the Middle Ages had their modern equivalents in the Nazi proclamation of a racially pure utopia and the Marxist promise of equality for all. Voegelin’s catchphrase was: “Don’t immanentise the eschaton!” (meaning: “Do not try to build heaven on Earth”).

Marxism and Nazism, Voegelin argued, were political versions of religion: we get rid of God only to reinstall him in the form of an elite of reformers with all the answers. In his recent bestselling book Homo Deus, Yuval Harari argues that we are entering a new stage of the process that Voegelin identified. We have become as powerful as gods, he argued, but now need to learn how to be wise and responsible gods.

Today Voegelin’s attack on overreaching perfectionism echoes in reactionary criticism of Obamacare and in the yearning for national certitude. Voegelin thought the role of philosophy was not to change the world, but to understand its underlying order and help us tune in to that, rather than being diverted by the lure of the false prophets of political religion.

He was influenced by the Viennese satirist Karl Kraus, who said that “origin is the goal”, by which he meant that the point of the future was to restore the ancient past. For Voegelin, order comes from a sense of harmony, of everything being in its place. This is a position that opens itself up to deeply conservative interpretations.

When, in his presidential inauguration address, Trump spoke of American “carnage”, he was echoing Voegelin’s account of decay and disorder. When he talked of “one people, one nation, one heart” he was evoking the kind of order that Voegelin spoke of. Trump and his acolytes see their mission as the need to restore a natural order, under which illegal immigrants and aliens are kept well away and white people can feel at home once more in a society where everyone signs up to Judaeo-Christian beliefs.

Nothing could be further from the ideas of Herbert Marcuse.

Born in 1898 in Berlin, Marcuse became a member of the celebrated Marxist Frankfurt School, which included Theodor Adorno, Max Horkheimer and, tangentially, Walter Benjamin. Marcuse emigrated to the United States in 1933 as Hitler came to power. By 1940, he had become a US citizen and, while Voegelin was starting work at Louisiana State, Marcuse was working as a researcher for the Office of Strategic Services, the precursor of the CIA. He continued working for the government after the war and resumed his academic career only in 1952. His best-known book, One-Dimensional Man, was published in 1964.

One of Marcuse’s big ideas was the “Great Refusal”: progress had to start with refusing to accept an unacceptable reality. One should say “no” to a world of alienating work, dominated by corporations and impersonal systems, which allow little room for people to explore their deeper sense of humanity. Marcuse saw the student and anti-war protests of the 1960s and 1970s, which adopted him as their intellectual mentor, as evidence that the Great Refusal was gaining momentum.

Trump has given the Great Refusal new life. The documentary film-maker Michael Moore has called for cities to become “regions of resistance” by offering sanctuary to immigrants threatened with deportation. Angela Davis, the once-jailed Black Panther revolutionary who was close to Marcuse, told the Women’s March in Washington that people had to be ready for “1,459 days of resistance: resistance on the ground, resistance on the job, resistance in our art and in our music”. In a lecture at the Free University of West Berlin published in 1970, Marcuse said demonstrations and protests were an essential first step towards a “liberation of consciousness” from the capitalist machine:

“The whole person must demonstrate his participation and his will to live . . . in a pacified, human world . . . it is . . . harmful . . . to preach defeatism and quietism, which can only play into the hands of those who run the system . . . We must resist if we still want to live as human beings, to work and be happy.”

The Great Refusal was a capacious idea capable of embracing anyone who wanted to say, “No, enough!” It could embrace trade unions and workers, African Americans and feminists, students and national liberation movements, those who were on the margins of society and those professionals – technicians, scientists, artists, intellectuals – who worked at its centres of power and who chose to refuse as an act of conscience.

As a new generation prepares to embark on a period of resistance, what lessons should they learn from the wave of protest that Marcuse once helped to inspire?

Protest is a way to bear witness, to make voices heard and to make it possible for people to bond. Yet the fire of protest can easily die out as the Occupy movement did, even if its embers are still glowing. The carnival-type atmosphere can be uplifting but fleeting. Creating common programmes to be taken forward by organisations demands hard work. The Arab spring showed how quickly a popular revolution can turn sour when a movement is not ready to take power.

Since the protests that Marcuse was involved in, no comparable movement of the left in the United States has mobilised such a broad support base. Instead, that period of resistance was followed, at the end of the 1970s, by a shift to the right in the US and the UK. It was reactionaries, not revolutionaries, who set off forward to the past.

Now we seem to be in for an intensifying cycle of conflict between the adherents of Marcuse and Voegelin: between the Marxist revolutionary and the mystic conservative; between resistance and order; between those who want to live among a cosmopolitan, urban multitude and those who want a society of provincial oneness and sameness; those who want change, innovation and creativity and those who crave simplicity, stability and authority.

That much is obvious. Yet what is striking is not how different Marcuse was from Voegelin, but how alike they were. The best way to respond to the rise of Trump might be to blend their ideas rather than set them against one another, to create a new intellectual and political combination. Indeed, they could be seen as different branches of the same intellectual tree.

Voegelin was influenced by the German- Jewish philosopher Hans Jonas, who studied with Martin Heidegger in Freiburg in the 1920s. Jonas joined the German Jewish Brigade, which fought against Hitler, before emigrating to the US, where he became a professor at the New School in New York. He was one of the foremost scholars of gnosticism, which became Voegelin’s focus. Towards the end of his life, Jonas took up a chair at the University of Munich named after Voegelin.

Voegelin did not study at Freiburg, but one of his closest friends was the social ­theorist Alfred Schütz, a student of Edmund Husserl’s who applied his phenomenological thinking to the sociology of ­everyday life. Marcuse studied with Husserl and Heidegger at Freiburg, at the same time as Jonas and Hannah Arendt. From that shared intellectual root have emerged some powerful ideas that could unite progressives and conservatives.

Only at moments of profound crisis – of the kind we are living through – do we see just how contingent, vulnerable and fragile our society is. Voegelin warned: “In an hour of crisis, when the order of society flounders and disintegrates, the fundamental problems of political existence in history are more apt to come into view than in periods of comparative stability.”

A crisis should be a time for profound reflection, yet leaders are more likely to resort to “magical operations” to divert people’s attention: moral condemnation, branding enemies as aggressors, threatening war. “The intellectual and moral corruption,” Voegelin wrote, “which expresses itself in the aggregate of such magical operations may pervade society with the weird ghostly atmosphere of a lunatic asylum, as we experience it in Western society.”

Welcome to the Trump White House.

 

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Voegelin is a timely reminder of how unconservative Donald Trump is and of how conservatives should be a vital part of the coalition against him. Conservatism comes in several strains: laissez-faire conservatives such as George Osborne want small government, free trade, low taxes and freedom of choice. Status quo conservatives such as Angela Merkel want stability and continuity, even if that entails sticking with social welfare programmes and liberal democracy. Authoritarian conservatives, however, are prepared to use the big state to engineer change.

One important question for the future is whether the laissez-faire and status quo conservatives will realign around the ascendant authoritarian camp promoted by Trump. Merkel is the world leader of the conservative-inspired opposition to the US president. But his most profound critic is Pope Francis, who uses language similar to Voegelin’s to condemn the “material and spiritual poverty” of capitalism, and the language of Marcuse to condemn the process of dehumanisation embarked upon by Bannon and Trump.

“As Christians and all people of goodwill, it is for us to live and act at this moment,” the Pope has said. “It is a grave responsib­ility, since certain present realities, unless ­effectively dealt with, are capable of ­setting off a process of dehumanisation which would then be hard to reverse.”

The challenge for progressives is to reframe resistance in terms that can appeal to conservatives: to use conservative ideas of character and spirituality for progressive ends. We will spend a great deal more time trying to conserve things. The swarm of legal challenges against Trump will hold him to the principles of the US constitution and the rule of law. Many of the young people attracted to Bernie Sanders and the Occupy movement yearned for the restoration of the American dream.

Building bridges with the conservative opposition is not merely a tactical manoeuvre to widen support. It has deeper roots in shared doubts about modernity which go back to Freiburg and the man both Marcuse and Jonas renounced in 1964 for supporting the Nazis: Martin Heidegger.

For Heidegger, modernity was a restless, disruptive force that displaced people from jobs, communities and old ways of life, and so left them searching for a sense of home, a place to come back to, where they could be at one with the world. Technology played a central role in this, Heidegger argued, providing not just tools for us to use, but an entire framework for our lives.

Marcuse, writing four decades before ­Facebook and Google, warned that we needed to resist a life in which we freely comply with our own subjugation by technical, bureaucratic systems that control our every thought and act; which make life rich but empty, busy but dead, and turn people into adjuncts of vast systems. We should “resist playing a game that was always rigged against true freedom”, he urged, using language that has been adopted by Trump.

Writing not far from what was to become Silicon Valley, Marcuse pointed to a much larger possibility: the technological bounty of capitalism could, in principle, free us from necessity and meet all human needs, but “. . . only if the vast capabilities of science and technology, of the scientific and artistic imagination, direct the construction of a sensuous environment; only if the world of work loses its alienating features and becomes a world of human relationships; only if productivity becomes creativity are the roots of domination dried up in individuals”.

Writing in the 1960s, when full employment was the norm and advanced society was enjoying a sense of plenty, Marcuse foreshadowed the debates we are having now about what it will mean to be human in an age of machines capable of rapid learning. Mark Zuckerberg’s argument in his recently published manifesto that Facebook creates an infrastructure for a co-operative and creative global civil society is a response to concerns that Marcuse raised.

 

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Just as Marcuse saw that capitalism was a union of contradictions – freedom created on the basis of exploitation, wealth generated by poverty – Voegelin thought modern society was self-defeating: it declined as it advanced. Giving everyone wages to buy stuff from the shops was not progress, he said, but a soulless distortion of the good life, an invitation to spiritual devastation. The gnosticism that Voegelin so hated, the effort to design a perfect society, was also the source of the technological and rational bureaucracy that Marcuse blamed for creating a one-dimensional society. Voegelin would have regarded the apostles of Silicon Valley as arch-gnostics, creating a rational order to the world with the insights gleaned from Big Data and artificial intelligence.

Marcuse and Voegelin point us in the same direction for a way forward. People need to be able to find a sense of meaning and purpose in their lives. Both would have seen Trump’s ascendancy as a symptom of a deeper failure in modern society, one that we feel inside ourselves. The problem for many of us is not that we do not have enough money, but that we do not have enough meaning.

For Voegelin, living well involves “opening our souls” to something higher than buy and sell, work and shop, calculate and trade, margins and profits. Once we detach ourselves from these temporary, Earthly measures of success, we might learn to accept that life is a mysterious, bubbling stream upon which we cannot impose a direction.

A true sense of order, Voegelin argues, comes from living with an open soul and a full spirit, not being part of a machine manufacturing false promises. If we cannot manage to create order from within, by returning to the life guided by the soul, we will find order imposed, more brutally, from without. Marcuse, likewise, thought that turning the Great Refusal into a creative movement required an inner renewal, a “liberation of consciousness” through aesthetics, art, fantasy, imagination and creativity. We can only escape the grip of the one-dimensional society, which reduces life to routines of buying and selling, by recognising that we are multidimensional people, full of potential to grow in different ways. It is not enough merely to resist reality; we have to escape it through leaps of imagination and see the world afresh.

Václav Havel, the leader of the Czech resistance to communist rule, called this “living in truth”. Havel’s most influential essay, “The Power of the Powerless”, written in 1978, is about how to avoid the slow spiritual death that comes from living in an oppressive regime that does not require you to believe in what it does, merely to go along with “living within a lie”.

The greengrocer who is the central figure and motif in Havel’s essay eventually snaps, and stops putting in his shop window an official sign that reads: “Workers of the world, unite!” Havel wrote: “In this revolt the greengrocer steps out of living within the lie. He rejects the ritual and breaks the rules of the game. He discovers once more his suppressed identity and dignity. His revolt is an attempt to live within the truth.”

Human beings by nature long to live in truth, even when put under pressure to live a lie. In language evocative of Voegelin and Marcuse, Havel writes: “In everyone there is some longing for humanity’s rightful dignity, for moral integrity, for free expression of being and a sense of transcendence over the world of existence.”

In communist Czechoslovakia that meant taking a wide and generous view of what counts as resistance as people sought their own ways to “live in truth”. Under President Trump, many Americans are finding they are living within a regime of lies, and they will be drawn back, time and again, to find ways, large and small, personal and political, to live in truth.

Resistance to Trump and Trumpism will succeed only if it mobilises both conservative and progressive forces opposed to authoritarianism, and it needs to stand for a better way to live in truth, with dignity.

Charles Leadbeater is the author of the ALT/Now manifesto, which is available to read at: banffcentre.ca

This article first appeared in the 23 March 2017 issue of the New Statesman, Trump's permanent revolution