Show Hide image

In with the in-crowd

The appointment of a pro-Israel hawk has, to some, undermined Obama's call for a new politics. Or ma

A year ago, Barack Obama's campaign organised a rather unusual event. Undecided New Hampshire voters were invited to a hotel for a gathering of a half dozen of Obama's foreign policy advisers, an illustrious and eclectic bunch that included a former secretary of the navy and Samantha Power, the Irish journalist and authority on genocide who would later exile herself from the campaign after calling Hillary Clinton a "monster" in an interview with The Scotsman. One by one, they talked about Obama and his plans for the world. Finally, the candidate himself appeared and held forth on his own. It was a cross between a graduate seminar and a travelling roadshow - Come Behold Barack Obama and his Astute Advisers Who Can Attest to His Judgement Even in the Absence of Much Experience!

The scene was meant to assure voters worried about the rookie senator's grasp on world affairs, but it also reflected something fundamental about Obama: he likes to surround himself with very smart people. This might not seem so remarkable, except that it hasn't really been the case for this past decade in Washington, where George W Bush mixed unquestionably sharp-minded figures such as Dick Cheney and Karl Rove with obvious cronies. Obama, by contrast, fetishises expertise in a way reminiscent of Franklin D Roosevelt's New Deal and John F Kennedy's "best and brightest". Obama has said that what he enjoyed more than almost anything about his promotion to the US Senate was the ability to call up authorities of all kinds for their insight. Debates within his staff tend to consist of him sitting or stretched out on his office couch, listening intently and pressing those in the room in Socratic fashion before making his decision. Running for president, Obama aimed even higher. After meeting the former Federal Reserve Board chairman Paul Volcker last year, Obama began reaching out to the 81-year-old economics giant (he's 6ft 7in) for advice, a resource that came in handy as the markets crumbled. When Obama appeared at his first press conference as President-elect last week, flanked by his 17-member "Transition Economic Advisory Board," there was Volcker towering over a group that also included the Google CEO Eric Schmidt, the former Treasury secretary and Harvard president Larry Summers, and, looped in by conference call for the preceding meeting, the mega-investor Warren Buffett.

The challenge for Obama is that there is only room in the inner sanctum for so many people. The most influential can be grouped into a few categories - there are the veterans of his tight-knit campaign team who will follow him to Washington, including the laconic southerner likely to be his press secretary, Robert Gibbs, and the mustachioed Chicago newsman-turned-political guru, David Axelrod. There are other Chicago confidantes who acted as travelling companions and gatekeepers during the campaign and will likely play an equivalent role in the White House, most notably Valerie Jarrett, a lawyer, businesswoman and fixture of Chicago's African-American elite. There are longtime denizens of DC's Democratic establishment who embraced Obama early on, including Tom Daschle, the soft-spoken former Senate majority leader from South Dakota, from whom Obama has absorbed some of his best Senate and campaign aides, and Greg Craig, a lawyer who defended Bill Clinton during his impeachment and also issued a damning indictment of Hillary's foreign policy embellishments during the primaries. There are governors who share Obama's conciliatory and earnest manner and could well end up in key cabinet posts, such as Kathleen Sebelius of Kansas and Tim Kaine of Virginia.

And presiding over it all, for now, are two heavyweights from the Clinton era. Leading the transition process is John Podesta, who served as Bill Clinton's final chief of staff and has since headed a liberal think tank that was a kind of Democratic government in waiting; and, assigned as Obama's chief of staff, is Rahm Emanuel, a young Turk in the Clinton White House who, after making millions in finance, was elected to Congress from Illinois. Emanuel is uncommonly colourful by the standards of today's capital, a former ballet dancer and civilian volunteer in the Israeli Defense Forces who is notorious for his profanity and pugnacity. (In a 2005 tribute, Obama joked that the teenaged accident that cost Emanuel part of his middle finger had "rendered him practically mute" and that Emanuel had composed a ballet based on Machiavelli's The Prince, with a lot of "kicks below the waist".)

Emanuel would seem in some ways to undercut Obama's call for a "new politics" - a Clinton holdover whose flair for the dramatic strays from the Obama team's buttoned-down tendencies. But his selection is a sign that, for all of the President-elect's high-mindedness, he knows how good it is to have people like Emanuel in your corner.

I observed this most recently at the convention in Denver, where a colleague asked Emanuel what he made of Obama's acceptance speech. In characteristically profane fashion, Emanuel praised the speech for its tough retorts to John McCain's attacks. And for emphasis, as he spoke, he tapped my colleague in the chest repeatedly and with perhaps more force than strictly necessary. Emanuel assures that for all its intellectualism, Obama's White House will not go soft.

This article first appeared in the 17 November 2008 issue of the New Statesman, Obamania

Jeremy Corbyn. Photo: Getty
Show Hide image

Lexit: the EU is a neoliberal project, so let's do something different when we leave it

Brexit affords the British left a historic opportunity for a decisive break with EU market liberalism.

The Brexit vote to leave the European Union has many parents, but "Lexit" – the argument for exiting the EU from the left – remains an orphan. A third of Labour voters backed Leave, but they did so without any significant leadership from the Labour Party. Left-of-centre votes proved decisive in determining the outcome of a referendum that was otherwise framed, shaped, and presented almost exclusively by the right. A proper left discussion of the issues has been, if not entirely absent, then decidedly marginal – part of a more general malaise when it comes to developing left alternatives that has begun to be corrected only recently, under Jeremy Corbyn and John McDonnell.

Ceding Brexit to the right was very nearly the most serious strategic mistake by the British left since the ‘70s. Under successive leaders Labour became so incorporated into the ideology of Europeanism as to preclude any clear-eyed critical analysis of the actually existing EU as a regulatory and trade regime pursuing deep economic integration. The same political journey that carried Labour into its technocratic embrace of the EU also resulted in the abandonment of any form of distinctive economics separate from the orthodoxies of market liberalism.

It’s been astounding to witness so many left-wingers, in meltdown over Brexit, resort to parroting liberal economics. Thus we hear that factor mobility isn’t about labour arbitrage, that public services aren’t under pressure, that we must prioritise foreign direct investment and trade. It’s little wonder Labour became so detached from its base. Such claims do not match the lived experience of ordinary people in regions of the country devastated by deindustrialisation and disinvestment.

Nor should concerns about wage stagnation and bargaining power be met with finger-wagging accusations of racism, as if the manner in which capitalism pits workers against each other hasn’t long been understood. Instead, we should be offering real solutions – including a willingness to rethink capital mobility and trade. This places us in direct conflict with the constitutionalised neoliberalism of the EU.

Only the political savvy of the leadership has enabled Labour to recover from its disastrous positioning post-referendum. Incredibly, what seemed an unbeatable electoral bloc around Theresa May has been deftly prized apart in the course of an extraordinary General Election campaign. To consolidate the political project they have initiated, Corbyn and McDonnell must now follow through with a truly radical economic programme. The place to look for inspiration is precisely the range of instruments and policy options discouraged or outright forbidden by the EU.

A neoliberal project

The fact that right-wing arguments for Leave predominated during the referendum says far more about today’s left than it does about the European Union. There has been a great deal of myth-making concerning the latter –much of it funded, directly or indirectly, by the EU itself.

From its inception, the EU has been a top-down project driven by political and administrative elites, "a protected sphere", in the judgment of the late Peter Mair, "in which policy-making can evade the constraints imposed by representative democracy". To complain about the EU’s "democratic deficit" is to have misunderstood its purpose. The main thrust of European economic policy has been to extend and deepen the market through liberalisation, privatisation, and flexiblisation, subordinating employment and social protection to goals of low inflation, debt reduction, and increased competitiveness.

Prospects for Keynesian reflationary policies, or even for pan-European economic planning – never great – soon gave way to more Hayekian conceptions. Hayek’s original insight, in The Economic Conditions of Interstate Federalism, was that free movement of capital, goods, and labour – a "single market" – among a federation of nations would severely and necessarily restrict the economic policy space available to individual members. Pro-European socialists, whose aim had been to acquire new supranational options for the regulation of capital, found themselves surrendering the tools they already possessed at home. The national road to socialism, or even to social democracy, was closed.

The direction of travel has been singular and unrelenting. To take one example, workers’ rights – a supposed EU strength – are steadily being eroded, as can be seen in landmark judgments by the European Court of Justice (ECJ) in the Viking and Laval cases, among others. In both instances, workers attempting to strike in protest at plans to replace workers from one EU country with lower-wage workers from another, were told their right to strike could not infringe upon the "four freedoms" – free movement of capital, labour, goods, and services – established by the treaties.

More broadly, on trade, financial regulation, state aid, government purchasing, public service delivery, and more, any attempt to create a different kind of economy from inside the EU has largely been forestalled by competition policy or single market regulation.

A new political economy

Given that the UK will soon be escaping the EU, what opportunities might this afford? Three policy directions immediately stand out: public ownership, industrial strategy, and procurement. In each case, EU regulation previously stood in the way of promising left strategies. In each case, the political and economic returns from bold departures from neoliberal orthodoxy after Brexit could be substantial.

While not banned outright by EU law, public ownership is severely discouraged and disadvantaged by it. ECJ interpretation of Article 106 of the Treaty on the Functioning of the European Union (TFEU) has steadily eroded public ownership options. "The ECJ", argues law professor Danny Nicol, "appears to have constructed a one-way street in favour of private-sector provision: nationalised services are prima facie suspect and must be analysed for their necessity". Sure enough, the EU has been a significant driver of privatisation, functioning like a ratchet. It’s much easier for a member state to pursue the liberalisation of sectors than to secure their (re)nationalisation. Article 59 (TFEU) specifically allows the European Council and Parliament to liberalise services. Since the ‘80s, there have been single market programmes in energy, transport, postal services, telecommunications, education, and health.

Britain has long been an extreme outlier on privatisation, responsible for 40 per cent of the total assets privatised across the OECD between 1980 and 1996. Today, however, increasing inequality, poverty, environmental degradation and the general sense of an impoverished public sphere are leading to growing calls for renewed public ownership (albeit in new, more democratic forms). Soon to be free of EU constraints, it’s time to explore an expanded and fundamentally reimagined UK public sector.

Next, Britain’s industrial production has been virtually flat since the late 1990s, with a yawning trade deficit in industrial goods. Any serious industrial strategy to address the structural weaknesses of UK manufacturing will rely on "state aid" – the nurturing of a next generation of companies through grants, interest and tax relief, guarantees, government holdings, and the provision of goods and services on a preferential basis.

Article 107 TFEU allows for state aid only if it is compatible with the internal market and does not distort competition, laying out the specific circumstances in which it could be lawful. Whether or not state aid meets these criteria is at the sole discretion of the Commission – and courts in member states are obligated to enforce the commission’s decisions. The Commission has adopted an approach that considers, among other things, the existence of market failure, the effectiveness of other options, and the impact on the market and competition, thereby allowing state aid only in exceptional circumstances.

For many parts of the UK, the challenges of industrial decline remain starkly present – entire communities are thrown on the scrap heap, with all the associated capital and carbon costs and wasted lives. It’s high time the left returned to the possibilities inherent in a proactive industrial strategy. A true community-sustaining industrial strategy would consist of the deliberate direction of capital to sectors, localities, and regions, so as to balance out market trends and prevent communities from falling into decay, while also ensuring the investment in research and development necessary to maintain a highly productive economy. Policy, in this vision, would function to re-deploy infrastructure, production facilities, and workers left unemployed because of a shutdown or increased automation.

In some cases, this might mean assistance to workers or localities to buy up facilities and keep them running under worker or community ownership. In other cases it might involve re-training workers for new skills and re-fitting facilities. A regional approach might help launch new enterprises that would eventually be spun off as worker or local community-owned firms, supporting the development of strong and vibrant network economies, perhaps on the basis of a Green New Deal. All of this will be possible post-Brexit, under a Corbyn government.

Lastly, there is procurement. Under EU law, explicitly linking public procurement to local entities or social needs is difficult. The ECJ has ruled that, even if there is no specific legislation, procurement activity must "comply with the fundamental rules of the Treaty, in particular the principle of non-discrimination on grounds of nationality". This means that all procurement contracts must be open to all bidders across the EU, and public authorities must advertise contracts widely in other EU countries. In 2004, the European Parliament and Council issued two directives establishing the criteria governing such contracts: "lowest price only" and "most economically advantageous tender".

Unleashed from EU constraints, there are major opportunities for targeting large-scale public procurement to rebuild and transform communities, cities, and regions. The vision behind the celebrated Preston Model of community wealth building – inspired by the work of our own organisation, The Democracy Collaborative, in Cleveland, Ohio – leverages public procurement and the stabilising power of place-based anchor institutions (governments, hospitals, universities) to support rooted, participatory, democratic local economies built around multipliers. In this way, public funds can be made to do "double duty"; anchoring jobs and building community wealth, reversing long-term economic decline. This suggests the viability of a very different economic approach and potential for a winning political coalition, building support for a new socialist economics from the ground up.

With the prospect of a Corbyn government now tantalisingly close, it’s imperative that Labour reconciles its policy objectives in the Brexit negotiations with its plans for a radical economic transformation and redistribution of power and wealth. Only by pursuing strategies capable of re-establishing broad control over the national economy can Labour hope to manage the coming period of pain and dislocation following Brexit. Based on new institutions and approaches and the centrality of ownership and control, democracy, and participation, we should be busy assembling the tools and strategies that will allow departure from the EU to open up new political-economic horizons in Britain and bring about the profound transformation the country so desperately wants and needs.

Joe Guinan is executive director of the Next System Project at The Democracy Collaborative. Thomas M. Hanna is research director at The Democracy Collaborative.

This is an extract from a longer essay which appears in the inaugural edition of the IPPR Progressive Review.

 

 

This article first appeared in the 17 November 2008 issue of the New Statesman, Obamania