After Obama, What Next? - Part 1

In just a few month's time, the US political machines will start to swing into action, in earnest, to begin the process of selecting candidates for the US Presidential elections. Eight years ago, when that same process started to get underway, there was great excitement at the fact that a young senator, from Illinois, was rapidly gaining support, having come from nowhere, to challenge Hillary Clinton, who until then had been thought to be the inevitable Democrat nominee.

That senator was Barack Obama, who despite an Irish sounding surname, was also the surprise contender for the simple reason that he was the first black candidate ever to seem to have a good chance of winning. But, of course, history records that not only did he beat Hillary Clinton to win the Democratic nomination, but he was to go on and win the Presidency itself, by a wide margin, against the challenge from right-wing Republican John McCain, backed by the even more right-wing Sarah Palin.

What perhaps made Obama's nomination more interesting was the political terrain on which he mounted his challenge. Bill Clinton had based himself, in the early 1990's, on a fairly traditional social-democratic platform, that contrasted with the conservative politics of the Reagan/Bush era that preceded him. Clinton inherited the economic conditions that period had created. Conservative governments in the US and UK had responded to the stagnation of the long wave downturn, and the process of de-industrialisation that flowed from old, low-profit manufacturing industry migrating to Asia and Eastern Europe, in search of higher profits, by themselves proffering support for the kind of backward looking, low-paying employers whose outlook they shared.

In effect, these conservative governments adopted the same kind of protectionist stance conservatives have generally adopted in more straightened economic times. The protectionism was of the worst kind; protection of these, often small, always inefficient, firms by means of releasing them from the requirement to meet some kind of minimum standards of how they treated their employees, or the environment in which they operated.

At the same time, and in conditions where the open advocacy of Keynesian fiscal stimulus was frowned upon, as contrary to the new orthodoxy, the conservatives turned to that new orthodoxy when a new big financial crisis erupted in 1987. Alan Greenspan pumped millions of dollars into the economy, the stock market crash was more than reversed within the year, property prices began a massive rise, and the stage was set, along with the Big Bang of financial deregulation, for a period of debt fuelled financial speculation, whose culmination we are on the verge of experiencing, in the shape of a Big Bang of a quite different type.

By the time Clinton came to office, in 1992, therefore, the conditions were established. At the tail-end of the long wave downturn, the US was showing all the signs of an economy in relative decline. Its old, big, heavy industries were no longer competitive with their equivalent, newly built, up to date competitors in China and elsewhere, who also employed workers paid a fraction of their US counterparts. The US had some world-beating industries in technology, media and so on, but not enough had been invested in them, in the previous period of encouraging a low-wage/high debt economy, and these new industries required relatively little in the way of inputs that would generate wider economic growth, and employed a relatively small number of very high value, highly paid workers.

This in itself was a contributory factor in creating a bifurcated economy, where large numbers of low-paid workers existed alongside this group of highly paid workers. Bill Clinton, encouraged by his wife, Hillary, had made health-care reform a centre piece of his social-democratic agenda. But, when he needed to get cross-party support to push through economic reform measures on tax, to bring a spiralling budget deficit under control, he readily dropped it.

What made Obama's stance more interesting was that Hillary Clinton, not surprisingly, stood on the same ground that Bill had been driven to. Not surprisingly because, despite all of the controversies over Whitewater, Monica Lewinski and so on, Clinton's Presidency had been seen as one of the most successful of recent generations. Not only had the budget deficit been overcome, largely as a result of reversing the dreadful Lafferite tax experiment introduced under Reagan, but the budget had gone into surplus, and the economy had started to grow.

It was Clinton who developed the “Third Way” also adopted by Blair. In reality, the “Third Way”, was nothing but the social-democracy of Anthony Crosland. The only difference was that this was social-democracy for a globalised world. The formation of a single global economy had found its manifestation, in the 1990's, after the collapse of Stalinism, in a rapid spread of globalised industrial capital. Its spearhead was the huge multinational industrial corporation.

Unlike Colonialism, which was based on the extraction industries and recreated feudalistic, rent based economies, these large industrial corporations needed and created, modern industrial societies, in which to operate and extract relative surplus value. Experience in the developed economies had shown that the best political shell to achieve that was the modern, bourgeois social-democratic state. Its not surprising then that such states also mushroomed across the globe during this period.

But, this global economy lacked a global state, to set the rules, and maintain a level playing field, as it does at a national level. Imperialism developed as a system of states, but with these huge multinational corporations increasingly footloose, and able to base themselves wherever they could obtain advantage, not only did they require some state functions to be undertaken at an international or at least intra-national level, but nation states themselves needed to come together to co-ordinate their activities, or face growing impotence and irrelevance, as economic power moved increasingly out of their influence. Existing international bodies like GATT were beefed up to become the WTO, and a string of forums were established that brought together the leading economic powers.

But, absent a global state, the role of enforcing a global rule of law fell to the US, as the hegemonic military power. Of course, just as the US uses the position of the dollar as global reserve currency, so it used its position as global policeman to further its interests. The fact that this is a system of states does not mean that there is no hierarchy within it.

The policy of Liberal intervention, that starts with Clinton and Blair, is basically the same social-democratic ideology applied at an international level. It says, if we want to have economic prosperity, there has to be compromise and negotiation in place of conflict, and that requires a set of rules that have to be obeyed. That applies both to the needs of multinational industrial capital, in being able to invest confidently across the globe, as well as the need to be able to trade and transport commodities across trade routes.

When Obama stood on a platform of opposing the war in Iraq, as a mistake, of closing down Guantanamo, pulling out the troops from Iraq, and Afghanistan, offering an open hand to Iran, and refraining from further foreign adventures, this was then a break from the ground on which Hillary Clinton was standing, and on which Bill Clinton had previously stood. Moreover, where Bill Clinton had quickly dropped healthcare reform, in favour of bi-partisan politics, and Hillary Clinton was not proposing to resurrect it, Obama made it central to his domestic policy agenda.

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