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From New Deal to the art of the deal: how the neoliberal project led to Trump

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The last fortnight has yielded three spectacles reflecting the demise of the left, the rise of a new reactionary right and a novel political era more generally.

Outgoing US President Barack Obama's "Yes we did" speech was a fitting liberal - in the anaemic and disconnected non-Roosevelt, non-New Deal sense - conclusion to a presidency that combined slick oratory skills and a highly compromised health-care programme with increased proxy war activity, drone strikes and, despite an egregious record that left a trail of social destruction, ineffectual wrist slaps for Wall Street.

President-elect Donald Trump's truly surreal press conference, in contrast, was emblematic of the now tectonic rise of populism around the globe. This was made significantly possible by the elite extension of market-oriented policy from Ronald Reagan and Margaret Thatcher on, by both parties of capital and - allegedly - labour.

Finally, we had the general secretary of the Communist Party of China giving a pro-free-trade keynote speech at the World Economic Forum, emphasising categorically that the world's woes were not a result of globalisation.

The tale of how we got here is important in order to avoid misdiagnosis and, indeed, incorrect treatment. And while analyses abound, what seems to escape many commentators is that the present crisis of politics has a lot to do with a monster that elites - often liberal - have spent decades breeding: neoliberal globalisation.

The rise of neoliberalism

Neoliberalism is itself an animal with many heads, operating both at the national and supranational levels as the script of world market capitalism in the form of free trade agreements and pro-market policy sets. At the micro-dimension, it works as the disciplining tune resonating through our private lives, which are increasingly vulnerable to the individualised risks stemming from the marketisation of everything and the sanctity of competitiveness.

Chinese President Xi Jinping gives a speech the World Economic Forum on January 17 2017.
Ruben Sprich/Reuters

The complacency that policy elites have shown towards neoliberalism's inherently unequal order - with eight men owning today as much wealth as half of the world's population - is at the roots of the despair that have turned millions away from the "extreme centre", as British journalist Tariq Ali dubs it.

Their votes have either vanished in the cynicism engendered by a post-truth reality in which political promises have long been mismatched with outcomes, gravitated towards eccentric and dangerous characters such as Trump, or - all too rarely - created an opening for progressive politics within and beyond mainstream parties.

Importantly, neoliberal globalisation demanded the death of national development that followed the so-called golden age of capitalism (1945-1973).

The 20th century, which British Marxist historian Eric Hobsbawm famously described as an age of extremes, was also very much a century of development. It was a century in which great, albeit uneven, progress was made in material conditions and productive capacity. It was also an era in which grand battles were waged over how the world was to be understood and how it was to be changed.

The post-second world war period in particular, saw the consolidation of the century of development. Nation-states - including many new entrants - became the key containers of development. They were home to new class-based outcomes that manifested in projects to forge national economies. And working classes enjoyed leverage and influence over states that shielded society and the economy from Darwinian competition.

But two grand shifts arising out of the contradictions and tendencies of capitalism were to tear these arrangements asunder. The first was the rise of neoliberal policy sets, initially under Thatcher and Reagan, that attempted to recraft state and society along market lines. The second was the reorganisation of global production on the back of both neoliberalism (the software of globalisation) and advances in areas such as information and communications technology and logistics.

Unending history

Both these shifts liberated capital from its territorial confines and diminished the power and influence of labour. If labour was to use the same strategies as before - strikes, protests and calls for revolution - competitive fractions of capital could now, on the back of policies facilitating the free movement of capital, goods and services, decry the impact on "growth and jobs" and threaten to up and leave.

Advances in logistics led to the reorganisation of global production.
Phil Noble/Reuters

And when the Iron Curtain fell (1989-1990) and China's vast workforce joined the global economy, the pressure on workers and their ability to collectively organise and safeguard their interests was all but demolished. For elites within the extreme centre, these transformations signalled the passing of ideology, or as American political scientist Francis Fukuyama trumpeted, the end of history.

Importantly, the software of globalisation was regularly promoted as much by traditional parties of the working class as by those of capital. This point is crucial to comprehend the deep cynicism that traditional working-class supporters now feel for mainstream politics.

In the United Kingdom, where many are dismayed by Brexit, New Labour under Tony Blair would do much to extend the marketisation project started by Thatcher and further shift responsibility and risk from state and businesses to the individual.

In the United States, where liberals still seem intent on looking for explanations everywhere but themselves, the North America Free Trade Agreement developed under Republican president George Bush senior (1989-1993), which had a deleterious impact on American jobs, would be signed into existence without modification by Democrat Bill Clinton (1993-2001). Clinton also presided over reforms that further facilitated the meteoric rise and experimentation of the finance industry and exposed American workers to new sources of vulnerability.

Crucially, these parties, aided and abetted by the reality that their populations would see negative impacts offset by cheap goods from China and easier access to credit, were ushering in policies that would undo their traditional constituencies of support.

A terrifying juncture

To be sure, when the 2008 global financial crisis hit, the spirit and rhetoric of Keynesianism were resurrected. Government stimulus took colossal proportions in the form of bank bailouts, quantitative easing, and infrastructure investment. Yet this "Keynesian revival" was divorced from the systematic redistributive social policy and restrictions on capital that characterised the era of national development.

Lehman Brothers collapsed during the 2008 global financial crisis, which led to massive bank bailouts.
Chip East/Reuters

Instead, it constituted "socialism for the rich": redistribution from the many to the few and the resuscitation of moribund banks and corporations that now had little incentive to reinvest their wealth nationally. Their burgeoning profits could flee to tax havens or be channelled to economies where exploitation offered more lucrative prospects (and the potential for more crises).

And while elites breathed a sigh of relief when economic indicators turned modestly positive again, it was no doubt a stretch for the unemployed, the precariat, the vulnerable and the socially immobile to trust they were enjoying the "rising tide lifts all boats" promise of globalisation.

All of this has brought us to an interesting if somewhat terrifying juncture - one that may only engender further cynicism. While we observe the rise of a new pack of alpha males (and possibly a new alpha female in France), who spout selective illiberal rhetoric along with anti-immigrant positions, it is hard to ignore the awkward juggling acts that have to be undertaken.

Trump, for one, seems to be harking back to an aggressive mercantilist position but will inevitably have to confront the massive economic interests in the US, and indeed close to the Republican Party, that have been key forces behind the promotion of free trade, globalisation and tolerance of undocumented workers. His pro-business domestic agenda will likely do little substantively to offset the structural drivers of dissatisfaction and social malaise.

What is truly worrisome about current trends is not just the prospect of yet another round of pillage at the hands of corporate greed under the leadership of an unpredictable egomaniac. The main problem lies in the fact that neoliberal globalisation has rendered nationally based policy-making in the interests of working classes all but impossible.

In times of great social crisis it's only normal that people seek to regroup, to find support in one another, and wrest politics back from elites and their spin. Unfortunately, while this impulse may at times translate into progressive class-based action, it may also awaken the ghosts of nationalism and reactionary forms of populism (as we witness today). What we need now is unblinkered analysis and coordinated progressive political action beyond the extreme centre at both the national and international levels.

Toby Carroll, Associate Professor, City University of Hong Kong and Ruben Gonzalez-Vicente, University Lecturer, Leiden University

This article was originally published on The Conversation. Read the original article.