Trump: How the Right stole revolution from the Left

If I were a vindictive person, the overwhelming temptation in this current moment in history would be to say “We told you so”. Sadly I am a vindictive person, but instead of saying “We told you so”, I’m here to say “They told you so”. Donald Trump as the next US president is what happens when people who’ve been screwed over by 40 years of neoliberalism and the last 8 years of unresolved financial crisis have put their own economic situation and democratic influence above the very real disaster of having a racist, sexist demagogue in charge of the world. This is simply what happens when we collectively ignore the urgent pleadings and advice of expert progressive economists, journalists, historians, writers, politicians and activists belonging to the fringe left (“alt-left”?) and indeed the rational centre, that the current system is thoroughly broken.

I don’t for a minute believe that a Trump presidency is a good thing on balance (though in this Orwellian era, anything is possible), but it was certainly predictable, and predicted, for those paying attention. And that’s precisely why it is so infuriating that all anyone seems to want to do in these moments is wash their hands of culpability. Never mind the decades of study, advocacy and counsel from the original progressives and alternative leftwing describing the economic, financial, environmental and political unsustainability of neoliberal finance capitalism cooked up since World War II. While this particular version of capitalism has been subscribed to by all major political parties in the West, and indeed most minor parties, first and foremost it is a system subscribed to and forgiven by modern liberal elite culture.

The Left forgot the GFC, Trump reminded us

To state the obvious, the rise of Donald Trump is the delayed political fallout from the GFC, its root causes, and its failure to be resolved by 8 years of Democratic party leadership in the US. Trump is a product of where we have come from. Progressives have had so many opportunities to put forward a genuine alternative, even stage rebellion against our evidently broken economic system, but in each case either failed or politely declined, opting instead for “lesser of two evils” Realpolitik. Now the right-wing alternative has filled that vacuum.

The problem stems from an inability to comprehend exactly why and how the current system is broken. It originates in the cognitive dissonance that is able to identify growing inequality as an urgent problem, but is unable or unwilling to identify and act on the root causes, being the unprecedented and unsustainable rise in private debt across the world and the over-financialisation of advanced economies, resulting in the first ever “industrial devolution” across Western liberal democratic societies.

One of the numerous classical progressive economists who do understand the why and how is Michael Hudson, whose encyclopedic knowledge of economic history is the starting point that we need in finding the way forward from this perpetual crisis. Like his contemporary Steve Keen, he predicted the GFC because he understood its provenance, and believes that its perpetrators did as well. As he explains in a recent interview:

“We’re in a permanent debt deflation. To make it brief, people think in terms of business cycles – as if whenever things go down, they automatically recover. But every business recovery since World War II has taken place with a higher level of debt – higher and higher and higher. Finally, by 2008, the volume of debt was so high that it was absorbing all the economic growth. At that point the stock markets plunged, especially when it became apparent that the business plan of the large banks was economic fraud and junk mortgages.

People say when Queen Elizabeth asked “Why didn’t anybody foresee it?” The fact is, everybody foresaw that there was going to be a crash. That’s why they used the term “junk mortgage.” That’s why they coined the term NINJA: No income, No job, no assets. All this terminology was widely used. The FBI in 2004 explained that there was the largest wave of financial bank fraud in history, but George Bush shifted the investigators out of the FBI into national security, so nothing was done.

When President Obama ran for election, he promised to write down mortgage debts to the real value of property, not the junk mortgages in excess of the value. The terms that Congress set for the bailout of the banks, the Troubled Asset Relief Program or TARP, were that banks would rewrite the mortgages so that homeowners who could not pay the nominal mortgage would simply pay what the rental value of their property was.

In practice nothing was done. The banks were saved, not the economy. Tim Geithner, who was a protégé of Robert Rubin, was moved on behalf of Citibank into the Treasury, and he bailed out the banks – leaving all the debts in place, not writing them down. Banks stopped lending mortgage money, and began to call in their credit card loans by about 100 billion dollars, from one trillion to about 900 trillion. Mortgages were not written off, so homeowners had to pay so much money to pay off the debts that had been built up during the bubble economy that they didn’t have enough income left to buy goods and services.

It is therefore the height of arrogance and delusion for the progressive and conservative establishment alike to dismiss this result as another bunch of racist hillbillies not knowing what’s good for them, just as the Brexiteers were naively cast, without taking stock of the ongoing economic and financial disasters inflicted on all of us, and by virtue of collective inaction, perpetrated by all of us. In order to pass such judgments, we need to first consult those that did predict the crisis because they understand the problem.

To not shoulder at least some of the blame for this perceived disaster, and the apparent crisis of Western democracy, is to not have been paying attention. It wasn’t ‘hillbillies’ and ‘bogans’ who destroyed the global economy by blowing the largest global debt bubble in history, bailed out criminal bankers, de-industrialised the developed world, privitised the commons, delivered the people to the rentiers and monopolists, privitised unearned financial gains while socialising the losses etc. etc. The list really does go on and on.

The reason that progressives cannot properly understand or acknowledge how Trump could win is actually the same reason that he did win: our blinding sellout to this set of policies most commonly referred to as neoliberalism, or neoclassical economics.

There have been hordes of commentators describing the bad sales job, the need for better communication, the need to listen to disenfranchised peoples etc. These are indeed shortcomings of the modern political order, and the total failure of the DNC to back the one viable progressive candidate they had is clearly a key issue. But it still completely misses the point. It’s not the marketing that is rubbish, it’s what you’re selling. We need a revolution in economics to fix the world’s panoply of structural problems, not just a sympathetic ear with pretences to caring about the little person. Nothing enfranchises a person more than economic and social inclusion, and that’s going to take a lot of hard work, not just a better salesperson.

The Left forgave war mongering, Trump held up a mirror

Perhaps even more galling than the widespread failure of the Left to diagnose and reform our broken economic and financial system, is that we so happily ignore or whitewash the documented fascist tendencies and war mongering of the Clinton and Bush empires (of which the Obama regime was simply an extension), and ironically, their continued interference and destabilisation of foreign regimes. The US neoconservative duopoly long ago swept up the neoliberal political caucus into its bosom, and over the course of the last 15 years, the mainstream Left have normalised and become apologists for the unending imperialist quest for US supremacy and hegemony in all matters military, geopolitical, cultural, economic, and most recently financial.

Additionally, the Left under Obama have become overseers and even architects of some of the most totalitarian and aggressive policies the US has ever perpetrated. For those of us struggling to recall, here is a sample of Obama’s legacy:

  • The increasing militarisation of the police force
  • The regression of civil liberties including wholesale and indiscriminate spying on its own citizens
  • Extrajudicial executions in the form of illegal drone strikes on sovereign states, including against its own citizens
  • Torture and indefinite detention of foreign fighters and terrorism suspects, including its own citizens
  • The creeping presumption of guilt infiltrating law and order, backed by the disintegration of media integrity
  • The unending extrajudicial powers in service to a “war on terror” that began 15 years ago, with still no end in sight
  • A failure to withdraw from ongoing wars in the Middle East, wars costing millions of civilian lives
  • The funding and arming of extremists when and where it suits US interests – even if it means supporting the likes of Al Qaeda, as has happened in both the original Afghan war in the 80s and then again in the modern Middle Eastern conflicts leading directly to the rise of IS and civil war in Syria
  • Multiple new military interventions across the Middle East and Africa including Libya and Syria
  • Support for brutal, totalitarian and aggressive client states such as Saudi Arabia while simultaneously condemning the same perceived traits in states and regimes not aligned with US interests – such as Syria and Iran
  • Build up of military presences in Europe and Asia, contrary to post World War II treaties and NATO’s own constitution
  • Provoking a New Cold War with Russia and China, on the way to a nuclear World War III

These are documented facts, not conspiracy theories. This is the dual neoliberal / neoconservative nexus in the modern era, and when asked to vote for these bipartisan policies time and again, eventually the polity was going to reject it. It just so happens that an unhinged rightwing demagogue was the first to describe an alternative. And despite the denial of most leftwing commentators, his alternative actually contains some policies of merit. Such as opposing protectionist “free” trade agreements, and more importantly, not continuing the legacy of destabilising the Middle East and Eurasia by periodically removing regimes unfavourable to US interests.

One of the only potential positive aspects of the Trump ascendancy is that both the Clinton and Bush political empires were destroyed – or at least severely disarmed politically. And with their disarmament, other things equal, comes the disarmament of the most destabilising escalation in geopolitical tensions, risks and regional wars since the Cold War. Far be it from me to predict whether or not Trump will stick to his word on foreign policy, but the balance of probabilities and available evidence suggest we ironically stand a better chance of avoiding World War III under Trump (who, awkwardly for pro-peace liberals, has already announced an end to the longstanding Washington consensus policy of “regime-change” – though has also ramped up hawkish rhetoric against China) than under another Democratic administration.

As veteran leftwing warrior and maverick journalist John Pilger wrote before Trump’s election about the New Cold War started by the US, and the dangers presented by the “lesser of two evils”, Hillary Clinton:

“In the circus known as the American presidential campaign, Donald Trump is being presented as a lunatic, a fascist. He is certainly odious; but he is also a media hate figure. That alone should arouse our scepticism.

Trump’s views on migration are grotesque, but no more grotesque than those of David Cameron. It is not Trump who is the Great Deporter from the United States, but the Nobel Peace Prize winner, Barack Obama.

According to one prodigious liberal commentator, Trump is “unleashing the dark forces of violence” in the United States. Unleashing them?

This is the country where toddlers shoot their mothers and the police wage a murderous war against black Americans. This is the country that has attacked and sought to overthrow more than 50 governments, many of them democracies, and bombed from Asia to the Middle East, causing the deaths and dispossession of millions of people.

No country can equal this systemic record of violence. Most of America’s wars (almost all of them against defenceless countries) have been launched not by Republican presidents but by liberal Democrats: Truman, Kennedy, Johnson, Carter, Clinton, Obama.

In 1947, a series of National Security Council directives described the paramount aim of American foreign policy as “a world substantially made over in [America’s] own image”. The ideology was messianic Americanism. We were all Americans. Or else. Heretics would be converted, subverted, bribed, smeared or crushed.

Donald Trump is a symptom of this, but he is also a maverick. He says the invasion of Iraq was a crime; he doesn’t want to go to war with Russia and China. The danger to the rest of us is not Trump, but Hillary Clinton. She is no maverick. She embodies the resilience and violence of a system whose vaunted “exceptionalism” is totalitarian with an occasional liberal face.”

The Left already has the solutions, Trump does not

The current descent of the Left into shock, denial, hate, generalisations, excuses, and even McCarthy-esque anti-Russian paranoia tells us all we need to know about why this happened. George Orwell would be horrified and unsurprised at the way in which mainstream liberal and leftwing society has come to reflect the most regressive economic policies, and the most warmongering foreign policies. Conservatives have been their partner the whole way, but ultimately it is incumbent on progressives to describe and create the alternative, and therefore more fault ultimately lies with this failure to execute the alternative.

We know that the current breakdown of economics and politics in the developed world is fundamentally about inequality and the refusal of those in positions of power to fix it, and crucially the refusal of people who benefit from it to acknowledge it and support the solutions. So the only rational way to fight back and correct the broken system is to understand what is causing the inequality. And as I detailed in my recent article, it all comes down to the last four decades of unprecedented increases in the level of private debt compared to the surplus produced by our economies.

The period of the ‘Great Moderation’ in the 80s and 90s wherein living standards, economic growth, financial wealth, fixed asset prices, financial deregulation and global trade liberalisation proceeded on an uninterrupted upward trajectory, was an anomaly in which rising debt levels replaced stagnating real incomes, creating the illusion of unprecedented stability and prosperity. The Global Financial Crisis unmasked that illusion, but rather than seizing the opportunity to reform the financial and economic system and cancel the rapacious and unproductive debts that would never be paid – as has almost always been the historic solution to financial, economic and political crisis caused by debt saturation – the liberal elites chose instead to extend and pretend.

A few short years ago, it was still widely acknowledged that the root causes of the crisis had not been fixed, and that respective authorities and central bankers were simply kicking the can down the road. Despite the fact that these root causes and imbalances are mostly worse now than they were in 2008 (global debt levels being chief amongst them), the shock and dismay expressed by modern neoliberals and the collective media establishment suggests that only 8 years later, with none of the underlying problems resolved, the crisis has been assumed to be solved.

In order to understand why the record level of global debt is the cause of the global ‘secular stagnation’, one only needs to look at the current global private debt level of around 150% debt to global GDP. If debt to economic output is at 100%, and average interest rates are at 4%, we need to grow our incomes and economy by at least 4% to ever have any chance of paying down the debt – assuming no voluntary fall in living standards. So to ever deleverage from 150% of GDP, the world would ned to grow at greater than 6%. It’s pretty clear that is no longer possible (even putting aside the obvious ecological and resource limitations to this level of growth), and that the result is exponential escalation in debt levels, and ever greater portions of income being swallowed up by debt servicing and the unproductive parasitic financial sector.

The global economy has therefore become a giant Ponzi scheme, wherein new debt is required in order to service old debts. This is why there has been no recovery. It’s called debt deflation, and it is well understood by the students of economic and financial history that it is well past time to listen to.

There is simply too much private debt, and its destroying the real economy, and causing most of the rise in inequality experienced over the last few decades. This is no mystery, and is the fundamentally unresolved global crisis that unchecked will cause further political shocks, financial crises and economic collapse. There is a long and inglorious human history of such breakdown in society and indeed civilisations being caused by an over-indebted private sector and an over-financialised economy that extracts the profits from it. The Roman Empire was one of many examples, whose collapse was ultimately brought about by debt saturation and over-financialisation, and manifested first in economic crisis, then political crisis. What followed was the Dark Ages, wherein the European continent spent several hundred years at war.

Michael Hudson, who famously proclaimed and proved “Debts that can’t be paid, won’t be paid”, explains some of the required and once well-understood solutions:

“In the end there’s only one way of solving the problem. That’s to write down the debts. There is no way today’s debts can be paid. The only way to free the economy from these payments for debt service is to write down the debts. That’s what finally happened in Rome. That was what Jesus’ first sermon was all about, wanting to restore the Jubilee Year.

That’s what finally happened in the 1920s when Germany and the allies were pushed into depression by German reparations to the allies, for them to pay their Inter-Ally war debts to the United States. Finally these were all cancelled in 1931.

So after about a decade of depression, there will be enough people who will finally see that the debts have to be written down. But there’s not that awareness yet, because there is a feeling that money doesn’t matter – that debts don’t matter, and the economy is really just barter. Unless people think of debt in terms of the whole economy being wrapped in a context of debt and property ownership and rent extraction, they won’t realize that’s what’s being sucked out of the economy doesn’t have to be. It doesn’t have to be this way.

[The alternative is] the view that classical economists had. They were reformers. Their idea was to keep natural monopolies – including health care and pharmaceuticals, water and electricity – in the public sector. You’d have a public alternative to provide basic services and basic needs at cost.

The first business professor in the United States, Simon Patten, said that government infrastructure is a fourth factor of production, alongside labor, land and capital. But unlike private capital, it doesn’t aim at making a profit. It aims at supplying health care and water, and banking either at cost or at a subsidized price or freely. That’s how you make an economy low-cost. If there is a natural rent in some land sites, you use that as a tax base. You tax economic rent, not labor, not industry. Basically, you tax free-lunch income. You don’t use a tax system that adds to cost instead of subtracting from costs.”

Trump’s election is more than anything else, a rude wake up call to the forgetful elites and bourgeoisie that the Great Moderation is over, and the GFC that represented its zenith and the beginning of its end have not yet been resolved, and unless we fight hard for the necessary revolution in economics, the much-needed political, social and environmental revolutions will never eventuate to save us from another Dark Age. The entitled, comfortable, ‘sustainable’, individualistic, self-referential, urban, cosmopolitan, post-GFC bubble has been burst, and if nothing else good comes from recent events and the next number of years, it is this fact.

So, like many people we’d rather not have to listen to, I’m here to say they told us so, and they have the solutions. It’s not like we need to scratch around for the solutions or the substance and structure of this revolution. The real progressives like Michael Hudson and Steve Keen have been discussing it for a least a decade. It is the height of intellectual laziness to throw our arms in the air and claim that “the Russians did it”, when we actually have all the answers we need to begin a progressive counter-revolution.

Here’s a high level sample of their solutions:

  • Rediscover and rebuild economic education around classical economics and the distinction between earned and unearned income, or economic rent
  • Restore the role of money, banks and debt in modern economic models, which essentially are blind to these factors (which is why the economic establishment failed to foresee the GFC)
  • Implement a modern debt jubilee, forgiving all odious national and private debts other than labour and business-to-business debts, by issuing a once off citizen dividend that must first be used to pay down debt, in order to not penalise net savers
  • Restore the creation of money as an exclusive public / sovereign privilege, not a monopoly freely granted to the private banking sector
  • Shift taxes away from labour and capital and onto economic rent, most crucially the unimproved value of land
  • Institute a universal basic income, paid for with the proceeds of economic rent taxes, which in turn ensure that the citizen’s dividend is not simply capitalised into asset prices – the key defect of UBI in isolation
  • Replace political donations with publicly and proportionally funded election campaigns
  • Craft a global treaty to shut down internationally sanctioned tax avoidance mechanisms such as transfer pricing and profit repatriation.
  • Restore the commons to the people by:
    • returning all natural monopolies (possibly even land according to some) to public ownership and governance,
    • taxing 100% of the economic rent for monopolies that are not centrally owned and governed (eg. land),
    • 100% taxation of ‘negative externalities’ such as environmental pollution, damage to public health and corporate crime, and
    • enshrining access to land, clean air and and water as fundamental universal human rights
  • Pursuit of an “Open-Source Everything” model for democracy, governance, defence, intelligence, community, religion, economics, finance, commerce, healthcare, engineering, infrastructure, agriculture and the environment

These solutions cannot easily be dismissed as Socialist, or Marxist, or even as “redistribution” – so hated by the Right. They are simply the rational and correct solutions to our economic, financial, social and environmental imbalances, precisely because they are simply “distribution” of the value that is created by out collective human endeavour and provided by the natural resources that we must all share, yet which has been allowed to be captured by the few. And this prosperity has been captured not through genuine innovation and investment, but through privilege, monopoly, deregulation, systematic tax avoidance, corruption and war. In other words, rent-seeking and imperialism. No one deserves to have an empire, and no one has a monopoly claim to economic rent.

The fundamental imbalance described by classical economics was this distinction between earned and unearned income, and the monopolies of land, natural resources and banking – among others – must not be allowed to fall into the hands of the few. That is a Tragedy of the Commons, where the fruits of our labour and enterprise, and the air, water and land that we all need for survival, are privitised in the possession of the monopolists and rent-seekers, the idle rich who must instead be obliged to return or “distribute” their windfall gains to the people and community that created it. The alternative is oligarchy and more Donald Trumps, repeated financial crisis, economic stagnation and collapse, environmental collapse, political revolution, and inevitably violence and war. The Left and the right must bear equal responsibility for this collective tragedy.

These solutions should appease the Left and the Right, Progressives and Conservatives, as they are actually supportive of genuine free markets, limit government ownership and regulation to where it makes most sense – in natural monopolies and provision of low cost essential infrastructure, encourages genuine productive endeavour, investment, and efficient and sustainable use of land and limited natural resources, and ultimately ensures the each person can share in our common prosperity and enjoy the most fundamental right and prerequisite for earning a living: access to land without the burden of onerous debt, interest and usury.

It’s time for self-reflection, time for humility, and time to get behind the solutions that have already been laid out by those that understand the problem. Spread their word every chance you get. It’s time for the Left to steal revolution back from the Right, and it starts by rediscovering, reclaiming and rebuilding economics from the ground up. We have a way forward, we have only to listen and act.

6 thoughts on “Trump: How the Right stole revolution from the Left

  1. Loaded earlier at Macrobusiness –

    I know your comment isnt about Russia, but my rant touches on many of the themes you mention…..we havent just cocked up our handling of Russia, but our handling of our own political and economic narrative…

    A boxing day rant (better than joining sales at Myers with the Mrs)…..

    Cheers for that. There are some good reads there, though I tend strongly to the view that Foreign Policy magazine is your classic neocon magazine with a ‘Russia is the bad guy’ stock in trade – and Bill Browder and Niall Fergusson won’t do much to disabuse me of that.

    For mine, I tend to the view that Russia represents a sort of unmentionable scar – particularly for the neoliberal consensus which is currently coughing up its grip on the developed world – and a vague sense of regret, that, but for a host of decisions which seemed plausible enough at the time, the world may have a completely different Russia to engage with currently. I would also add that if you stripped that sentiment back you would come awfully close to the possibility that the Western world (and mainly the US – UK nexus) has completely fucked its handling of Russia, and the former Soviet Union, and that the chickens of that mishandling are still coming home to roost.

    If you go back to that day Mikhail Gorbachev meandered off into history to leave the stage to Boris Yeltsin, the United States and the Western world had an opportunity. They could ensure that the dismantling of the Soviet Union was orderly and delivered benefits to the people of the former Soviet Union, or they could pocket the windfall of a reduced geopolitical spending requirement, and leave the peoples of the former Soviet Union to sink or swim of their own accord as they addressed the immense challenges of the end of the centrally planned era.

    Looking back from 2016 it is pretty easy to see they largely adopted the sink or swim approach. Eastern Germany, the Baltic states (Estonia, Latvia, Lithuania), the Czech Republic and Hungary, represent plausible success stories where former Soviet nations have largely transitioned into functioning western style democracies (though all have their issues), and you could make a case for Poland and Slovakia (though you’d have to ask questions about the way vested interests in both nations have shaped their polities). The rest is largely a tragedy. Bulgaria and Romania so beset by corruption that the EU is still baulking at complete integration, Moldova so poverty stricken people smugglers use it as a cheap way station, Belarus still trapped in a time warp of Lukashenko, Georgia, Armenia and Azerbaijan still trapped in a world of ethnic rivalries, corruption and local strongmen, Tajikstan, Uzbekistan, Turkmenistan, Kyrgyzstan and Kazakhstan one party states largely still run by the descendants of those who were there in power when Mikhail told them they were on their own, mainly marked by violent, capricious, corruption riddled regimes.

    Next cab off the rank is Ukraine, where the Soviets in power in 1990 simply became ‘nationalists’ and birthed the most spectacular failed state on the planet. They’ve driven the living standards of a people who have fertile agriculture, commodity resources, a significant industrial base, and strong cultural and economic ties into Europe, backwards for 15 years after nationhood, and handed control of the nation to a self-serving batch of maybe 500 corrupt oligarchs, prepared to hold their nation, every nation with whom they engage, and the EU, to ransom to extort further cash, while treating everyday Ukrainians with contempt.

    Finally we come to Russia. They got, from 1991, 9 years of complete chaos in the form of dysfunctional parliaments, impotent regulators, sham assets sales revolving around the dismantling of the economic basis of the Soviet state (pushed along by the IMF, World Bank, the US, an army of carpetbagging advisors and consultants – all keen to hurry the process so the Soviet State couldn’t be recreated) a ‘democracy’ which saw a freshly created oligarchy (those with the funds to buy the assets being sold off by the Russian state in the first Yeltsin administration) and its freshly created ‘free’ media quite literally go out and buy an election (Yeltsin 1996) where everyone knew Boris was a coronary event away from the afterlife and his family had decided to make personal hay while the sun shone, and where ordinary Russians were already showing signs of an inclination to go back to the CCCP. Russia descended into uber chaos in that second Yeltsin administration as the price of crude collapsed to $10/bbl in 1998 and Russia was abandoned by global capital and the western world, and a profoundly corrupt coterie group of oligarchs took control of the running of the country. All the while ordinary people’s standards of living went into reverse, and criminal gangs – largely the creations of the oligarchs – went about whacking each other on the streets of Moscow. In the 18 months following the collapse of crude, while Yeltsin was a missed heartbeat away from the afterworld, Russia had three Prime Minister’s trying to craft some sort of order from the chaos. Vladimir Putin was the third of those and the moment it appeared he had some sort of sway over the chaos the Oligarchs who had created and feasted on the second Yeltsin administration, slipped him into the Presidents seat (3 months before the ostensible end of Yeltsin’s term, due to health reasons) – with a deal that he wouldn’t touch the Yeltsin family and the Oligarchs which had been spawned by it – and confident they had a compliant future head of Russia in their pocket.

    In that first Putin term he did a deal with the oligarchs to the extent that he wouldn’t touch them or the processes they had accumulated their wealth with, provided they stayed out of politics and didn’t undermine state interests, which he made clear from the get go were about recreating order, sorting out the national economy and its finances, and recreating a national sense of respect for themselves on the part of ordinary Russians. When some Oligarchs showed signs of baulking at that he broke them (Berezovsky and Khodorkovsky).

    The rest, as they say (and it isn’t all Putin’s doing) is history. A national leader who had seen his nation taken to the cleaners by neoliberal economic ideology rejected it out of hand and began reconsolidating state ownership of assets (particularly in energy). A national leader who had seen the ‘free’ media used to buy an election by a group of uber wealthy beneficiaries of corruption, brought the media under state control and took steps to ensure those oligarchs didn’t buy any more elections. A national leader who had seen the scant regard with which the IMF and World Bank (in particular) treated debtor nations, went out of his way to make sure Russia paid down every last cents of state debt miles before it was due, and wasn’t backward in pointing out the neo liberal agenda and its downsides. For a Russian public which had seen politicians, policeman, gangsters, judges, journalists, and business identities blowing each other up on the streets of Moscow for ten years he bought back a sense that the risk was being reduced – if the policing is a bit heavy it is nothing Russia hasn’t experienced before. For that same public, which had developed extreme reservations about the oligarchs and their propensity for using the state to further their own wealth he returned a sense of the oligarchs were at least now bowing to state imperatives. For a nation which had come to sense that NATO, the EU and the US, were trying to ensure a position of being able to shoot into Russia without the Russians being able to shoot back, and were forever trying to move military assets closer to Russia, Putin called out what they were thinking and told the Western world (and the neo liberal [or neocon – there was nothing to distinguish them in a geopolitical sense] consensus) where to get off, and set about bolstering his military ability to be able to back that up.

    That isn’t to say the guy, and Russia, don’t have significant downsides. It is, as the Americans have identified, a ‘vast kleptocracy’ and there is not the slightest doubt in the world that Putin and those close to him are prime beneficiaries of that. He himself probably is amongst the richest people in the world, though we do have a situation where disentangling what is a state asset used by him, and what is his personal asset, and what are or could be gifts for him held in fief by others, is monumentally difficult. The ordinary punters of Russia are quite poor. Russia has spectacular corruption (though still to a degree lesser than Ukraine) and the regulatory services are all too often deployed as weapons in competition between the elites, rather than for a public good. The media is state centric and although good at pointing out shortcomings in the western world, would not go within a bulls roar of really looking at key issues (corruption mainly) affecting Russians. In the geopolitical sense, Russia does push the envelope; it has taken parts of Georgia, it does back a brutal tyrant in Ramzan Kadyrov as head of Chechnya, it has taken Crimea by military means, and it does back separatists in Transdnistria and eastern Ukraine with arms. More disturbingly, rightly sensing that the neo liberals of the world wouldn’t hesitate to remove VVP if they thought they were a chance, and wanting to keep as many like neoliberal ‘disreputables’ in play as possible, it does back (in Assad in Syria, much of central Asia, Lukashenko in Belarus) some ugly regimes.

    More pertinently, given events in the US election, Russia does direct a lot of effort to hacking, digital disruption and surveillance. Anyone with a website will be able to tell you that simply geoblocking Russia significantly reduces the risk to that website.

    As far as most Russians are concerned it is beyond doubt that the Americans and the ‘West’ have been seeking to influence Russian elections for the generation since Gorbachev handed over the reins. You can see it in the NGO activities, the media coverage of things Russian, and UN and global institution activities in Russia. For most Russians, Russia having an ability to eavesdrop on the Western world, or hack into its communications, or even to be able to spread disinformation, is nothing that they don’t feel they have experienced for a generation. If they think their government has the ability to do it back then they are often supportive of that.

    From there the closest engagement of Russia and the ‘West’ has generally been at the ‘elite’ end of town where uber wealthy Russians, who all Russians assume have been beneficiaries of corruption, are welcomed into New York or London, often fleeing law enforcement in Russia, and often get rewarded with passports and visas and rights to abode and buy property which ordinary Russians would never be able to access if they were fleeing Russian law. In the end the Davos set got Khodorkovsky out, and a walk through the expensive burbs of London New York or Miami will alert to the possibility there are a lot of minor bureaucrats, minigarchs, and oligarchs who have apartments, mansions and estates there, having got their booty out of Russia. The ‘West’ rewards parasites praying on Russia, and most Russians tend to the view that the western ‘ideal’ of Russia is an enfeebled state which is militarily and economically impotent. For some Russians a bit of totalitarianism in Moscow is an acceptable alternative to having impotent chaos which rewards the criminal. If that is the dynamic the Russians are seeing then why wouldn’t they seek to influence perceptions and know about the thinking on the other side?

    I don’t have the slightest skerrick of doubt that Russian controlled elements sought to hack into whatever they could in their pursuit of knowledge about what was unfolding in the US. Similarly I don’t have the slightest doubt that Russian media presence presented issues in the US and UK media to influence the way those publics saw events, so as to be able to further Russian state interests. The question is not about whether they would try. The question about whether they would have succeeded in hacking would be answered only in knowing the security of the US officials whom the Russians are believed to have hacked – but like most security the weak link is the people, not the system. The question about whether Russian state media was an influence in determining voting priorities of publics in the US and UK would reflect not so much the Russian media, but the degree to which the media in those nations had ceased to be credible to those living there – and it is fairly obvious they have cashed in their credibility with the publics they service, amidst a raft of issues which couldn’t ever really get traction – such as taxes of the elites, corporate tax avoidance activities, the increased take of the economic pie by the 1% set, immigration control, the offshoring of working class jobs, lack of wage gains for the 99% and private debt. Like if the Russians had wanted a perfect environment into which they could pump fake news and have it believed, it isn’t as though we haven’t gone out of our way to give it to them.

    So where do we go from here with Russia? God only knows. I cant see crude prices going anywhere significantly above where they are, and energy is the only real lever Russia has – both as a direct tool in its geopolitics, and in the funding of the Russian state (and military) it enables. So I tend to see the high water mark of Putin’s influence as probably having just passed. We can be fairly sure that next time around there will be strenuous and well-funded efforts to ensure that any Russian influence in the media sufficient to influence electoral dynamics across western Europe or the US will be curtailed. I don’t doubt VVP will win the 2018 Russian Presidential election easily. But after that it wouldn’t surprise me to see another round of effort to undermine Russia, and or seek to establish something in the post Putin era which was more inclined to come to agreement with the neoliberal interest. I cannot see ordinary Russians getting increased access to visas and passports in the EU, UK or US, and I don’t really see Russia addressing corruption any more than it has, and I don’t see living standards in Russia getting significantly worse, but rather trudging along the bottom where they have been since circa 2012.

    I reckon there is great scope for some form of Russian over reach, but also for a miscalculation on either the western or Russian side to disrupt things. I reckon Trump and Putin will have conceptual similarities in common which are recognisable to each other – both are scions of revolt against a neoliberal consensus which had been feeding ordinary people shinola, and both are essentially frauds insofar as both are beneficiaries of that consensus (trump as property developer and VVP after becoming head of state) – but I don’t think they will be able to do all that much for each other. I don’t see that much scope for more trade between the US and Russia, and I am not that positive on the financial sanctions on key Russians being removed. More importantly I can’t see Trump being able to deliver higher crude prices which would loosen the economic straightjacket on Putin. Putin may be able to come to some sort of ‘spheres of influence’ deal with a Trump administration which would free up US military assets to focus elsewhere, and possibly to sort out a batch of frozen conflicts Russia is involved with, I can see the current Ukraine administration withering on the vine as the EU and US walk away from any engagement with it – which would free up Russian funds supporting separatists there. That said if things got out of hand I could see Russia laying claim to Novo Rossiya, though I think an increased autonomy deal with those areas remaining inside Ukraine is more likely.

    All in all, an entertaining time ahead

  2. Very good article. However, I think fiat currencies are closer to the core of the problem. It is hard to create unbounded debt without fiat money.

  3. ‘Shift taxes away from labour and capital and onto economic rent, most crucially the unimproved value of land’ Not sure I understand what this actually means. Are you able to explain please?

    1. A land tax is effectively council rates but levied (as well) by state or federal governments. The idea being to disincentivise speculation in land – currently encouraged by rent seeking, land banking, negative gearing, capital gains discounts, etc and possibly encourage labour and capital into more productive avenues (though in Oz with an ageing risk averse population this money is likely to end up in banks or chasing blue chips)

      Land tax is not without its problems. The unimproved value of land is easily manipulated by the same government bodies that seek to gain from its taxation (urban containment, immigration, zoning, etc) and such manipulation would no doubt be encouraged by the large property development firms who would benefit from selling ever smaller spaces for higher prices under the guise of affordability. As the unimproved value of the land increases, land tax is taxing people for an unrealised or potential future profit.

      We can see what land tax in our corrupt little nation would do if we look at HKG. The HKG government is incentivised to restrict land release to maximise the value of the land and thereby land tax (about 1/5th of its revenue).

      Australia already has some of the highest house prices in the world thanks to the gross mismanagement of a number of regulatory settings and that is before we encourage our worthless governments to drive them even higher with a revenue incentive.

      As a tax payer on a fixed salary I am all for shifting the burden from the productive to the parasitical but there is so much low hanging fruit in the Australian economy that would benefit from reform before we risk throwing another baby and the bathwater out on the street because we have replaced one established set of parasites with another.

  4. the elephant in the room for the so called progressive left intellectuals, is that most of them are technological cornucopias, with a religious attachment to the idea of eternal progress. Whereas while the working class has seen the new robotic technologies as a threat and danger to their dwindling livelihoods, any protest is labelled ludite. As a veteran of the 60-70’s gender wars, many women saw this coming.Some boffin said recently that the jobs of the future will be what the robots can’t do, women already know that, they have always done them, but it still doesn’t tell us what men are going to do.. Its fine to write erudite intellectual analyses, but it needs to include a real hard look at where the Elon Munks of the world are going. I think it was Althusser who said “the working class don’t have to read Das Capital, they live it”
    Donald Trump promised to bring jobs back home. the working class voted for him.

  5. Excellent post, though I disagree with labeling “left” and “right” based on being ‘the other side’, rather than actual policies and philosophies. Truth is there simply bugger all left-wing representation in modern politics in most of the western world.

    A specific question about one of your proposals:

    “Replace political donations with publicly and proportionally funded election campaigns”

    How would you see this actually working in practice ? How does a new, unaffiliated candidate gain public funding to campaign ?

    IMHO, the real problem with political donations is the concentration of most of them from a very small group of wealthy & powerful vested interests. I think a better resolution would involve:
    * Allowing donations from natural persons only (maybe even only people on the electoral roll)
    * Limiting the maximum amount per person per year to something attainable by a majority of the population – a couple of grand at most.
    * Severe penalties (mandatory gaol time and bankruptcy-inducing fines) for both donors and recipients who seek to circumvent these limitations.

    This allows a more democratic approach, where people who genuinely appeal to large percentages of the population can gain widescale financial support in a somewhat representative proportion.

    I also think you should more explicitly call for a real democratic process where the people can act directly, rather than only through political gatekeepers in yoru solutions. Eg: citizen-initiated referendums and recall elections.

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