People and Other Commodities 3: Left Behind?

Bob Rae says that the Ontario and federal NDP are "wedded to a culture of opposition and protest", "have great difficulty embracing the lessons of the postwar world about the relationship between markets, society and government",and "cannot escape a knee-jerk reaction to business entrepreneurship and wealth creation".

That's funny. The NDP aren't even really a socialist party- they don't envisage nationalizing anything. The old CCF would have difficulty recognizing them. If one were to ask the NDP why they don't push for the (re-)nationalization of industries and utilities, they would likely say that the tools that worked in the past don't necessarily work now. Like the other parties, the NDP agrees with the idea of a "mixed economy"- the debate is over what sort of mix it should be, and even that debate is fairly limited in scope.

As for the "lessons of the postwar world", let's look at what policies were being put in place during the period of greatest economic growth after the Second World War. This was the period from about 1950 to about 1973. In most countries the role of government in the economy increased, often dramatically so. New social programs were introduced and consolidated. Government debts, which were huge at the end of the Second World War, were not "paid back" but were allowed to decline over time relative to rapidly growing economies. International trade expanded dramatically, but capital flows were subject to controls that seem almost unthinkable now. Unemployment rates generally remained low in North America and even lower in the United Kingdom and many other European countries- lower than they are now, by the way. Low interest rates? Interest rates were low then too, rarely going above 5%.


This relatively rosy picture began to unravel in the mid-1970s with the first oil crisis, bringing in inflation, rising unemployment, and rising government deficits, just as capital markets were starting to be "liberated" from controls. Pretty soon people like Reagan, Thatcher and Mulroney came along to bring in their "free market" solutions to these problems- and the rest is history.

So, when Rae accuses the NDP of not learning the lessons of the postwar years, are they the lessons that these pioneers of neo-liberalism preached to us in the 1980's? Are they the lessons that have become dogma ever since?

Rae has, for instance, embraced the neo-liberal idea that "competitive tax rates" for business are a "precondition to prosperity". If only it were true. "Competitive tax rates" do not in themselves create prosperity (except for the rich). They do not add to global economic growth (unless we assume that corporate taxes are inherently bad for growth- an unproven assertion). A country's tax rates can only be "competitive" in comparison with another's- so "competitive tax rates" may boost one country's growth at another's expense. A country may gain from moving its rates lower than that of a "competitor"- until its competitor follows suit.This erases any competitive advantage, but it does leave corporations with more money.

The problem for those wishing to sit out this race to the bottom is that not playing the game may hurt a national economy in the globalized marketplace. However, that is largely due to the "free trade" agreements which have ushered in "globalization", allowing investors to move their capital in and out of countries as they see fit, not having to commit to anything or meet any conditions. If social democratic parties were really interested in doing so, they could push for substantive changes to these agreements, such that capital flows could be regulated by countries in the public interest. But this idea is anathema to the "pragmatism" Rae is pushing. Except...if an idea is anathema to it, is it really that pragmatic? Just because it's accepted by the powers that be doesn't make it non-ideological.

As for Rae's suggestion that the NDP should have followed the lead of Britain's New Labour- who's he kidding? Do we really need two federal Liberal parties? Surely one is enough, and it is now good enough for Rae. He's found his new home- hope he's happy- but why shouldn't points of view outside of the neo-liberal consensus have major parties to represent them? The worst thing about New Labour is that it's a denial of the hope that there can be anything better than what was set in motion by Thatcherism- and anyone who still has that hope is now consigned to the sidelines of British politics.

If anything, the trouble is that the NDP aren't forceful enough in saying that there are alternatives. They're actually rather conservative, in my opinion. By the way, this is where Rae is correct in saying that they're just into opposition and protest. They're fighting a rearguard action against neo-liberalism, without even being very forceful in questioning neo-liberalism's assumptions. I think they need to learn to be bold again. Once their ideas were at the forefront- ideas like Medicare, the Canadian Pension Plan, and Unemployment Insurance. If they could present bold ideas again, they could avoid just clinging on to what's left to salvage of social democracy in Canada and actually enunciate what a social democracy of the 21rst century could look like in Canada.

Just a thought.