In a couple of weeks I will be in San Francisco for the American Psychiatric Association’s annual meeting, at which the latest edition of the APA’s diagnostic “bible”, the Diagnostic and Statistical Manual of Mental Disorders, the DSM-5, will be released. From the look of the program, you’d think this is much like when previous versions were released — gathered delegates will get to hear lots of explanation of how the manual will work, how it was developed, and what evidence was used to validate diagnoses. There are very few papers that could be considered even remotely dissenting.

But appearances can be deceiving. Last week the National Institute of Mental Health — the peak US mental health research body — delivered a body blow to the authority of the DSM by announcing that it was abandoning the manual in favour of its own Research Domain Criteria (RDoC).

This is a new phase of the controversy that has dogged the DSM-5 at every turn. Petitions opposing the project have garnered the signatures of thousands of clinicians. The revision process has been attacked for being kept behind closed doors, and for favouring the pet research areas of expert committee members. The corporate media — usually uncritical of mainstream psychiatry — has reported substantial criticisms of proposed changes. The taint of academic psychiatry’s incestuous relationship with Big Pharma has fed accusations of financial influence. And the psychiatrists who headed DSM-III and DSM-IV — Robert Spitzer and Allen Frances — have attacked the DSM-5.

Even on the aims its creators set, the DSM-5 is a failure; an incoherent compromise and a mess. Significantly, its contents will reflect the impasse of the diagnostic paradigm that became hegemonic with the DSM-III in 1980, following a “revolution” in diagnosis designed to save US psychiatry from its profound crisis in the 1970s. It will be a further sign of the failure to create a “scientific” basis for psychiatry through symptom-based diagnoses, as NIMH director Thomas Insel has argued on his blog.

But the authors of DSM-5 also wanted the kind of quantum leap Insel advocates. When they started work over a decade ago they saw their task as going beyond simply describing disorders in terms of the symptoms and behaviours (the DSM is currently silent as to the “aetiology”, or cause, of almost all the disorders it defines). Instead they would align diagnoses to the “underlying” genetics and neurobiology. Yet as they proceeded it became increasingly obvious that there was insufficient evidence for this shift. More importantly, the biomedical model was increasingly being challenged from a number of directions: A series of major scandals involving kickbacks from drug companies to psychiatric “thought leaders”, mounting public concern about the over-diagnosis and gross overmedication of adults and children, and the growing evidence that many top-selling psychiatric medications (especially anti-depressants) worked little or perhaps no better than placebo.

It is no wonder that DSM-5 “innovations” like removing bereavement as an exclusion criterion for Major Depression are widely opposed. It feeds into a suspicion that psychiatrists and drug companies are cynically expanding potential markets for the expensive services and products they are selling.

The finished DSM-5 will have most of its original raison d’etre missing, some of the rewriting (e.g. personality disorders) relegated to an appendix, and a pall of controversy, mistrust and confusion surrounding it. The APA has suffered financially in recent years from a stagnant membership base and growing regulation of its financial ties with industry. Sales of the manual (not cheap at US$199) and its various guides to use form a major part of the APA’s annual revenue and seems to have been a driver for getting a new edition out for sale.

In the end politics hobbled the DSM-5 because the “objective” scientific advances its developers saw as being just around the corner proved to be a mirage.

The persistence of the neurobiological paradigm

While this is a setback for the DSM, it is far from being a defeat for the dominant neurobiological model of mental health and illness. As blogger 1 Boring Old Man points out, Insel is simply taking the established NIMH position to its logical conclusion by formally breaking with DSM-5. And the last half-century is proof of how profoundly that model shapes psychiatric research and practice. No matter how lean the pickings they deliver, biologically based approaches remain powerful and those who question them tend to be sidelined. You can see this in Insel’s alternative program for devising new diagnostic boundaries:

• A diagnostic approach based on the biology as well as the symptoms must not be constrained by the current DSM categories,
• Mental disorders are biological disorders involving brain circuits that implicate specific domains of cognition, emotion, or behavior,
• Each level of analysis needs to be understood across a dimension of function,
• Mapping the cognitive, circuit, and genetic aspects of mental disorders will yield new and better targets for treatment.

Such assumptions are little more than speculative, yet they are presented as conclusive. They serve to close off avenues of research that fall outside their boundaries rather than open them up. They point to the imperviousness of the dominant biological paradigm to evidence that contradicts it. In the words of Samuel Beckett, “Try again. Fail again. Fail better.”

Another example of this is the set of arguments being put by Patrick McGorry and his collaborators here in Australia. When I last blogged about McGorry he was arguing for early intervention in young people deemed to be at ultra high risk (UHR) of psychosis. The intervening period has not been kind to this aggressive treatment approach, and last year he spoke against having UHR included as a diagnosis in the DSM-5. But this doesn’t mean he has abandoned the UHR concept, despite further setbacks to its validity and usefulness. For example, his team last month published a paper showing that anti-psychotic drugs are not more effective than supportive approaches and CBT in preventing “transition” to psychosis in a large group of UHR patients. More striking — and not noted in the abstract but buried in the text — is the fact that the patients who did the best were the ones who refused any kind of intervention!

Yet this has not stopped McGorry more recently defending such interventions in a sharply worded letter to the leading Australian psychiatry journal:

With respect to interventions, it is simply not true to say that there is ‘even less evidence’ of which treatments are effective for those at risk. Two meta-analyses (Preti and Cella, 2010; Van Der Gaag et al., 2013) both show, on the basis of 10 randomised control trials with the ultra-high risk for psychosis concept, that treatment is very effective in reducing risk with the number needed to treat (NNT) between four and nine. This indicates real potency of treatment in reducing risk and also underscores the fact that cognitive behavioural treatment (CBT) is the most appropriate first- line treatment. This should defuse the controversy surrounding this issue, which has been fuelled by ideological currents and confused with disinformation (McGorry, 2012).

The failure of the UHR concept to live up to its promise has also not stopped McGorry and his collaborators from spreading the gospel of his broader “clinical staging” model, which argues for the greatest intervention in early (or pre-illness) phases of various disorders. It seems that this is to be applied to every mental disorder, with depression, bipolar disorder, and even borderline personality disorder being redefined so as to find “at-risk” symptoms in young people. The logical extension of this model, originally developed for the treatment of cancer, has not been lost on its proponents, and they openly argue that people with established chronic mental illnesses should be treated on a “palliative care” basis. It is in this context that we can understand McGorry’s anger that funding the National Disability Insurance Scheme (NDIS) might delay the rollout of early intervention services.

McGorry has previously said he sees himself as working towards a “scientific revolution” in the sense that Thomas Kuhn would have seen it — a sudden break from the dominance of one paradigm to that of a new one. Yet the shallowness of McGorry’s approach strikes me as obvious: He may reject parts of the symptom-based DSM model but he has not emerged from the mire of biological reductionism and the use of metaphors crudely appropriated from other branches of medicine.

The real problem afflicting all these attempts to find a way out of the current impasse is that they have failed to accurately diagnose the sources of the crisis. Because psychiatry, like the rest of medicine, is deeply imbued with scientific positivism (that real science is free of social values) and methodological individualism (that social processes are merely the aggregate outcome of individual behaviours), it cannot fully grasp that all health and illness — mental and physical — is both socially embedded and socially constructed. Therefore it cannot critically reflect on its own social nature, its own ideologies and practices that are inextricably bound up with wider social conflicts in their historical contexts.

The reaction to the 1970s crisis of American psychiatry was to use claims about the “reliability” of diagnosis to strengthen the profession’s “scientificity” in appearance but not reality. That model served powerful interests in the psychiatric profession, academia, government bureaucracies, and the pharmaceutical industry, but has unraveled when so many of its claims to help those with mental health problems have been exposed as hollow. A new paradigm that doesn’t simply repeat those flaws cannot be built from above, not by DSM committees nor NIMH directors. It can only be built through the struggles of patients and clinicians for a mental health system driven by quite different social priorities.

Thanks to Melissa Raven for pointing me to the two UHR references.

Cross-posted from Larvatus Prodeo. Thanks to Mark Bahnisch for convincing me to return to this subject.

I have to confess that I couldn’t bring myself to watch Monday’s Four Corners on the scandal of Australia’s “offshore” asylum seeker processing regime. I’m on the Sydney Refugee Action Coalition email list and read horrifying stories from Manus Island on an almost daily basis. Rather than being numbed by this atrocity exhibition I am scared I will simply lose control of my rage and frustration if I have to actually see the human cost on TV.

What makes me doubly angry is that it is a Labor government doing this. Now, I’m one of those hardened Marxist types who expects the reformists to do bad stuff, but there is something debased in this government’s attempts to surpass Howard’s record in “toughness” on refugees. To hear that Labor is now back-flipping on its policy of keeping children out of mainland detention centres just days after the Four Corners special suggests that their strategy is to plough ahead undeterred by basic questions of human decency. Clearly this government is not for turning; at least not in this race to the bottom.

But there is something even more troubling going on: Currently we have the bizarre spectacle of the ALP pursuing not one but two anti-immigration strategies, whereas Abbott and Morrison can only manage one. I refer, of course, to the government’s decision to also “campaign” against the alleged failure of its own skilled migration program to prevent purportedly massive levels of “rorts” involving “illegitimate” deployment of 457 visas. I’m not sure I recall the last time a government tried to whip up support for a campaign against its own policies, but right now we seem to have the ALP shouting, “We demand we do something about this!”

Immigration Minister Brendan O’Connor claimed on the weekend that over 10,000 of the 105,000-or-so current 457 visa holders are on visas that have in some way broken the eligibility rules regarding local skill shortages. He even went so far as to suggest that the system was spinning out of control: “If demand for these visas continues at the current growth rate, there would be 350,000 temporary workers from overseas on 457 visas in Australia in three years’ time.” And, just so people got a sense of the scale and urgency of the problem, he added, “That’s more than the population of Wollongong and at a time when locals are looking for training and promotion opportunities, this growth is unsustainable.”

O’Connor says he plans to introduce legislation to change the system before the election, although what this will mean is hard to tell. While he claims that this is action taken against bad bosses who are denying local workers jobs, in fact any crackdown is only likely to lead to foreign workers being punished for these infractions by being expelled from Australia when they cannot find a new employer in the short timeframe they are given. Given that the crackdown is predicated on a current downturn in job prospects, O’Connor is effectively suggesting that thousands of workers will be forced out.

457 approvals peaked in August 2012

Total number of 457s plateauing

If this wasn’t bad enough, there is no publicly available evidence that this mass rorting is actually happening. O’Connor points to a 19.2 percent increase in 457s since March 2012, but this figure hides a downward trend in approvals for the temporary visas since the peak in August, a trend that continued in the latest statistics released. Indeed, the AFR reported a spokesperson for the minister admitted that there are no statistics to back his claims, and that the evidence is “anecdotal”. The report also noted that, “Department of Immigration statistics show just 125 sponsors of 457 visa holders were formally sanctioned in 2011-12; another 449 sponsors were warned and 49 were issued with an infringement notice.” Simply put, there is no way that O’Connor’s numbers add up. Meanwhile, Fairfax journalists were told by the Department that some 457s were being used “in ways which may be legal but which are clearly against the intent and spirit of the program” — an exciting new definition of “rorting”.

When comparing Labor with the Coalition, then, perhaps the kindest thing one can say is that at least Labor is more consistent in exploiting nationalism with half-truths, insinuations and unsubstantiated anecdotes than its opponents. Few immigrants of any kind seem safe from their politicking.

Yet there is also cognitive dissonance here that is not recognised by some Labor supporters and trade unionists, activists who identify on the Left of politics yet support the 457 “crackdown”. And I’ve also had the uncomfortable experience of sharp debates with committed supporters of refugee rights who simultaneously want to defend the concept of “local jobs for local workers”.

Now, unlike the cynical operators leading the ALP towards a historic rout on 14 September, most people who take this position start from the perfectly reasonable worry that alongside “skills shortages” that 457 Visa holders fill, there are many thousands of unemployed or underemployed Australian resident workers, and that economic conditions are starting to turn down with portents of worse to come.

They can also rightly point to the problems with the rise of 457 Visas as the main immigration gateway into Australia. The shift from immigration based mainly on entry for permanent residency to one where temporary visas are a stepping-stone to but not a guarantee of permanency mainly occurred in the Howard years. The 457 Visa is a profoundly capital-friendly migration instrument because it allows employers to import already-trained workers for specific productive needs yet can have them quickly expelled from the country when they are no longer needed. In economic good times this is not such an issue, especially as there are provisions to apply for permanency, and indeed the main route to permanent residency these days is via a period on a temporary visa. But the uncertainty of having their stay in Australia depend on your employer’s benevolence means that many foreign workers feel too scared to rock the boat when bosses impose wages and conditions different to what a locally resident worker might get.

Sections of the union movement have fought excellent campaigns against such practices, organising the kind of internationalist solidarity that has too often been missing in this era of neoliberal globalisation. But increasingly we have seen highly visible union campaigns around slogans like “local jobs for local workers” and effectively demanding the sacking of workers employed in relation to 457 Visas. When the AWU’s Paul Howes polemicized against a government plan to allow Gina Rinehart a large number of 457 places for a new project, I argued that the workers’ movement needed to focus on solidarity and demands for job creation rather than calling on the state to move against guest workers. The AWU subsequently softened its line in public — perhaps because of Howes’ known pro-migration views, perhaps because it was causing too much heat from employers — but soon left-wing unions like the CFMEU and MUA were campaigning on “local jobs for local workers” and a picket by unemployed workers at a Werribee water treatment project hit headlines nationally with its banner reading, “Local unemployed tradespeople before visa (457) workers”.

Canberra AMWU campaign for 457 workers’ equal rights

These union campaigns had two tangible effects. Firstly, they provoked claims of racism from employers and the Coalition, leading some unions (like the CFMEU) to mount a defence by pointing to the naked self-interest behind such claims. While there can be no doubt about that self-interest, it doesn’t settle the question of the political consequences of the union strategy. Secondly, these campaigns led to a response by the Left of the political class — from Gillard infamously promising “to stop foreign workers being put at the front of the queue with Australian workers at the back” to the Greens’ Adam Bandt calling for a tougher 457 crackdown while simultaneously accusing Gillard of dog-whistling. In both cases there is an explicit appeal to the union bureaucracy and in the ALP’s case a further desperate slide into the dog-whistling dictated by the “Lindsay Test”. That slide, of course, is intimately connected with the ALP’s profound structural crisis, so that we get the weirdness of Abbott appearing to be on the Left of Labor on some issues.

I don’t intend to make a detailed case for opposing the “crackdown” on 457s here. Nor do I intend to debunk the economic nationalist argument (including its Left variant) that sees migrant workers as a threat to the livelihoods of local workers. Suffice to say, the problem with these approaches is that they do not go beyond the limits created by the interests of capital and enacted (often very coercively) by the state — a zero-sum competition between workers on the basis of nationality.

In my view immigration policy has always been shaped by the politics of nationalism and scapegoating (and very often racism also), and has pretty much nothing to do with apparently technical arguments about jobs, welfare bills, population, security risks or anything else the politicians dream up to justify their actions. The stark contrast in Australia between bipartisan support for mistreatment of asylum seekers arriving by boat and (until recently) bipartisan support for mass skilled migration to feed a capitalist boom should give some sense of the hypocrisies that infect migration politics. It is for this reason that I think the Left needs to argue for (real) open borders as the only realistic response to the shameful politics being played at the top of society.

But I will say one last thing to the Left defenders of Gillard and O’Connor’s antics. Many have raised how carefully the government has avoided using blunt racial language as proof that this is just about hitting nasty employers; i.e. a class policy. However, just as in the asylum debate, the actions of the state in removing people from their jobs (and the country) will cement the idea that yet another group of foreigners is guilty of something bad or illegal — or else why would the state be doing this? And when more sinister forces on the far Right gain confidence from this and simultaneously claim it is not going far enough, we have to recall it is the state’s practice that will have spoken this poisonous message more clearly than any number of words from a minister’s mouth.

Premature celebration?

A few weeks ago the right-wing Australian think-tank the Institute of Public Affairs (IPA) held a gala dinner to celebrate its 70^th birthday. The event garnered extra attention thanks to a small but spirited protest outside the venue, which was ritually condemned by police and politicians. While the protesters’ political objectives struck me as diffuse, they reflected a more widespread fear on the Left that society is increasingly manipulated by shadowy cabals of right-wing corporate leaders (Rupert Murdoch and Gina Rinehart attended), politicians (Tony Abbott, Dennis Napthine and Robert Doyle), pundits (Andrew Bolt) and neoliberal intellectuals (the IPA itself). In particular, the IPA’s wish list of 75 policies for an Abbott government and other material by their members is seen by some as his blueprint to implement a neoliberal agenda far more radical than Coalition policy describes.

While Left Flank has previously looked at the contradictions in the libertarian ideology of the IPA, the increased interest in the power of neoliberal elites makes this a subject worth returning to. I want to do this through a review of the groundbreaking 2008 collection edited by Philip Mirowski and Dieter Plehwe, The Road from Mont Pèlerin: The Making of the Neoliberal Thought Collective (TRFMP). Already this book is considered a classic of intellectual history and the definitive account of the international network of neoliberal thinkers and activists whose prescriptions became economic orthodoxy after the collapse of the post-WWII “Keynesian consensus”.

TRFMP approaches its subject by going to the source, as it were, and looking at the deliberations and debates of the intellectual clique who met from 1947 as the Mont Pèlerin Society (MPS), as well as their practical interventions in policy and government. In doing so it dispels a series of popular myths, some later promoted by MPS leaders themselves.

The constitution of neoliberalism

Firstly, the book shows that neoliberalism is not merely a unitary economic doctrine that sprung from the head of MPS founder Friedrich Hayek, but was developed over many years as the MPS clarified its ideas. Secondly, it outlines the main trends that came together in the development of a neoliberal consensus within the MPS: Early French neoliberalism, British liberalism and its revisions, German “ordoliberalism” with its greater emphasis on a “social” market society, and the rise of the infamous “Chicago School” with Hayek’s participation and the emergence of more US-centric notions of economics, business and market democracy.

Thirdly, and perhaps centrally, TRFMP reveals neoliberalism is not a simple extension of old-style liberalism, which sought to limit state power so that more-or-less automatic market processes could operate unhindered. Instead, neoliberals are clear about the need for strong state action to construct a market society in which “freedom” and “liberty” are maximized for the entrepreneur, even if they must be limited in terms of formal democracy. In New Studies in Philosophy, Politics, Economics and the History of Ideas, Hayek makes clear this distinction, and it is worth quoting at length:

In the struggle for constitutional government in the nineteenth century, the liberal and the democratic movements indeed were often indistinguishable. Yet in the course of time the consequence of the fact that the two doctrines were in the last resort concerned with different issues became more and more apparent. Liberalism is concerned with the functions of government and particularly with the limitation of all its powers. Democracy is concerned with the question of who is to direct government. Liberalism requires that all power, and therefore also that of the majority, be limited. Democracy came to regard current majority opinion as the only criterion of the legitimacy of the powers of government. The difference between the two principles stands out most clearly if we consider their opposites: with democracy it is authoritarian government; with liberalism it is totalitarianism. Neither of the two systems necessarily excludes the opposite of the other: a democracy may well wield totalitarian powers, and it is at least conceivable that an authoritarian government might act on liberal principles. [142-3]

Mirowski stresses the similarity of such views to those of German legal theorist Carl Schmitt, who was willing to justify aspects of Nazi rule and foreign policy. This stands in contradiction to neoliberal claims to be equally opposed to fascist and communist totalitarianisms. But it does clarify that the real objection for them is not the repressive power of the state in general, but when that power is used against (rather than for) markets. While the contributors to TRFMP don’t put it exactly like this, what they make clear again and again is that neoliberalism is an explicitly political project for reshaping society. This is the book’s greatest strength, but it is also related to what I see as its key weakness, which I will discuss below.

Fourthly, TRFMP looks at how the neoliberals worked through some key internal debates: The hardening of their opposition to trade unions, their rejection of the notion that business monopoly is a threat to markets, their elaboration of a market-based agenda for developing economies, and their incorporation of a growing coterie of businesspeople committed to the neoliberal cause — as against ideas that they must be a purely intellectual and academic grouping. These shifts demonstrate their determination to develop theory while applying it to real-world problems and garnering connections with capitalists.

Pinochet meeting with MPS leader Milton Friedman

Fifthly, the ability of neoliberals to actually shape economic and other institutional policy is laid out in detail using three case studies: The influence of MPS-related intellectuals in reconstructing Chile after Pinochet’s 1973 coup, their work inside international economic institutions around the United Nations, and the way that neoliberal economics shaped the interpretation of the urban property right project in Peru to cloak its disastrous social effects and economic failure behind a veil of market success.

Finally, Mirowski usefully synthesises the findings of the authors in his Postface by defining the neoliberal project under 11 clear headings, fleshing out how neoliberalism is not merely economic but openly poses itself as a set of politics, policies and values, organised around an incredibly narrow view of freedom. Rather than trying to overcome the market-versus-state contradiction that lies at the heart of neoliberal thought, Mirowski points out that this unresolved tension allows the project great flexibility in its prescriptions, and indeed allows neoliberals to claim that market failure can only be solved by more marketisation.

Limits of ideas-centred explanations

The clarity and power of the argument put by TRFMP about the nature of the MPS project is considerable. Yet it is ultimately unsatisfying. Crucially, by focusing on the continuity of the intellectual and practical aspects of the project it cannot explain the sharp turning point in its fortunes from the mid-1970s. In a review of David Harvey’s A Brief History of Neoliberalism (2005), published before TRFMP was released, Mirowski criticises Harvey for deploying “simplistic class analyses” and for downplaying the growing influence of neoliberals in elite circles prior to the 1970s. Yet Harvey makes clear, in a way that TRFMP obscures, that it was the destabilizing effect of capitalist crisis that led ruling elites to scramble about for a way of re-establishing control. In my view Harvey mistakenly sees this in terms of a “restoration of class power” — as if capital was somehow weakened during the post-WWII boom, the greatest and most sustained period of capitalist growth ever — but he does grasp the fact that the capitalist class would not have needed neoliberalism unless it held the potential to solve specific problems that confronted it.

And not just any crisis would do to ensure a neoliberal victory. As Neil Davidson has pointed out in “What was Neoliberalism?” (2010, in Neoliberal Scotland) Suharto’s bloody 1965 coup against a powerful Left in Indonesia did not usher in a neoliberal moment, whereas Pinochet’s in Chile did. It is not enough to suggest, as TRFMP does, that the neoliberals had to teach capitalists what their own interests were. Instead, those interests do not neatly conform to the neoliberal project across the history of capitalism. The chapter on Chile in TRFMP is both illuminating and frustrating: Illuminating because it outlines the twists and turns of the neoliberals in adapting their ideas to the needs of Pinochet’s regime, and frustrating because the actual crisis of Chilean society that preceded the coup is described almost exclusively in terms of the ascension of the left-wing Allende government. The mass workers’ insurgency and instances of workers’ control of industry, the counter-mobilisations of the militant Right, and the crisis of the state are brushed aside — leaving us with a narrative implying that the neoliberals had simply managed to reach critical mass in terms of influence and then the ear of Pinochet. This is intellectual and governmental history almost completely divorced from its social basis, let alone wider political struggles.

What emerges from TRFMP is an ideas-driven account of the power of neoliberalism. This leads to a view of the state as a mere instrument in the hands of a coherent body of thought. Real social relations are effectively treated as subordinate to the sharp intellects and clever manoeuvres of the MPS collective. Damien Cahill has recently pointed to the limits of such ideas-centred accounts of neoliberalisation. By analysing reforms carried out by the Howard government he concludes that rather than neoliberals providing “blueprints” or “programs” for reform, they more played a role in providing “frames” and arguments to justify pro-business policies and counter opposing viewpoints. He concludes that, “the role of ideas can only properly be grasped when considered in the context of the institutions and power relations within which they are enmeshed — when ideas are considered as dialectically related to both institutions and interests.”

A second problem with the ideas-centred approach is that it conflates the popularity of such ideas among elites with their popularity across the whole population: Once neoliberalism is in charge it stays in charge, with no need to make concessions to popular opinion. This leads to a lack of periodization in the progress of neoliberalism-in-practice.

Davidson makes a strong case for seeing neoliberalism in most Western liberal democracies as having two phases: An initial activist phase of direct assault on the working class and the Left, best exemplified by Thatcher in power, and a second phase where incremental neoliberal reform continues, but all-out frontal attack has been exhausted as a viable strategy. I would argue that the current global crisis has led to a further phase as mass resistance to the imperatives of capital clashes with a political system historically weakened by its embrace of neoliberalism. Hence why we see rapid political fragmentation in parts of Europe, with no clear solution in sight for ruling elites. Meanwhile Australia, still spared from the full brunt of that crisis, has to make do with neoliberalism’s political dregs.

TRFMP has a tendency to overstate the usefulness of neoliberalism as an elite capitalist political project for all occasions. The capitalist system has always been based on a synergy between private capital and the capitalist state, precisely because they are both expressions of the same set of fundamental social relations. Because those social relations develop historically, there is no single, eternal relationship between state and capital that works in all periods and places. Indeed, it was autarkic state capitalist intervention — more or less negating private capitalist interests for the greater national good — that successfully pulled many countries out the Great Depression and set the stage for the Long Boom. The question of whether there is any social (and therefore political) basis for the eternal continuation of neoliberalism, let alone for any preferred social order the authors hint at, is never addressed in TRFMP because of the limited nature of its political project. Neoliberalism, by their account, seems to be monolithic and impenetrable — ironically just as its basis in capitalist social relations is proving more fragile than ever.

This is the first in a series of posts on the coming Abbott government and the politics of the Right.

If there’s one thing the entire Australian Left agrees on right now it’s that “Thatcherism was a very bad thing”. But beyond that, it may be appropriate to ask what exactly it is that people think was a bad thing. The answer to that question rests on one’s interpretation of what exactly was going on in the high neoliberal period of the 1980s, and what followed it. There is an uncomfortable fact that many local progressives are also trying to dance around, one that impacts on their view of the domestic political situation. That fact is that the highpoint of the ALP’s federal political success with the Hawke and Keating governments shared much of its DNA with Thatcher’s neoliberalism, here understood as a political project to shift the balance of forces in the class struggle towards capital, and thereby enact a historic redistribution of wealth and power upwards.

Of course some on the Left, like Ben Eltham in New Matilda, might claim that at the core of Thatcherism is something else — that “she symbolises the ideal of the free market as the single dominant philosophy of conservative politics” and that she “really did believe in the primacy of individuals over collectivities, especially the state”. Eltham uses this to claim that Tony Abbott and the neoliberal think-tank, the Institute of Public Affairs (IPA), are her true heirs in this country. While this might tell us something about Thatcher’s ideology, it informs us little about what types of policies and social changes she enacted. For example, far from being hostile to the state as she sometimes implied, in practice Thatcher’s project was one of massive and brutal state mobilization on the side of big business, as demonstrated by a series of major confrontations with unions.

Others have pointed to Thatcher’s especially confrontational style, contrasting it to the “consensual” manner in which the ALP-ACTU Accord was implemented. Some also contend that Labor’s “social wage” reforms softened its wage cutting, financialisation and privatization program. Yet even here the difference is one of quantity and not quality. It’s true the leading unions agreed to the Accord. But Hawke also smashed two unions that bucked the trend — the Builders Labourers’ Federation in 1986 and the pilots’ strike in 1989, the latter by using the military as scabs. Meanwhile the government stood by as employers used the courts to break union attempts to act outside the Accord, such as at Dollar Sweets in 1985, using the threat of further rogue actions by the New Right to discipline other unions into staying in the Accord.

It is true Thatcher managed to push through significant cuts to the welfare state, but as Cabinet papers from 1982 reveal she blocked more radical plans for fear of their political unpopularity, and was forced to publicly restate support for the NHS. In Australia the 1983 National Economic Summit saw major progressive reforms scrapped to appease business, undermining the original Accord agreement within months of it being signed. And while Medicare was introduced, welfare and social spending were soon subject to Budget austerity, welfare tightening and so on. As Philip Mendes has noted [PDF], this led the IPA’s Michael Warby to argue that Hawke and Keating had introduced a number of policies, including greater targeting of welfare “which we heartily endorse … Indeed there is a very good argument that the ALP government engaged in more thorough economic reform than a Liberal government would have.” Further, the government

eliminated the remaining universal payments via the introduction of an assets test on pensions, and the means testing of family allowances. In addition, it imposed a number of compliance initiatives designed to reduce the number of persons receiving income support payments, replaced unemployment benefits for 16 and 17 year olds with a job search allowance worth half the then junior unemployment rate (May 1987), introduced the Newstart scheme linking unemployment benefits to compulsory training and revoking the traditional notion of an unemployment benefit as an entitlement (1990), and introduced “mutual obligation” measures in the 1994 White Paper on Employment to tighten social security regulations and make beneficiaries more accountable. … Many of these policies mirrored proposals made by the think tanks, and were enthusiastically welcomed by CIS and IPA operatives.

Superannuation was introduced in lieu of wage rises, and it has since become apparent that it hasn’t delivered stable or substantial returns. Accumulated savings have driven financialisation rather than a hoped-for manufacturing recovery. Left-wing economist Frank Stilwell, who had initially been enthusiastic about Labor’s potential to deliver progressive change, concluded in 1993:

The original Accord envisaged wages policy as a component in a broader program of progressive economic and social reform. In practice, wages policy has been integrated into a quite different program of austerity and regressive distribution. (Quoted here)

In 2011 Keating reminisced about this representing a “big contribution from the unions and the ACTU in particular under the Accord of reducing real wages and letting the profit share rise.” This was a reduction in wages that sharply contrasts with real wages growth during Thatcher’s prime ministership. The reward for this sacrifice was the “recession we had to have” which pushed unemployment to around 11 percent in 1992 and left economic conditions significantly worse for large sections of the working class.

Strikebreaking during the pilots’ dispute

Whitewashing Left neoliberalism

British neoliberalism was never simply a shift to an idealized set of policy settings that fit with Thatcher’s Hayekian influences. Indeed, one could say that Hayek was no Hayekian either, because like Thatcher he saw “liberty” as a product of social engineering that might require the use of “dictatorial” state power to enforce it. Rather, neoliberalism has always been a class project, with national variations in how it was implemented. It is only by downplaying its class character, by mixing up ideology and practice, that one ends up ignoring the fact that in Australia it was a product of the Left in government.

But such confusion is absolutely necessary if one wants to whitewash Labor’s 1980s project, and what differentiates Labor from Abbott’s Coalition. As Jean Parker pointed out in a perceptive paper on the ALP response to the GFC at last weekend’s Australian Left Renewal Conference in Sydney, Rudd’s famous Monthly essay was careful to define neoliberalism in the narrowest possible terms as the most extreme free market ideology and practice, thereby detaching it from its relationship to Labor’s record. For Rudd there is no problem with capitalism or markets per se, and social democracy is redefined thus:

Social-democratic governments face the continuing challenge of harnessing the power of the market to increase innovation, investment and productivity growth — while combining this with an effective regulatory framework which manages risk, corrects market failures, funds and provides public goods, and pursues social equity. Examples of such a government are the Australian Labor governments of Bob Hawke and Paul Keating during the 1980s and early ’90s.

Rather than being the neoliberals that the neoliberal think tanks believed them to be, in Rudd’s account “Hawke and Keating pursued an ambitious and unapologetic program of economic modernisation” entirely within a social democratic framework. This is revisionism that cannot explain the intense debate on the Left in the 1980s and 90s about whether Labor was still in any way true to its social democratic origins. Rudd gets closer to the truth, however, when he says that social democracy’s historic mission is “to save capitalism from itself”.

One of the problems with focusing on ideology is that it misses how neoliberalism-in-practice has not been a continuous process towards free market nirvana. In both the UK and Australia the initial radical phase of neoliberalism petered out as the years of bitterness and sacrifice eroded the social and political basis for the neoliberal program. After Thatcher was dumped in the wake of the Poll Tax debacle, the Tories only managed to limp on under Major until 1997 thanks to a weak and divided Labour opposition. Keating unexpectedly won in 1993 by effectively running against his own economic rationalist legacy, now personified as John Hewson, only to be bundled out three years later because he had not really reversed course.

By the mid-1990s neoliberalism in both countries was deeply unpopular and politically poisonous, but the disorientation of the Left ensured there was no sustained opposition. The result was piecemeal erosion of public services and workplace rights tempered by sufficient handouts to minimize the political cost of reform. With the good fortune of a long period of debt-driven expansion up to the GFC, incumbency during the War on Terror, and oppositions deeply traumatised by previous defeats, the Howard and Blair governments avoided having the full extent of their political weakness exposed until near the end. In Australia wages growth even recovered under Howard, ironically producing some economic relief for workers after the Accord despite the dramatic weakening of union power the Accord had initiated.

As Left Flank has argued before, the process of economic reform has eroded the social base of both sides of politics. Neither side can easily construct a stable popular majority for another round of harsh restructuring like the high points of the Thatcher and Hawke-Keating experiments. But because the advantages gained by capital in that period have not been reversed, because there has been decay of social services and a breakdown in solidarities, the unwillingness of the political class to effect positive change is punished with ever more volatile swings by a detached and bitter electorate that treats governments with disdain. Kevin Rudd offered a brief break in this trend by connecting with the anti-politics sentiment prevalent in the electorate. Aside from this, both sides of politics posture in various ways about the heroic reforms of the past yet lack the authority to repeat them, before too long turning to desperate scapegoating and other distractions to try to gain temporary advantage.

This is especially acute for the ALP because, as social attitude surveys in recent years show, a majority of voters (including Liberal voters) not only rejects economic rationalism but pines for what one might call old fashioned social democratic policies. Yet these cannot simply be tacked onto the really existing Labor Party (an NDIS here, some small increases to some welfare payments there) to make up a social democratic program that could save it. Something similar is true for Abbott, no doubt fantasizing he can “do a Thatcher” but without the means to drive that through. Indeed he has already been hosing down the expectations of his IPA constituency, proclaiming he will not be a Whitlam of the Right.

Abbott and the Liberals, like Gillard and the modern ALP, are much less heirs of Thatcherism than the final incoherent dregs of neoliberalism as a political project.

I’ll take a closer look at Abbott’s problems in my next post. Thanks to Liz Humphrys for informing my thinking and providing some of the quotes.

I’ll be part of Participatory Forum II: Uniting to Fight the Abbott Coalition, from 10-11.30am on Sunday, alongside Sally McManus from the Australian Services Union, NSW Greens MLC Cate Faehrmann, Greens candidate for Grayndler Hall Greenland and the Victorian ALP Socialist Left’s Andrew Giles. My talk is: “How having the Left in government made life easy for Abbott — and what we can do about it now”.

Liz will be part of Workshop 15: Left Responses to the Global Capitalist Crisis, from 12-1.30pm also on Sunday, alongside left-wing economist Graham Larcombe and Solidarity’s Jean Parker. Liz’s talk is: “Alternative Economic Strategies: The Question of Agency”.

The full program can be viewed here.

The Facebook page for the event is here.

It’s best to register online via trybooking.com here.

For inquiries: Troy Henderson on (02) 9698-4918 or admin@search.org.au.

***

SECURE JOBS IN A GREEN FUTURE

Australian Left Renewal Conference

Weekend April 6-7, 2013

University of Technology Sydney

Featuring Mick Gooda; Kostas Isychos (SYRIZA)

Guthrie Theatre
Building 6
702 Harris Street, Ultimo

Building a Stronger Left

Uniting to Fight the Abbott Coalition

Strategic Priorities for the Left

3 Participatory Forums, 15 Workshops

This is the speech I gave on Monday this week, at the forum ‘IRAQ 10 years on: Remembering when the world said NO to war’ — organised by the Sydney Stop the War Coalition. 

That story of dissent against multinational corporations, and the government structures that facilitate them, was not just to be the story of the US however; or only the story of Prague, Davos, Genoa or Gleneagles. It is our story too. Thirteen years ago we saw magnificent protests in Australia that both criticised the way the world was, as well as imagined a different future. ‘Another World Is Possible’ was the slogan of the World Social Forum, and it reflected sentiment around the globe. In Australia the Global Justice Movement exploded at the s11 protests, when we blockaded the Asia-Pacific Summit of the World Economic Forum at Crown Casino in Melbourne – and 20,000 people shut it down. It was a protest that said no to the ruling class agenda of prioritising profits above people and the planet, and it was a celebration of the diversity of those who imagined a different world. Similar events and movements across the globe questioned the structures and the priorities of capitalism – if in confused ways at times – and it was the formation of a global anti-systemic movement.

As everyone in this room knows, on the first anniversary of the s11 protests, an extremist fragment of political Islam took such dramatic action that their message about American hegemony would become a defining point for a generation. The events of September 11 in New York and Washington started a path that took us to both the invasion of Afghanistan and Iraq. It is now eleven and ten years respectively since the coalition of the willing – the coalition of the killing – began wars that saw millions killed, maimed and injured. And we cannot yet fully talk of the legacy of those actions, as those wars and interventions are not complete. The social, political and humanitarian ramifications will be felt for generations. Today is a day to recall the human cost of all of those harmed, those displaced, and those whose lives were irretrievably changed. In our federal parliament, all the parties except for the Greens lined up behind George W Bush, John Howard and Tony Blair.

However, today is also a day to recall the largest protests in human history ¬– to recall that millions marched to say no to the Iraq war. While the protests against the invasion of Afghanistan were smaller that those against the invasion of Iraq, we should not forget that public opinion in Australia was turned around in the course of the occupation, and in the years after invasion polls indicated a majority of Australians wanted troops brought home from Afghanistan. A million people protested against the launch of the war on Iraq in major cities and tiny rural towns around Australia; the largest demonstration, of about half a million, took place in Sydney. The protest that day at Hyde Park, that wound its way through the City to the Domain, was unforgettable. An unforgettable rally even for those, like me, who never even got to leave Hyde Park to march anywhere, such was the size of the demonstration.

But there are some difficult questions for the Left to ask in the wake of the massive success of those protests, about their failure to stop the war in Iraq. And in particular, reflecting on the fact that these protests occurred on the back of the Global Justice Movement. We must ask ourselves why the movement did not stop the war; why the biggest protests in history, locally and globally, did not stop the invasion of Iraq. Relatedly, we must ask where the movement went – why we did not maintain large protests or a substantial ongoing movement and why, simultaneously, the Global Justice Movement collapsed in Australia.

So why didn’t the movement stop the war? The war was a choice of the leading imperialist power, the United States, and its allies, as part of a strategic plan for the Middle East. It polarised nation-states worldwide on which side they should fall, and in some cases there was a reaction against the intentions of the US – especially in France. In most cases, the ruling elites defied popular will and went along with their initial choice to back the US. At the time the stakes were too high, and for many in the ruling class the Bush plan seemed a game-changer. A very different kind of game-changer to what eventuated.

In terms of the movement, there are lessons to be drawn. The coalition that mobilised against the war was the biggest block of forces ever: it included imperialist states such as France, Russia and China, as well as the millions in the streets. Its participants were everyone from concerned conservatives to large sections of the Muslim community, and from small ‘l’ liberals to revolutionaries. But even a movement as diverse as this was not enough.

Two issues seem important here. First, while there was mass opposition to the war there was the relative stability of the economy and Western Governments – that is, the Bush, Blair and Howard governments were not yet on the nose politically in their home countries. This gave the US, UK and Australian governments significant room to manoeuvre. Secondly, the success of a movement does not only depend on coalition-building, but also on the existence of a radical minority that will disrupt the war effort in a sustained way, and the social weight that this radical minority possesses. This second part of the necessary movement was absent from our actual movement. It is my view we needed both. In some ways the objective circumstances were there for such a radical minority to work and gain greater social weight – in the form of the Global Justice Movement – but this is not what occurred. Such elements didn’t or couldn’t initiate a movement that would substantially disrupt the war-effort: the social forces and the politicisation for something like that was absent.

A successful antiwar movement depends on both coalition-building that is ongoing and deep-rooted, as well as radical elements willing to disrupt the war effort in a sustained way. This, of course, raises a question as to whether the coalition we built – a coalition that did mobilise a million people in Australia – was one that was ongoing and deeply rooted in our communities, one that developed multifaceted rapport between its constituent parts and that committed itself to working together for the longer-term project of ending the war once it had started.

Do we have, therefore, a negative balance sheet for the antiwar movement? I think we unequivocally have to say no. The antiwar movement was unable to stop the invasion and occupation of Iraq, yet the movement undoubtedly shaped national and international politics in a valuable direction. The antiwar movement limited the space for the US intervention and occupation of Iraq, it kept the pressure on Western politicians to bring the troops home, and the existence and size of the movement was a significant asset for the people who resisted the occupation in the Middle East using arms. It also had a big impact in the Middle East more generally – can we, for instance, understand the beginnings of the Egyptian revolutionary process without the pro-Palestinian movement and the boost it received from the antiwar movement in the West?

An important victory for the antiwar movement was the delegitimising and, later, the final defeat of the US hawks’ neoconservative plan for the Middle East. This defeat must take into account the antiwar movement. It is crucial to recognise that the interventions we see today are not the ‘continuity’ of the Bush plan for a new Middle East. Yes, it still tries to reassert an imperialist hegemony, but in a drastically different environment. The antiwar movement played a significant role in that.

And most significantly, the resounding victory of Obama, and defeat of Bush, cannot be understood outside the impact of the antiwar movement. I think this is the case in Australia as well, and the defeat of John Howard – both in the defeat of his government and his defeat in his local seat – are important reflections of the impact of the antiwar movement alongside other factors. That Obama, Rudd and Gillard proved to be more of the same in many ways is not in dispute. What we must acknowledge is that at the point Bush and Howard launched the war on Iraq – at the point our movement failed to prevent the attacks – many threw their effort into the defeat of those two leaders. In the US, activists moved into the Democratic campaign around Obama, and here many activists moved into campaigning for the Greens. This was a dynamic observed by social movement researchers in both the US and Australia, including in my own research on the impact of the September 11 attacks on the Global Justice Movement.

The other observation made, and I’ll use the language of the US academics who have looked at this question, was that there was a spillout from the Global Justice Movement into the antiwar efforts and then subsequently into electoral work. By spill-OUT I mean the shifting of effort and resources from the Global Justice Movement – from a movement with anti-systemic politics – into the antiwar effort with its narrower frame of ‘No War’. This is not what occurred in other periods of anti-systemic movements, and is clearest when we look at the 1960s, where the dynamic was more of a spill-OVER, with movements drawing strength and weight form each other. It was a time when movements bolstered one another, and did not vacate one field for another. But when it came to Iraq, the Global Justice Movement vacated in favour of the antiwar movement. This observation is important, as while we wanted to and needed to build the broadest possible movement against the war – hence the unifying slogan of ‘No War’ – there was a problem in that the radicalism and alternative future focus of the Global Justice Movement was excluded. It made it difficult to combine a critique of imperialism or capitalism with a critique of war; this combined critique was something that the movements in Australia and the US found difficult, although it was better achieved in certain European countries. For example, the slogan at the initial Barcelona mobilisation over Iraq was ‘Against a Europe of Capital and War’.

These two processes, of spillout and looking to electoral solutions point to something else, too: the lack of a coherent and independent Left politics within the movements in Australia, one that could have not only protested and made powerful ideological claims, but could also have challenged the political elites on their own terrain. Movements do not proceed along linear paths – neither the Global Justice Movement or the antiwar movement – and nor should we expect them to. But it is in understanding movement successes and victories, as well as failures and collapses, that we can better understand the political period and how to regroup for the ongoing effort of building a safe and just world. I raise these issues as a starting point in a discussion about how the events of ten years ago might be understood, and how we might better understand how to build a Left project in the here and now.

By KEVIN OVENDEN

My previous post was written early on Monday morning, London time.

Since then events have proceeded rapidly and dramatically. They will continue to do so. This update is meant to highlight the political significance of some of those developments in a fast moving crisis.

1) Despite desperate protestations it is now clear, as I had stated previously, that it was the Cypriot delegation in talks with the Troika in the early hours of Saturday morning that opted to sacrifice the mass of the population through raiding whatever deposits they had in the domestic banking system.
Centre-right Cypriot president Nikos Anastasiadis was caught between Scylla and Charybdis: between the demand that depositors take a “hair-cut” (a forced “bail-in”) of €5.8 billion in return for a bail-out of €10 billion for the banks (plus austerity piled on an economy in a double-dip recession) on the one hand. On the other was the settled policy of the Cypriot elite to maintain its role as a tax-haven for hot and dodgy money — two thirds of it from Russian oligarchs.

The IMF and German Finance Ministry were prepared to throw the burden onto Russian capitalists; Anastasiadis opted to spread it to the Cypriot pensioner, worker, farmer and struggling hotelier.

2) No one in the talks says that the outcome — both the proposed measures and the obvious social/political upheaval that followed — was intended. The dysfunctionality of the European response to a now renewed crisis could not be clearer. It is as if all the principal actors have chosen to be the prisoners of events and then — by way of a kind of collective Stockholm Syndrome — disavow responsibility for their own actions.

3) The deal was, entirely predictably, both unacceptable to the mass of the Cypriot population and also seen near universally as a harbinger of further bank heists, the rational response to which is to get your money out, thus precipitating the kind of 1930s bank run that policy-makers from Ben Bernanke to Gordon Brown congratulated themselves four years ago on avoiding.

The bank robbery was also viscerally opposed by two other groups.

First, the Cypriot business class. It has been utterly dependent on the island’s tax haven status for a decade and a half. It rebelled. One of its main spokespeople in the US, the former governor of the central bank of Cyprus Athanasios Orphanides, told any business journalist who would listen on Tuesday that the powerful states of the EU had enforced a kind of apartheid across the continent where the law facilitated the expropriation of the weak by the strong.

He virtually genuflected in front of the Statue of Liberty, hailing the doctrine of equality before the law in an effort to persuade Wall Street and Capitol Hill of the unfairness of it all.

Second, Moscow. Staggeringly, the Eurozone finance ministers did not even inform, let alone consult, the Russian government about their plan to extort possibly up to €4 billion from Russian business interests.

Russia’s president Vladimir Putin was rebuffed and his government moved swiftly to explore its own independent intervention. There is a deep, bitter division between Russia’s oligarchs, with Putin at the head of the state and representing one wing. He indicated that there were certain hostile interests whose hair he would shed no tears over clipping. The Russian finance ministry toyed with demanding a version of the Lagarde List — an inventory of dodgy dealing modelled on the IMF chief’s list of the Greek rich’s overseas holdings.

But whether it was friends or factional opponents of the Russian government who were to suffer, Putin’s position was clear. If any oligarch was to get a buzz cut, have their liquidity frozen or be thrown in the slammer, it was to be a Kremlin decision and no one else’s.

The Cypriot finance minister tendered his resignation; it was not accepted. So he headed off to Moscow for talks while his bosses sought renegotiation with the Troika and getting something, anything, through the Cypriot parliament.

4) On Tuesday the Cypriot parliament not only rejected the original deal, it rejected a revised package exempting those with deposits under €20,000.

It didn’t just reject it. Not a single MP voted for it. Thirty-six MPs voted against, 19 of the president’s party’s MPs abstained. No one voted in favour.

The Cypriot vote is a watershed. For the first time in three years of the banking and sovereign debt crisis in Europe an institution has voted no. That crisis is, of course, an expression of a deeper global slump. But the ways it has manifested have depended on the particular architecture of the competing interests that make up the EU.

The Greek parliament — at the price of bleeding the political centre — voted through the savage austerity memoranda, which in 2011 also meant a hit for holders of Greek sovereign debt. That move pushed the Cypriot banks over the edge.

The Italian political class, in its majority, voted for the pain and accepted, as did their Greek counterparts, the imposition of a non-elected prime minister, Mario Monti, to see it through. Last month saw an electoral revolt against the Italian political class.

Now there is little Cyprus. Not only the mass of people, but now also an institution — the Cypriot parliament — has said no. A small child (Cyprus joined the EU in 2004 and the single currency in 2008, accounting for just 0.2 percent of the union’s economic output) has told the rest that the emperor has no clothes.

The profound significance of that will play out as there is now both a desperate scramble to reassemble some deal over Cyprus’s banks (Russian takeover? Exceptional European Central Bank cash? Creative destruction?), and deepening opprobrium across the south of Europe at those politicians who said that the only game in town was austerity in order to secure a bailout.

5) The failure of the Cypriot parliament to agree to the bank heist on Tuesday was total. The political positions of the MPs, still more so the interests of the conflicting social classes in Cyprus, are far from uniform.

With the Cypriot business class opposing the Troika, with Russian-oligarch depositors alienated and with Moscow floating alternatives, even a number of centre-right MPs could find a backbone. Even those of Anastasiades’ Democratic Rally could slither into abstention.

But those parameters will change. In the combination of conflicting pressures that produced the Cypriot “no” there is one central element for the radical Left. It is the mobilisation — and with it political agency — of the mass of the people in Cyprus who took to the streets outside the parliament on Tuesday with the backing of, among others, the official opposition Akel party.

That means not being oblivious to the cracks and fissures that are opening up in official politics as a parliament of an EU state bucks the austerity trend. But it also means firmly standing independent of those conflicting elite interests, even while exploiting their mutual clashes.

All sorts of voices in Cyprus and across Europe will now seek to gather political strength to plot their preferred way out the crisis.

As my previous post argued — the radical Left should have its own voice, based upon extending the kind of mobilisations we’ve seen in Cyprus so far, and upon a trajectory of fundamentally breaking with a failed system.

A version of this text will appear later today alongside the previous post on the US-based Socialist Worker website. UPDATE: Here it is.

An angry Cypriot depositor drives an excavator into a bank

GUEST POST by KEVIN OVENDEN

Two months ago, perennial optimists were telling us that the worst of the Eurozone crisis was probably over. Then came the Italian election. Now the great Cypriot bank heist.

By Sunday morning it was dawning on tens of millions of people what had happened, as the news spread from the specialist financial commentary to front pages and top television news across the continent.

At one stroke, the Troika of the Eurozone finance ministers, European Central Bank and International Monetary Fund had, with the new right-wing Cypriot government, stolen between 6.7 and 9.9 percent of the money of all depositors in Cyprus’s ailing banks. All in the name of a bank rescue.

When the leading capitalist states moved in 2008 to rescue the banks it was through taking on debt themselves and guaranteeing small and medium deposits in order to prevent a run on the banking system following the collapse of Lehman Brothers. The public, of course, was then to be squeezed in the name of reducing the debt that was now on the public books. Now, nearly five years on, “rescue” means direct robbery of the depositor.

It’s as if as the crisis has continued and deepened the capitalist system has become auto-cannibalisitic. What was meant to be sacred — private property and the essential private contractual relationship — has become profaned; not at the hands of some North Korean “communist terror”, but by the partisans of re-turbocharging the neoliberal model, which is what the austerity is all about.

Writing in the Financial Times, Wolfgang Munchau spelled out the consequences:

If one wanted to feed the political mood of insurrection in southern Europe, this was the way to do it. The long-term political damage of this agreement is going to be huge. In the short term, the danger consists of a generalised bank run, not just in Cyprus.

The banks in Cyprus and Greece are closed today for the Orthodox Clean Monday holiday. The Cypriot parliament is in emergency session to try to pass the measures while its government also seeks to renegotiate them. The potential in the coming days and weeks for a rapid spread of this phase of the crisis — and for a dramatic social and political rupture — is immense.

It’s not just one thing; it’s one damn thing after another. The political instability, worsening economic outlook and rising resistance are spread across southern Europe and elsewhere. This sudden sharpening of the crisis poses acutely the strategic questions for the labour movement and the Left.

While the German government and its representatives in the European institutions remain utterly rigid in enforcing an austerity that is failing, they are not alone in hurtling over the cliff — as the dogma of the Cameron government in Britain, which is not in the euro, shows again this week in the face of mounting evidence of further economic collapse.

Potential for accidents at every level

The government of Nicos Anastasiades in Cyprus slipped out carefully selected and self-serving details over the weekend, claiming that it had bravely fought German demands and that the island had been overwhelmed by a foreign power from without — comparing the economic disaster now with the Turkish invasion of 1974.

On one level, it’s true that Anastasiades bridled at the initial German/Troika proposal. But that proposal was to throw the burden of bank theft almost wholly onto large depositors, those with over €100,000. The Cypriot government was desperate to keep its status as a home for hot money, a policy that had contributed to the massive overextension of Cyprus’s banks so that their business swelled to seven times the size of the actual economy. Much of the cash in the banks — €20 billion — is from Russia’s capitalist oligarchs.

So it was the centre-right in Cyprus that decided to offer up workers, pensioners, farmers and small businessmen to placate the banks and their Troika enforcers, just as in myth Athenian king Aegeus sacrificed the city’s youth to the Cretan Minotaur.

Now, faced with an enormous backlash, which commentators staggeringly claim was not predicted by the geniuses who run the Cypriot government and Euro-institutions, they are looking to tilt the burden back towards squeezing the Russians and others.

It’s a lose-lose situation. Whatever the Cypriot parliament decides today, the rich will withdraw their deposits anyway, ending Cyprus’s status as money laundry of the south (a barely concealed aim of Berlin and Brussels). And so will the middling and poor when the banks reopen. As Munchau says, they will be acting rationally. If others withdraw money, then the banks will be in further trouble, which means more austerity with the possibility of a further bank heist — so you had better get out now as well.

There is immediate spill-over in Greece. The Cypriot banks in Greece will now be included in the Greek banking system. But who will recapitalise them — to the tune of something like €2 billion? The money from the last round of the Greek bailout has withered as austerity deepens the slump. Greek depositors have €13 billion in Cypriot banks in Greece, principally the Cyprus Bank and Laiki, which the Troika has said it will pull the plugs on if there is no agreement in Cyprus to raid the deposits. Why on earth should anyone leave their money in the Greek outposts of those banks?

This question will hit this week when the banks reopen in an atmosphere of not only ongoing social rage but of a further moment of political crisis in Greece.

The government of Antonis Samaras tried to play poker with the Troika a few weeks ago. He wants to appear tough in the negotiations and, more importantly, his government has not been able to drive through all the measures demanded. So the Troika left Athens without closing a new deal. The last time this happened, under PASOK’s Evangelos Venizelos, it took the imposition of a poll tax on property to get the Troika to come back and deal.

People in Greece are asking what more must be offered up to the monster? One obvious answer now is their deposits.

The intersection of political and economic crisis poses a major systemic danger. An accident can happen at every level: in the vote in the Cypriot parliament; in withdrawals by big investors (mainly Russians); in a run by the mass of depositors; in a spread of the bank run to Greece and the south; in a new round of austerity by the Greek state to recapitalise the banks; in the political impotence of Samaras’ tripartite government to vote through the measures, still less enforce them.

And the Cypriot bank job is set to exacerbate geo-political tensions in the eastern Mediterranean. The government is promising a share of future profits from gas extraction to those (principally Russians) who keep their money in the country for the next two years. But the recently discovered gas field has yet to be exploited. And rights over the field are contested by Greek Cyprus, Israel, Lebanon and Turkey.

The government of Samaras, a hard nationalist who rejoined the New Democracy party in Greece after his own chauvinist party hit the rocks a few years ago, is toying with unilaterally declaring an Exclusive Economic Zone in the Aegean — in flat opposition to Turkey.

The crisis is not waiting for the coming of an anti-austerity government, still less a consortium of some European governments which might together push for an alternative. People are not only being squeezed and having publicly-owned assets handed to the 1 percent; they are now being directly robbed as surely as if at gunpoint.

How German cartoonist Harm Bengen saw the “haircut”

Left strategy — renegotiation or rupture?

There are two broad lines of argument the radical Left can articulate — and two general directions of travel it can take.

First, we can say that the problem is Germany; that Angela Merkel has put bank deposits at risk; that it is the Left, not the partisans of neoliberalism, which can ensure the basic inviolability of the private financial transaction; and that the agency for an alternative to austerity is institutional — a bloc of governments of varying hue that can stand up to the mafia in Berlin and Brussels.

There is certainly propaganda merit in showing that it is the defenders of neoliberalism and not the Left that have inflicted the nightmare on anyone who has a bit of money in the bank.

But what would it mean to say that the Left can defend the little person in Cyprus and elsewhere? It would mean taking control of the banks. The Cypriot state — with overnight bans on electronic transfers and other withdrawals — has just shown that this is not only possible but (and for its own purposes) is actually how this free market system operates. Bank nationalisation and capital controls would entail directly standing up to the blackmail issued by big capitalists and the banks, and enforced by their consiglieri in institutions such those making up the Troika.

It would mean nationalising the currency — a direct break or rupture with the Eurozone and EU. In other words, if it were to mean anything to the people who are suffering now in Cyprus, it would entail a radical anti-institutional break. It would mean the second direction of travel that is open to what the Left can try to do and argue for.

That is to say that if the agencies of capitalism, in the interests of capitalism, can take over the banks and seize deposits, then so can the Left for entirely different interests and with different effect. It’s tempting to say that where the liberal capitalists fail in their solemn undertaking to preserve the holiness of the private contract, the Left can succeed and in so doing can even attract as part of a “hegemonic bloc” sections of the population that lose out in the “bailout” well beyond the ranks of the working class and poor.

But if the liberal capitalists cannot succeed in protecting rights of private property, there is no reason to imagine that we can. Rather, there is every reason to base our arguments and agitation on an anti-capitalist position. Depositors in banks are not a social class. They are not a uniform interest group, and are not a potential bloc that the Left can mobilise, lead and rest on. For us, nationalising the banks means protecting working people and the middle class at the expense of big business and finance. That means further measures that impinge on capitalism.

The debate over such measures, certainly for those of us in Britain, might have seemed abstruse over the last couple of years. After all, wasn’t the central issue the bringing into office of a government that was in some way opposed to the austerity madness? The problem is that the Cypriot heist poses the question of whether there needs to be a renegotiation of austerity or a radical rupture with it — not as a policy dilemma of government, but as a political argument around which masses of people may be mobilised to have political effect.

And Cyprus did have a government opposed to austerity: its first-ever Communist President, Demetris Chrisofias. It sought exactly to find allies among governments of the south and to mitigate the austerity, while saying that things like taking over the banks were at best a provocation that would prevent winning broader political support and were at worst futile. The futility was in not taking radical measures. Chrisofias lost the election last month.

What the Left says and does now matters. First, can it encourage radical mass mobilisation that can shift the political calculus. If it does not, the rise of the fascist Golden Dawn in Greece shows that there are others who will. Secondly, extending and popularising arguments against the banks and big capital, and for a rupture with both, impacts on whatever outcome there is from future elections. We want the Right out and the Left in. But will that Left follow the path of Chrisofias or a different one?

In large part that depends on whether it comes in on the back of rising resistance and a social agency that is posing radical political answers.

Last year, so much of that seemed like a luxurious or even trivial distinction. But the actual dilemma is not in the future — to be faced possibly by a government led by the radical left Syriza party in Greece, or some equivalent elsewhere. It is posed now in what the social reaction is to this extreme moment in Cyprus, with implications elsewhere.

2013 is not 1953

Alexis Tsipras, the leader of Syriza, was in Britain at the end of last week. He repeated his call at the time of the Greek general elections last summer for the holding of a modern version of the London conference of 1953, which forgave 60 percent of West German debt.

Now, from the point of view of those of us in London — home to so many of the banking leviathans — championing writing off debt against our government and the City of London has great merit. Indeed, arguing to seize the £777 billion of idle deposits in Britain’s banks and using them for socially needed investment has great value.

But as the anti-capitalist writer and activist Panagiotis Sotiris has argued the circumstances for such a conference do not obtain as they did in 1953, the beginning of the long post-war boom, when Washington’s fears of West Germany being drawn towards the Soviet camp were backed by a confident US with the means to underwrite the Marshall Plan.

Above all, the governments and institutions remain wedded to one another and to austerity. It was in the name of the national that Anastasiadis decided to bleed the people of Cyprus in order to remain a financial facility for dubious Russian money.

Increasing numbers of working people, the poor, farmers and sections of the middle class are not, however, wedded to the failed policy — as the Italian election showed.

The central question posed for the Left is whether we can speak to them, but not with the aim of drawing them into a bloc with a section of the elites that have failed. Instead, to create a new, powerful political pole that strikes at the root of the problem.

Tsipras told the audience at a public meeting in London that a large majority expected Syriza to win the next election, whenever that is. (And everyone on the Left everywhere will be hoping that Syriza and the Left as a whole do win.) But he added that the same majority did not expect anything to change.

A part of changing that hopelessness, pronounced elsewhere as well, is for the Left to base itself squarely on building the widest effective resistance now, and articulating a political vision that inspires confidence that it will bring change, because it is based not on the ambiguities and triangulations that have seen the centre-left enervated across the continent, but on a radical rupture with a system that has failed.

Cyprus and our response to it is a moment to advance an argument for just such a break.

A version of this article has also been posted at the UK-based blog Left Unity.

Now also cross-posted at Crikey.

Iraq – 10 years on:
 Remembering when the world said No to war

Monday March 18 at 6-8.30pm — Mitchell Theatre, Sydney Mechanics School of Arts, 
240 Pitt Street, Sydney

This month marks the tenth anniversary of the Invasion of Iraq. It is a timely reminder not just of the brutality of the war in Iraq, but its length. A decade of war has ravaged the Iraqi people and decimated public infrastructure. In 2004 and 2006 epidemiologists and others associated with Johns Hopkins School of Public Health in the US published research in the international renowned journal The Lancet, estimating the number of ‘excess deaths’ due to the war. The second report states that 650,000 people had died as a result of the war in Iraq, a figure that is likely far greater given the intense fighting that occurred after 2006 and the ongoing health and social crisis in the country. And let us not forget those injured and maimed.

It is also time to recall the the tenth anniversary of the largest protest in Australian history, on February 15 2003, when between 300,000 and 500,000 people protested in central Sydney. That weekend between 600,000 and 900,000 protested across Australia, alongside many millions around the world.

The Sydney Stop the War Coalition is conducting a forum next Monday to remember when the world said no to war, and consider what the situation is in Iraq now and what can be done to prevent more wars. I will be speaking on the panel alongside Donna Mulhearn, who was a human shield during the first ground invasion and has recently returned from another visit to Iraq.

I will be focussing my contribution on the impact and legacy of the protests. While the antiwar movement did not stop the invasion of Iraq from proceeding, it had a significant effect in the outcome of future political events. It shaped international and national politics, and one cannot imagine the comprehensiveness of Howard’s defeat in 2007 without it. For me, an important question is also the difficulties we had of uniting the Global Justice Movement with the anti-war movement in Australia.

Press release from the Sydney Stop the War Coalition

Media release – March 13, 2013

Iraq – 10 years on
Remembering when the world said No to war

This March 20 marks 10 years since the invasion of Iraq by the Coalition of the Willing, or Coalition of the Killing as it came to be described. Sydney Stop the War Coalition will host a panel discussion on what has happened in Iraq and to the anti-war movement since, and what anti-war activists can do to prevent more such wars.

The panel will hear from Donna Mulhearn who has just returned from another trip to Iraq. Donna was part of the “Human Shields” who tried to stop the war in Iraq before it started.  She has since devoted time to informing Australians of the consequences of this war. “It seems the new Iraq is becoming very close to the old Iraq in terms of lack of free press, free movement or free speech. After so many decades of suffering, Iraqis deserve better.”

Elizabeth Humphrys, a researcher, who was also active in the movement to stop the invasion, is another panelist.“There are many aspects to reflect on including the differences between the 2003 upsurge and the anti-Vietnam War movement.  How did the anti-corporate globalisation movement intersect with the anti-war movement? And what should anti-war activists be doing now to stop this and other imperial wars?”

Simon Butler, a youth leader of the Books not Bombs movement – the youth walk-outs from schools across Sydney which the state government and media tried to demonise – is also a panelist. “Students were accused of just wanting to wag school. But they were very conscious about why they were protesting; they saw that this war was not about democracy; this war was a grab for Iraq’s resources. The government of NSW Labor Premier Bob Carr was the only one in the Western world to ban an Iraq war protest.”

Hall Greenland, another participant in the huge mobilisations and another of the panelists said: “The Greens stand in the proud tradition of opposing acts of aggression. Ten years ago Bob Brown and the Greens said the illegal attack on Iraq would lead to disaster. Sadly, we and other peace activists have been proved right.”

Monday March 18 at 6-8.30pm

Mitchell Theatre, Sydney Mechanics School of Arts
240 Pitt Street, Sydney

Entry $10/5 concession

Phone Pip 0412 139 968 or Anne 0404 090 710 for more information.

Organised by Stop the War Coalition Sydney — www.stopwarcoalition.org

How the SMH visualised the end of NSW premier Nathan Rees

That aspect of the modern crisis which is bemoaned as a “wave of materialism” is related to what is called the “crisis of authority”. If the ruling class has lost its consensus, i.e. is no longer “leading” but only “dominant”, exercising coercive force alone, this means precisely that the great masses have become detached from their traditional ideologies, and no longer believe what they used to believe previously, etc. The crisis consists precisely in the fact that the old is dying and the new cannot be born; in this interregnum a great variety of morbid symptoms appear.

— Gramsci, 1971, Selections From The Prison Notebooks, pp. 275-6

Watching last night’s ABC Four Corners one could easily think that Eddie Obeid is just the latest (and most extreme) exponent of the systems of patronage which have long characterised ALP influence in NSW. But Obeid’s singular power and murky dealings were also a function of how the party’s factional structures have had their social and political meaning hollowed out in the neoliberal era.

This occurred thanks to simultaneous shifts in power from party organisation to professional political class, and from a base of strong (if conservative) trade unions to the ossified and self-interested bureaucracies of a deeply weakened union movement. As we have noted here previously, it is no mere crisis of ideology, narrative or belief. And the labour movement’s disaster was most centrally the product of a period of self-transformation that it deludes itself into believing represented the peak of its historic achievements.

This was the trajectory of a neoliberalised Labor Party: Towards patronage denuded of a material class base and any vestige of progressive ideology. No longer was big business to be opposed, not even was it simply to be cravenly backed in the name of “growth” and “jobs”, no longer were former ministers to land plum consultancies and directorships, but now its political patrons in the ALP saw it as completely natural to be “in on the action” while in office.

To say it is sickening and helps explain the ALP’s current disastrous standing in public opinion and polls only tells part of the story.

More importantly it should make clear that when people imagine that the neoliberalised ALP can simply weather this “downswing” in the “political cycle”, they misunderstand that a crisis of political authority of this sort does not operate on the basis of swings and roundabouts. What we are seeing is one part of a secular unraveling of the Australian official political system, with no guarantee that even if it survives that it will simply reconstruct itself around the old, institutionalized axis of Laborism v conservatism. And that has profound implications for how we think something “new” can be built as the “old” crumbles.

Meanwhile, expect yet more “morbid symptoms”.

[SMH photo montage from here.]