The World Drifts Left….

The center of political gravity in Europe is obviously moving leftward.  When Francois Hollande wins the French Presidential election on Sunday (barring a huge upset; today the center candidate threw his support to Hollande, further increasing the likelihood of victory), France will have its first socialist president in 17 years.  In Spain, the Socialsts did much better than expected in the regional election in Andalusia in March.  In the Netherlands, the withdrawal of far right support for the government, leading to new elections, may open the way for a leftist victory.  Leftists are expected to well in Greece in the coming elections as well.

But more significantly, we have seen the return of state nationalisations in Latin America.  In Argentina, President Fernandez nationalised the state oil company YPF, which had been majority owned by the Spanish oil giant REPSOL.  In Bolivia, President Morales nationalized the electrical grid, which had been owned by the subsidiary of a Spanish electric company.

It would be wrong to once again sound the death knell of capitalism (we’ve heard that ring before; it’s always an illusion).  However, voters and politicians are reminding capitalists of something they seem to have forgotten:  While capitalism works by giving successful businesspeople, celebreties, athletes, entertainers, and others who offer things that people value the opportunity to become obscenely rich, ordinary people only tolerate this if the economy also offers them a decent chance at a job and rising real incomes too.  If the successful grow rich while ordinary people grow poorer and less secure, then we are in the capitalism of Karl Marx, where weath is the result of exploitation of workers and seen as illegitimate.

The successful capitalism of Bismark and Roosevelt remembered that it had to provide for workers too, and limit the exessive accumluation of the rich; they therefore engaged in buiilding social support, unions, and enough regulation to ensure vigorous competition but without companies overrunning workers.

Today, it seems that capitalists have forgotten that they cannot extract unlimited wealth from economies whose ordinary workers are suffering long-term stagnation, unemployment, and loss of their savings and assets, and expect the workers to accept it for very long.

With house values, salary, and unemployment now ticking along at recession-levels for the fifth year in most countries, patience with austerity programs or giving more to the rich in the hope that they would lift others is running out.

Watch out, conservative parties and wealthy elites:  far right wing populists as well as left-socialists are out to bring you down to earth.  Either support policies that quickly give some benefits and relief to ordinary workers, or they will turn on you and the capitalist system that they believe is benefitting you, and only you.

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About jackgoldstone

Hazel Professor of Public Policy at George Mason University
This entry was posted in The Global Economy. Bookmark the permalink.

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