Posts Tagged ‘Princeton’

The Rise of Trump, and Kautsky’s Description of the Mass Appeal of Fascism

September 24, 2016

I found this extract from Karl Kautsky’s “Some Causes and Effects of National Socialism” in the section on Fascism in Lucien Laurat’s Marxism and Democracy (London: Victor Gollancz 1940). It’s footnote 2 on pages 174-5. What struck me was the similarity between Kautsky’s view of the rise on the Nazis in Germany, and some of the factors underlying the rise of Trump today and the increasing right-wing extremism of mainstream politics in Britain. Kautsky wrote

Those masses of the people without political and economic knowledge, drawn into political activity only by the war and its effects, were imbued with militarist ideas and were totally ignorant of political economy. They believed that the will and political power would be sufficient to obtain for them all they desired. These desperate people entirely failed to recognise the existence of economic laws, which must be known before measures can be taken to restore the economic system to health, nor did they see the international character of the crisis, which demanded international remedies.

These elements thirst for power rather than for knowledge; having no confidence in themselves they do not demand that political power should be given into their hands, but into the hands of an individual from whom they expect their salvation, that is to say, an improvement in their personal situation…

In a moment like the present the strength of National Socialist propaganda is very great, particularly as since the war the militarist idea has vanquished the economic idea. A far-sighted strategist is well aware of the importance of the economic element, but the ignorant soldier believes only in the omnipotence of violence. The war with all its evil consequences has reinforced this belief amongst certain classes of the people, so that to-day the crassest petty-bourgeois ignorance believes itself capable of guiding the development of the State and of society without any preliminary study, and solely in accordance with its most pressing needs…

To these circumstances is added the absolute necessity for radical intervention in economic life, the paralysis of parliamentary activity owing to a more or less even balance of party strength, the bankruptcy of the old political parties, the despair not only of the workers, but also of the middle classes and the intellectuals, belief in the omnipotence of violence, and the ignorance of great masses of the people, particularly the youth, with regard to economic and social questions, a phenomenon particularly striking since the World War and for which the war is largely responsible.

This analysis of the rise of Nazism doesn’t completely explain the rise of Trump and the Far Right in America and the Continent today, but there are certain elements common to both. These are:

1. The effects of war and violence.

The West has been at war for about 15 years now following 9/11 against Islamism, and the result has been that all Muslims are regarded by a certain portion of the population with deep suspicion as potential terrorists and a threat to western society. The result has been a rise in xenophobia. At the same time, both America and Britain have at the level of popular culture a deep faith in the ability of the militaries to emerge victorious. All it needs is for us to give more support in terms of personnel and funding to our troops, and al-Qaeda and ISIS will be wiped out. While al-Qaeda and ISIS certainly need and deserve to be wiped completely from the face of the Earth, this simplistic view of ending the present wars through more violence and force ignores the radicalising effect of our attacks and counterattacks on the indigenous population, and the possibility that more peaceful methods, such as sanctions and the freezing of terrorist bank accounts, may be a far better solution.

2. Ignorance of the Economic Causes of the Global Crisis.

The current economic crisis, and the devastation of societies all over the globe, has been brought about through the operation of economic laws. Laissez-faire capitalism doesn’t work, and the neoliberalist economics embraced by politicians of various shades since Maggie Thatcher and Ronald Reagan have been responsible for immense economic, social and political damage. But these are supported uncritically by vast numbers of the population, who revere these figures as saving the country from the threat of socialism or encroaching liberalism. As the real economic causes of the crisis aren’t recognised, people look around to find scapegoats for their ills, finding them in the threat of ethnic minorities.

3. Kautsky’s statement that people’s sense of personal powerlessness leads them to expect and demand salvation from a strong political figure also seems apt. The right has led a campaign over the past three decades and more to destroy the very organised working class organisations, which have acted to protect and empower working people, such as trade unions. And the effect of the recession, with its threat of redundancies and the imposition of zero hours contracts and short-term contracts, has been to make more people feel powerless. As a result, they turn to a strong political figure, like Trump, to give them what they feel they need, rather than empowering themselves through left-wing campaigning and political action.

4. The paralysis of parliamentary activity, and the bankruptcy of the old political parties. The precise circumstances between America today and Weimar Germany of the 1920’s and 1930’s is different, but the overall analysis still holds here as well. Hitler came to power at the end of the 1920s and beginning of the ’30s, when parliamentary democracy in Germany broke down completely. The ruling coalition that governed the country since the end of the First World War between the Social Democrats, Catholic Centre Party and the two Liberal parties collapsed, with the individual parties refusing to cooperate with each other. Hindenburg, the president, began to govern by decree, as provided by the German constitution. He also approached the Nazis to break the deadlock by including them in a coalition which would have the necessary majority. The result was demands by Hitler for total power, and the final collapse of German democracy.

In America, public opinion of congress is extremely low. The power of the corporations to influence politics is such that polls have shown that only 9 to 25 per cent of the American public believe their politicians are doing a good job and representing them. A study by Princeton found that America was no longer a democracy, but an oligarchy because of the corporate nature of American politics.

There are also significant differences, however. While the majority of Trump supporters are middle class, the majority of supporters for Bernie Sanders, the self-confessed democratic socialist, were young. Most of the audience for Fox News is in its late sixties and above. It’s America’s young people, who are challenging the Conservative political establishment of the older generation.

As for Trump’s middle class support, this has been interpreted as disproving the explanation that Trump’s rise is due to the impoverishment of the American working class. That’s true, but it doesn’t mean that the threat of impoverishment isn’t one of the factors behind his rise. One of the causes of the emergence of Fascism in Germany and Italy was the fear of those countries middle classes that they were losing their social status, threatened by big business from above and organised labour from below. Certainly the rise of Trump, and that of the neocons before him, is due to the sense of threat felt by white, middle class men that their privileged social status is under threat from women and ethnic minorities. At the same time, the American middle class is shrinking due to the effect of neoliberal economics in immiserating the broader masses of working people, including salaried employees.

My guess is that much of this analysis also applies to Britain, where many people have the same view of the essential morality and effectiveness of using extreme military force against the peoples of the Middle East; a sense of threat of foreigners and the unemployed taking jobs and support from the dwindling welfare state; an ignorance of the role of Conservativism and neoliberal economics as the direct cause of the growing impoverishment of British society; a feeling of powerlessness that looks to strong leaders to save them; a feeling of despair engendered by a corrupt parliamentary system, dominated by a shared political consensus between left and right in neoliberalism, and permeated with corporate corruption.

What is needed to stop the growth of the extreme right is not just a campaign of anti-racism, but also a renewed assault and abandonment of the prevailing neoliberal consensus. More people need to be shown that not only are immigrants not responsible for poverty and poor welfare provision, but that these have been directly caused by the likes of Thatcher and Reagan. And far from neoliberal and conservative economics being the only effective system, it is possible to challenge these and think outside them, to see them as the real cause of contemporary poverty and the economic and political crisis engulfing America and the world.

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Financial Times Review of Book on Origins of American Financial Imperialism

October 27, 2015

Also looking through the pile of past newspaper clippings I’ve collected, I found this review by David Honigmann of Financial Missionaries to the World: The Politics and Culture of Dollar Diplomacy 1900-1930, by Emily S. Rosenberg, published by Harvard, in the FT’s weekend supplement for 11th/12th March 2000.

The Real Costs of an Empire on Loan

At the end of the 19th century, the US was acquiring an empire by default, picking up colonial possessions and exerting a sphere of influence it did not quite know how to handle. When the 1896 selection turned on the question of currency reform and the gold-standard advocates won, the next step to export the gold standard to the scattered territories under US control. It spread from Puerto Rico to the Philippines, then Panama, Cuba, Haiti, Nicaragua, Mexico. Eventually, US financial advisers would by plying their trade as far afield as China, Germany and Persia.

Dollar diplomacy was the term coined for an arrangement under which struggling economies would receive loans from US banks in return for accepting “supervision” from American economic advisers. The story of the public-private partnership that tried to bring this about is the subject of Emily Rosenberg’s meticulously researched book.

She traces the three parties involved in pushing dollar diplomacy. Investment banks, anxious for new markets, provided the loans. Academics made, in some cases, small fortunes from providing the advice: Edwin Kemmerer, who became the high priest of dollar diplomacy, made many times his already generous Princeton salary from grateful client governments. (Rosenberg cites personal correspondence to show that Kemmerer was obsessed with the inadequacy of his salary and what this meant for his manliness.

The third party underpinning all this was the US State Department, which played an ambiguous role in approving the loans. Each loan went to the State Department for approval, and when approval was granted there was at least a tacit expectation by lenders that the US government was backing it, protection which could take any form from ambassadorial murmurings to the dispatch of the Marines.

Banking was a contested area at the time. The gold standard, with its tendency to deflation, was inimical to small farmers and small businessmen. Marxists condemned it as materialism in action, and opposition to it also drew on a strain of populist anti-Semitism. (In the 1896 election, the Democrats warned against “crucifying mankind upon a Cross of Gold”.)

Attitudes to dollar diplomacy did not split evenly along political lines, however. When President (Theodore) Roosevelt, in 1905, halted the Dominican Republic’s slide towards bankruptcy by turning it into a US fiscal protectorate, and then built it into a model of dollar diplomacy, there was little anti-imperialist protest. The plan was seen essentially as extending “assistance without annexation”.

It was only as client countries began to rebel against the conditions and policies imposed to accompany loans (the Sandino rebellion in Nicaragua in the late 1920s being the most visible) that progressive domestic opposition and the Comintern rallied to denounce it.

Rosenberg dives deepest into the professional advisers and their search for respectability. this was the foundation of the whole system: the professionalism of the advisers reduced the perceived risk of the loans, lowering their price and making them affordable for the client countries. The advisers presented themselves as impartial third parties, aloof from both US governmental interests and the banks, responsible only to client governments. In fact, they received considerable support behind the scenes from the State Department, and Kemmerer was also kept on a secret annual retainer by Dillon Read, one of the investment banks: not so much Chinese walls as Hall of Mirrors.

Despite the technocratic claims of the advisers, dollar diplomacy was not a clean, value-free exercise. Rosenberg locates its roots in the cultural debates of the early 20th century. The Tarzan books and films were only one example of the ways in which other nations and peoples were framed as “primitive” and in need of western assistance.

Dollar diplomacy even became the subject of poplar entertainment, as in Edison’s 1917 film Billy and the Big Stick, whose hero was an American customs officer in Haiti, denied his salary by the Haitian president until he threatens the dispatch of gunboats. All very explicit, it might seem; in fact, as Rosenberg notes, it was the US financial adviser in Haiti who sopped the wages of Haitian officials until they agreed to his proposals.

The crux of Rosenberg’s argument is that dollar diplomacy cloaked geo-politics in the guise of market contracts, but with the iron first ill-concealed in the velvet glove. She draws a parallel with Victorian marriage contracts: “the dominant (male) party promised monetary support (loans) and supervision in return for obedience and acceptance of regulation. Yet, also like marriage, the status inequalities were embedded in the controlled loan contracts of dollar diplomacy, even as the contracts tended to be culturally presented as freely negotiated and based on mutual attraction.”

Financial Missionaries to the World is not easy reading. It is full enough of fiscal minutiae that even fairly central concepts, such as financing currency conversion through seniorage, go unexplained. There is no argument that is not a discourse, no assumption that is not a paradigm, no subordination that is not a “feminization”.

But it works well in explaining how this policy of arm’s length financial administration arose, how it was sustained by cultural pressures in the teeth of growing opposition from both isolationist Right and anti-colonialist Left, and how it eventually collapsed in the gale of the 1929 Crash and a series of armed rebellions.

Rosenberg does briefly trace the evolution of dollar diplomacy through Bretton Woods and the rise of the IMF, although a less scholarly book might have drawn even more explicit parallels with the financial regimens imposed by today’s multinational institutions. But perhaps the warnings are all too clear.

That last paragraph is important. The IMF and the World Bank certainly do act as instruments of American economic imperialism. When countries go for them for loan, these are given with a set prescribed conditions to rectify those nations’ ailing economies: they are to private the state industries and cut down on state expenditure generally, including removing or cutting back on any welfare support they may provide their citizens. The privatised industries are to be sold to American companies.

And the Americans haven’t just tried this with Developing Nations. They’ve done it to us as well. The British Empire was dismembered partly due to pressure from the Americans for their help during the Second World War, as they wanted to open up the closed imperial trading bloc to American companies. And they’ve continued interfering in our economic affairs afterwards. According to Lobster, one of the chiefs and head executives at the Bank of England under Bliar was Deanne Julius, a high ranking official within the American banking system. She believed that Britain should abandon its role as a manufacturer and concentrate instead on servicing American global financial interests.