That's pretty much the same as the famous quote attributed to US President Calvin "Silent Cal" Coolidge, "The business of America is business."
If the website This Day in Quotes is correct, that's a shortened form of Coolidge's statement, "the chief business of the American people is business."
In any of those versions, including Schröder's, the idea is the same: the business of the people's democratic government is to serve business owners, corporate executives, industry lobbyists and cater generally to the comfort of the already very comfortable.
Neoliberalism is the term that much of the world uses to describe the free-market ideology that became dominant in the world in the post-Bretton Woods era. The term can be confusing for Americans, because in the US starting in the 1920s "liberal" economic policies referred to policies restricting corporate abuses, activist government and the kind of social-security measures now called welfare-state policies.
Neoliberalism is an application of free-market principles developed originally in the liberal philosophical and economic tradition of the 18th and 19th centuries to the post-Bretton Woods world. The period from 1947 to 1971 was the era in which the Bretton Woods Agreement provided an economic framework for the capitalist world, a framework Yanis Varoufakis et al call the Global Plan. (Modern Political Economics: Making sense of the post-2008 world; 2011)
Broadly speaking, capitalism has always operated under some form of liberal economic theory. What was "neo" about neoliberalism was not that leading figures in its application like Ronald Reagan and Maggie Thatcher had converted away from their conservative outlook. They hadn't. It was the application of old-fashioned, anti-welfare-state doctrines to a world in which the advanced capitalist nations were operating with substantial government insurance programs to protect the health and retirement security of their citizens and economies well-regulated enough to prevent a recurrence of the Great Depression. The collapse of the Soviet Union and the Eastern Bloc in 1989 and the following years strengthened the credibility of neoliberalism in various ways, including removing a major source of external ideological competition and fueling a feeling of triumphalism in western countries.
For conservatives, neoliberalism was a new chance to implement a market fundamentalism that they had always found attractive. But for center-left parties like the Democratic Party in the US and the social-democratic parties in Europe, it meant selling laissez faire, anti-union, anti-regulation, anti-welfare-state policies to their traditional working-class constituencies without at the same time losing all credibility with them. The project of the now-defunct Democratic Leadership Council (DLC) was largely aimed at that purpose, and significantly influenced the Clinton Administration on issues like the NAFTA trade agreement.
In Britain, Tony Blair and so-called New Labour enthusiastically pursued that course. And Gerhard Schröder became the German leader most identified with it. Blair and Schröder even issued a joint statement in 1999 titled, "Europe: The Third Way/Die Neue Mitte." This website from a University of Alberta web address appears to be a mirrored version of the declaration as it once appeared on the Labour Party's website, where I was unable to find it.
The Third Way/Neue Mitte manifesto is fascinating in retrospect. After five years and counting of President Obama preaching deficit reduction and pushing for a Grand Bargain that in practice means nothing other than cutting benefits for Social Security, Medicare, Medicaid and veterans' benefits, it's easy to focus on the phrases that have since become more widely understood as catch-phrases for cutting government services that benefit ordinary working people. Which is also what I'm going to do here.
But it's worth noting that even in 1999, it was not nearly so clear even to people who were committed to maintaining the welfare state - or the social safety net, as we call it in our "exceptional" American political vocabulary - that it was or would soon become nothing but a cynical gloss on conservative policies to be sold to the constituencies of the center-left as not-as-bad-as-what-the-conservatives-want.
For instance, these two points from the Blair/Schröder manifesto sounded in 1999 like something the center-left and progressives could consider necessary, constructive and different than a return to Herbert Hoover economics by the center-left parties:
But the poison pills are there, with my translation in 2013 American political terms:
- In a world of ever more rapid globalisation and scientific changes we need to create the conditions in which existing businesses can prosper and adapt, and new businesses can be set up and grow.
- New technologies radically change the nature of work and internationalise the organisation of production. With one hand they de-skill and make some businesses obsolete, with another they create new business and vocational opportunities. The most important task of modernisation is to invest in human capital: to make the individual and businesses fit for the knowledge-based economy of the future.
Public expenditure as a proportion of national income has more or less reached the limits of acceptability.2013 Translation: cut gubment spending (except defense!)
Within the public sector bureaucracy at all levels must be reduced, performance targets and objectives formulated, the quality of public services rigorously monitored, and bad performance rooted out.2013 Translation: Git the gubment off the backs of private business and privatize as much of it as you can get away with to turn it into private business.
Social security systems need to adapt to changes in life expectancy, family structures and the role of women.2013 Translation: Cut benefits on Social Security, Medicare and Medicaid (or the British and German equivalents) and raise the retirement age.
Social democrats need to find ways of combating the ever more pressing problems of crime, social disintegration and drug abuse.2013 Translation: poor people are degenerates and criminals.
[In the previous center-left approach:]Too often rights were elevated above responsibilities, but the responsibility of the individual to his or her family, neighbourhood and society cannot be offloaded on to the state. lf the concept of mutual obligation is forgotten, this results in a decline in community spirit, lack of responsibility towards neighbours, rising crime and vandalism, and a legal system that cannot cope.2013 Translation: poor people are degenerates and criminals.
The past two decades of neo-liberal laissez-faire are over. In its place, however, there must not be a renaissance of 1970s-style reliance on deficit spending and heavy-handed state intervention. Such an approach now points in the wrong direction.2013 Translation: We'll use the deficit as an excuse to continue the course of the previous neo-liberal laissez-faire policies.
There is a whole section on "A tax policy to promote sustainable growth" that basically offers several different angles of an argument for cutting taxes on corporations and the wealthy.
Now that we've seen the United States and the EU pursue Herbert Hooverish economic policies in the face of a repeat of the Great Depression - with some partial exceptions like Obama's initial stimulus program - these points look a lot grimmer than they did to a lot of people in 1999. Being enchanted by some of these ideas is at least a little more understandable in the context of the tech boom's euphoria. The fact that such policies persisted even among center-left parties until now retrospectively indicate how seriously the Third Way leaders took the conservative elements of the neoliberal program, and how empty much of the left-sounding rhetoric has turned out to be.
David Kusnet and Ruy Teixeira captured some of the contradictory nature of the Third Way program in an article for Dissent (Summer 1999), "The Third Way and The Future of Social Democracy" (Kusnet was Bill Clinton chief speechwriter in his 1992 Presidential campaign):
Thus, a leading American advocate of this approach, Al From of the centrist Democratic Leadership Council (DLC), has declared that the third way is "the global generic brand name for the progressive politics of the Information Age." Implicitly, From is arguing that the DLC's style of third way politics - one that targets affluent voters, recommends the partial privatization of social insurance programs, and is wary of what it calls class warfare - should hold the American franchise for "the progressive politics of the Information Age."Kusnet's and Teixeira's point that the political appeals "focused on what progressive have always done best" were actually "the appeals that actually elected Clinton, Blair, and Schröder" highlights the role that center-left parties including the Democratic Party, New Labour and the SPD have tended to play in the neoliberal scheme in the years since. They get elected offering relief from the failures of their conservative predecessor and offering solutions attractive to working people in the general tradition of the New Deal, the postwar Labour Party and German social democracy. Then they push they push the kind of pro-corporate, anti-labor policies indicated by the euphemistically phrased programmatic points quoted and "translated" above.
But there's a different and better sort of third way. This kind of politics is concerned with economic insecurity and inequality and focused on what progressives have always done best: setting rules, making investments, and building institutions to help working people make their way in changing times. And it is in the spirit of the best traditions of progressive parties throughout the West, in keeping with the appeals that actually elected Clinton, Blair, and Schröder. and an appropriate response to the needs of working families in the Information Age. [my emphasis]
And in doing so, they kick their own base voters in the teeth. So the SPD has done poorly in national politics since Schröder's Chancellorship. They entered Merkel's first Grand Coalition government, which proceeded to raise the retirement age from 65 to 67. Their vote percentage improved in this year's elections after being in the opposition for four years. Now, in entering a second Grand Coalition government, they claim it as a victory in their coalition negotiations that they got some measures included that, if passed, would mitigate some of the problems caused by their raising the retirement age during the first Grand Coalition!
In American politics, we could quibble about whether Clinton's seemingly centrist positions on things like his "Sistah Soljah" moment so beloved by the pundits who worship at the altar of High Broderism or his support for school uniforms were decisive in his Presidential election victories of 1992 and 1996. But the basic point holds. He didn't get elected either time proposing to loosen regulations enough for Wall Street to bring on a re-run of the Great Depression. Kusnet and Teixeira note of Clinton's 1992 campaign:
Far from avoiding anything that sounded like "class struggle," he tapped into public anger at irresponsible corporate behavior, declaring: "It's important to remember that the most irresponsible people of all in the 1980s were those at the top quarter, those who sold out our workers and our country with bad deals and spent billions of dollars on wasteful debt." He linked anxieties about economic stagnation and social breakdown: "Our country is growing apart when we should be growing together." ...Kusnet and Teixeira also define why the neoliberal model since 1999 has proven to be a self-destructive course for the center-left parties, not only in the US, Britain and Germany:
Similar appeals on social and economic issues - most notably the famous "E2M2": education and the environment, Medicare and Medicaid-contributed to Clinton's re-election in 1996. Progressives in the United Kingdom, Germany. and France likewise won as champions of working people pledged to fight unemployment, raise the minimum wage, and defend social insurance. The workforce of the new economy-blue-collar, white-collar, and technical worker-provided their majorities.
An improved image. although very desirable in the short run, is no substitute for the material accomplishments of a successful political-economic model, one that yields a period of sustained and broadly shared prosperity. Such achievements provide the cement that keeps voters and left parties together over time. Conversely, a party that cannot take credit for these sorts of accomplishments will find voters' loyalties to he tenuous.Because, without that, "the third way leads nowhere except out of office with relatively little accomplished in the interim."
And, sadly, this warning from their 1999 article still holds for Obamaism. In that article, they were arguing for a "third stage" of progressive policies that would increase the electoral strength of the left, following on a first stage of postwar liberal hegemony in economic policy in the US and a second stage of conservatives successfully blaming Keynesianism and center-left policies for increased economic hardships. Their first stages correspond roughly to the Bretton Woods/"Global Plan" stage and the subsequent stage of the ascendancy of neoliberal doctrine embodied by the Reagan and Thatcher governments.
... breaking the conservative economic consensus creates problems for the third way as a marketing plan. Aggressive, activist government and expansionary policies create a convenient target for conservatives, who arc further aided by the reaction of financial markets to such policies. Swing working- and middle-class voters, whose loyalty to left governments is not yet cemented, may thereby he moved hack into the conservative camp, ending the process before it has even begun.One aspect of the Kusnet-Teixeira analysis that unfortunately didn't play out the way they indicated is their observation that advocates of the "third way" in Europe didn't find themselves "find themselves drawn to a politics that wrongly minimizes the problems of economic insecurity and the potential of collective action by working people" to the extent their counterparts in the US did. As it turns out, notably in the case of the SPD, they did.
However, without the success of expansionary policies. a third stage will never be established. So: no risk to the marketing plan, no reward in the long-term. A third way that could successfully hear these risks and arrive at the other end ... would be truly worthy of the name.
Finally, Kusnet and Teixeira wrote in 1999 that the Third Way approach was in "its buzzword phase." Unfortunately, in the SPD they took the pro-corporate buzzwords way too seriously and the worker-friendly ones, well, they largely left those a buzzwords. One of the major goals that Kusnet and Teixeira in 1999 were urging the center-left parties to embraces was the idea that "international institutions like the International Monetary Fund should cease their unrelenting focus on fiscal austerity that has imploded one economy after another in the developing world."
Now, of course, in Europe even the IMF has been hinting that Merkel's aggressive, Herbert Hoover/Heinrich Brüning style austerity policies in the eurozone have gone too far. But the SPD has agreed, and apparently agreed cheerfully, to continue them for another four years. German and European politics would probably start looking more hopeful if the SPD agreed to merge with Merkel's Christian Democrats and the Greens and the Left Party merged to form a single opposition party. Because it's hard to see any kind of encouraging future for the SPD on the path they're on now.
Tags: angela merkel, austerity economics, eu, euro, european union, gerhard schröder, neoliberalism, spd