Writers have identified the onset of capitalism with slavery, land grabs, brutal violence, and globalization. Out of this came an industrial revolution that over two hundred years rearranged the processes of extraction of raw materials, manufacturing, the global distribution of goods and services, and the accumulation of incredible wealth by small global ruling classes and the expansion of human misery for the vast majority. In the twentieth century, banks assumed great power and control of national economies and political systems.
Changes in the global political economy gave rise to revolutionary ferment, socialist systems, and massive campaigns demanding economic justice including the right to form trade unions. In the twentieth century governments were forced to adjust the capital accumulation process to accommodate some worker demands. A small number of socialist states struggled to create new economic and political systems. From the 1930s to the 1970s the United States responded to massive social movements by carrying out modest political and economic reforms which combined substantial growth and ruling class wealth with policies to redistribute some of it to meet the needs of workers.
By the 1970s, because of declining profit rates, over-production and under-consumption, a state fiscal crisis, rising oil prices, and expanding worker power, the “golden age” of the welfare capitalist state was dismantled. Of particular significance was the shift from a manufacturing- based economy to financial speculation. To accommodate finance capital President Ronald Reagan in 1980 embraced a series of economic policies which transformed the system of welfare state capitalism, initiated in the period of the New Deal in the 1930s to a new economic program referred to as neoliberalism.
Reagan gutted government programs, reduced taxes for the rich, launched a frontal assault on trade unions, and increased military budgets. The official rationale for the new public policies was that “government was not the solution; government was the problem.” Inspired by Prime Minister Margaret Thatcher in England, and promoted by Western-dominated economic institutions such as the International Monetary Fund and World Bank, the so-called “Washington consensus” was imposed on the world: forcing virtually every country to cut government spending, privatize public institutions, and to produce for global rather than local markets. U.S. capital outsourced manufacturing to countries with cheap labor and expanded its direct foreign investment.
In the United States political arena, pockets of resistance to neoliberalism, or austerity, grew. The national Democratic Party, for the most part, embraced the Reagan Revolution but vibrant presidential campaigns of Reverend Jesse Jackson in 1984 and 1988 challenged the direction of change in the United States. Jackson launched a movement, the Rainbow Coalition, which was designed to mobilize workers, people of color, women, and youth to reverse the panoply of Reagan policies. Despite enormous popularity, the Jackson campaign could not break through the wall of collaboration of the Democratic Party.
On the Republican side, right-wing populist Pat Buchanan challenged the Reagan consensus, particularly on so-called free trade in 1992. Others, such as Ross Perot, ran for president primarily on the basis of opposition to the yet to be approved North America Free Trade Agreement (NAFTA). Both efforts were motivated by sectors of capital that were domestic in character, in contradistinction to the growing primacy of globalized financial capital. 1992 Democratic candidate Bill Clinton remained cautious on NAFTA as he promised American workers that he would represent their interests.
Upon election, Clinton proceeded to cajole recalcitrant Democrats in Congress to vote “yes” on NAFTA. Over the next twenty years NAFTA led to the loss of at least a million jobs in the United States and created a downward pressure on workers’ wages. Meanwhile the Mexican economy declined, relying on growing food imports and massive migration. Clinton continued the Reagan era programs by cutting modest but critical welfare programs, supporting efforts to increase the incarceration of masses of people of color who lost economic opportunity because of the neoliberal policy agenda, and worked to expand the so-called neoliberal-framed trade agenda by helping to create the World Trade Organization. While there was high tech job growth during the Clinton years (1992-2000), real wages for most workers began their steady decline, manufacturing jobs continued to go overseas, and economic migration from Latin American and Asia increased.
Reflecting on this historical overview from a political perspective several conclusions seem clear. First, the economic and political characteristics of the “golden age” of the United States, that is the growth and distribution of wealth benefiting workers between the late 1930s and the late 1960s, were anomalies.
Second, as a result of the economic crises of the 1970s, politics shifted from support of government programs for the many to austerity and wealth for the few. The Reagan Revolution of the 1980s constituted a qualitative shift from welfare to growth and from providing some benefits to the working class to extracting more from them to increase profits. The Reagan Revolution expanded the economic shift to financialization. Ideologically, pluralities of Americans were convinced that the economic problems they faced were because of too much government.
By the 1990s, the pluralities drawn to Reaganomics increased to majorities as a result of the support given to it by the Clinton Administration. NAFTA, mass incarceration, and welfare reform supported by “third wave” Democrats like Clinton legitimized the Reagan Revolution.
Based on this extrapolation from economic and political history, the 2016 presidential election campaign on the Democratic Party side is critical. Candidate Hillary Clinton speaks for the interests of financial speculation, trade regimes, privatization of public institutions, and accommodations with Reagan descendants in the United States Congress.
Candidate Bernie Sanders, however, represents a fundamentally different public policy agenda; one that begins with the most marginalized rather than the economic elite. It presumes that by bolstering the economic opportunities of workers, the poor, people of color, women, and youth, a buoyant economic recovery could occur that “trickles up” from the base. His program endorses some redistribution of wealth and the provision of health care, education, a job, and adequate housing as basic human rights. His vision also is of a “moral economy,” one in which every person is provided with the opportunity to achieve all of her or his human potential that is possible in the twenty-first century.
Questions remain about whether a “political” and “moral” revolution is fully achievable without fundamental structural change in the U.S. and the global political economy, but there is no question that the Sanders campaign represents an effort to reverse the policies established by Presidents Reagan and Bill Clinton during the late twentieth century.