In a struggle between oligarchy and democracy, something must give
By: Michael Hudson
The Democrats’ Quandary
To hear the candidates debate, you would think that their fight was over who could best beat Trump. But when Trump’s billionaire twin Mike Bloomberg throws a quarter-billion dollars into an ad campaign to bypass the candidates actually running for votes in Iowa, New Hampshire and Nevada, it’s obvious that what really is at issue is the future of the Democrat Party. Bloomberg is banking on a brokered convention held by the Democratic National Committee (DNC) in which money votes. (If “corporations are people,” so is money in today’s political world.)
Until Nevada, all the presidential candidates except for Bernie Sanders were playing for a brokered convention. The party’s candidates seemed likely to be chosen by the Donor Class, the One Percent and its proxies, not the voting class (the 99 Percent). If, as Mayor Bloomberg has assumed, the DNC will sell the presidency to the highest bidder, this poses the great question: Can the myth that the Democrats represent the working/middle class survive? Or, will the Donor Class trump the voting class?
This could be thought of as “election interference” – not from Russia but from the DNC on behalf of its Donor Class. That scenario would make the Democrats’ slogan for 2020 “No Hope or Change.” That is, no change from today’s economic trends that are sweeping wealth up to the One Percent.
All this sounds like Rome at the end of the Republic in the 1st century BC. The way Rome’s constitution was set up, candidates for the position of consul had to pay their way through a series of offices. The process started by going deeply into debt to get elected to the position of aedile, in charge of staging public games and entertainments. Rome’s neoliberal fiscal policy did not tax or spend, and there was little public administrative bureaucracy, so all such spending had to be made out of the pockets of the oligarchy. That was a way of keeping decisions about how to spend out of the hands of democratic politics. Julius Caesar and others borrowed from the richest Bloomberg of their day, Crassus, to pay for staging games that would demonstrate their public spirit to voters (and also demonstrate their financial liability to their backers among Rome’s One Percent). Keeping election financing private enabled the leading oligarchs to select who would be able to run as viable candidates. That was Rome’s version of Citizens United.
But in the wake of Sanders’ landslide victory in Nevada, a brokered convention would mean the end of the Democrat Party pretense to represent the 99 Percent. The American voting system would be seen to be as oligarchic as that of Rome on the eve of the infighting that ended with Augustus becoming Emperor in 27 BC.
Today’s pro-One Percent media – CNN, MSNBC and The New York Times have been busy spreading their venom against Sanders. On Sunday, February 23, CNN ran a slot, “Bloomberg needs to take down Sanders, immediately.” Given Sanders’ heavy national lead, CNN warned, the race suddenly is almost beyond the vote-fixers’ ability to fiddle with the election returns. That means that challengers to Sanders should focus their attack on him; they will have a chance to deal with Bloomberg later (by which CNN means, when it is too late to stop him).
The party’s Clinton-Obama recipients of Donor Class largesse pretend to believe that Sanders is not electable against Donald Trump. This tactic seeks to attack him at his strongest point. Recent polls show that he is the only candidate who actually would defeat Trump – as they showed that he would have done in 2016.
The DNC knew that, but preferred to lose to Trump than to win with Bernie. Will history repeat itself? Or to put it another way, will this year’s July convention become a replay of Chicago in 1968?
A quandary, not a problem
Last year I was asked to write a scenario for what might happen with a renewed DNC theft of the election’s nomination process. To be technical, I realize, it’s not called theft when it’s legal. In the aftermath of suits over the 2016 power grab, the courts ruled that the Democrat Party is indeed controlled by the DNC members, not by the voters. When it comes to party machinations and decision-making, voters are subsidiary to the superdelegates in their proverbial smoke-filled room (now replaced by dollar-filled foundation contracts).
I could not come up with a solution that does not involve dismantling and restructuring the existing party system. We have passed beyond the point of having a solvable “problem” with the Democratic National Committee (DNC). That is what a quandary is. A problem has a solution – by definition. A quandary does not have a solution. There is no way out. The conflict of interest between the Donor Class and the Voting Class has become too large to contain within a single party. It must split.
A second-ballot super-delegate scenario would mean that we are once again in for a second Trump term. That option was supported by five of the six presidential contenders on stage in Nevada on Wednesday, February 20. When Chuck Todd asked whether Michael Bloomberg, Elizabeth Warren, Joe Biden, Pete Buttigieg and Amy Klobuchar would support the candidate who received the most votes in the primaries (now obviously Bernie Sanders), or throw the nomination to the super-delegates held over from the Obama-Clinton neoliberals (75 of whom already are said to have pledged their support to Bloomberg), each advocated “letting the process play out.” That was a euphemism for leaving the choice to the Tony-Blair style leadership that have made the Democrats the servants’ entrance to the Republican Party. Like the British Labour Party behind Blair and Gordon Brown, its role is to block any left-wing alternative to the Republican program on behalf of the One Percent.
This problem would not exist if the United States had a European-style parliamentary system that would enable a third party to obtain space on the ballots in all 50 states. If this were Europe, the new party of Bernie Sanders, AOC et al. would exceed 50 percent of the votes, leaving the Wall Street democrats with about the same 8 percent share that similar neoliberal democratic parties have in Europe (e.g., Germany’s hapless neoliberalized Social Democrats), that is, Klobocop territory as voters moved to the left. The “voting Democrats,” the 99 Percent, would win a majority leaving the Old Neoliberal Democrats in the dust.
The DNC’s role is to prevent any such challenge. The United States has an effective political duopoly, as both parties have created such burdensome third-party access to the ballot box in state after state that Bernie Sanders decided long ago that he had little alternative but to run as a Democrat.
The problem is that the Democrat Party does not seem to be reformable. That means that voters still may simply abandon it – but that will simply re-elect the Democrats’ de facto 2020 candidate, Donald Trump. The only hope would be to shrink the party into a shell, enabling the old guard to go away so that the party could be rebuilt from the ground up.
But the two parties have created a legal duopoly reinforced with so many technical barriers that a repeat of Ross Perot’s third party (not to mention the old Socialist Party, or the Whigs in 1854) would take more than one election cycle to put in place. For the time being, we may expect another few months of dirty political tricks to rival those of 2016 as Obama appointee Tom Perez is simply the most recent version of Florida fixer Debbie Schultz-Wasserman (who gave a new meaning to the Wasserman Test).
So we are in for another four years of Donald Trump. But by 2024, how tightly will the U.S. economy find itself tied in knots?
The Democrats’ Vocabulary of Deception:
How I would explain Bernie’s Program
Every economy is a mixed economy. But to hear Michael Bloomberg and his fellow rivals to Bernie Sanders explain the coming presidential election, one would think that an economy must be either capitalist or, as Bloomberg put it, Communist. There is no middle ground, no recognition that capitalist economies have a government sector, which typically is called the “socialist” sector – Social Security, Medicare, public schooling, roads, anti-monopoly regulation, and public infrastructure. These are a valid alternative to privatized monopolies extracting economic rent.
What Mr. Bloomberg means by insisting that it’s either capitalism or communism is an absence of government social spending and regulation. In practice this means oligarchic financial control, because every economy is planned by some sector. The key is, who will do the planning? If government refrains from taking the lead in shaping markets, then Wall Street takes over – or the City in London, Frankfurt in Germany, and the Bourse in France.
Most of all, the aim of the One Percent is to distract attention from the fact that the economy is polarizing – and is doing so at an accelerating rate. National income statistics are rigged to show that “the economy” is expanding. The pretense is that everyone is getting richer and living better, not more strapped. But the reality is that all the growth in GDP has accrued to the wealthiest 5 Percent since the Obama Recession began in 2008. Obama bailed out the banks instead of the 10 million victimized junk-mortgage holders. The 95 Percent’s share of GDP has shrunk.
The GDP statistics do not show that “capital gains” – the market price of stocks, bonds and real estate owned mainly by the One to Five Percent – has soared. This is thanks to Obama’s $4.6 trillion Quantitative Easing pumped into the financial markets instead of into the “real” economy in which wage-earners produce goods and services.
How does one “stay the course” in an economy that is polarizing? Staying the course means continuing the existing trends that are concentrating more and more wealth in the hands of the One Percent, that is, the Donor Class – while loading down the 99 Percent with more debt, paid to the One Percent (euphemized as the economy’s “savers”). All “saving” is at the top of the pyramid. The 99 Percent can’t afford to save much after paying their monthly “nut” to the One Percent.
If this economic polarization is impoverishing most of the population while sucking wealth and income and political power up to the One Percent, then to be a centrist is to be the candidate of oligarchy. It means not challenging the economy’s structure.
Language is being crafted to confuse voters into imagining that their interest is the same as that of the Donor Class of rentiers, creditors and financialized corporate businesses and rent-extracting monopolies. The aim is to divert attention from voters’ own economic interest as wage-earners, debtors and consumers. It is to confuse voters not to recognize that without structural reform, today’s “business as usual” leaves the One Percent in control.
So to call oneself a “centrist” is simply a euphemism for acting as a lobbyist for siphoning up income and wealth to the One Percent. In an economy that is polarizing, the choice is to favor them instead of the 99 Percent.
That certainly is not the same thing as stability. Centrism sustains the polarizing dynamic of financialization, private equity, and the Biden-sponsored bankruptcy “reform” written by his backers of the credit-card companies and other financial entities incorporated in his state of Delaware. He was the senator for that state’s Credit Card industry, much as former Democratic VP candidate Joe Lieberman was the senator from Connecticut’s Insurance Industry.
A related centrist demand is that of Buttigieg’s and Biden’s aim to balance the federal budget. This turns out to be a euphemism for cutting back Social Security, Medicare and replace social spending (“socialism”) to pay for America’s increasing militarization, subsidies and tax cuts for the One Percent. Sanders rightly calls this “socialism for the rich.” The usual word for this is oligarchy. That seems to be a missing word in today’s mainstream vocabulary.
The alternative to democracy is oligarchy. As Aristotle noted already in the 4th century BC, oligarchies turn themselves into hereditary aristocracies. This is the path to serfdom. To the vested financial interests, Hayek’s “road to serfdom” means a government strong enough to tax wealth and keep basic essential infrastructure in the public domain, providing its services to the population at subsidized prices instead of letting its services be monopolized.
Confusion over the word “socialism” may be cleared up by recognizing that every economy is mixed, and every economy is planned – by someone. If not the government in the public interest, then by Wall Street and other financial centers in their interest. They fought against an expanding government sector in every economy today, calling it socialism – without acknowledging that the alternative, as Rosa Luxemburg put it, is barbarism.
I think that Sanders is using the red-letter word “socialism” and calling himself a “democratic socialist” to throw down the ideological gauntlet and plug himself into the long and powerful tradition of socialist politics. Paul Krugman would like to call himself a social democrat. But the European parties of this name have discredited this label as being centrist and neoliberal. Sanders wants to emphasize that a quantum leap, a phase change is in order.
If he can be criticized for waving a needlessly red flag, it is his repeated statement that his program is designed for the “working class.” What he means are wage-earners and this includes the middle class. Even those who make over $100,000 a year are still wage earners, and typically are being squeezed by a predatory financial sector, a predatory medical insurance sector, drug companies and other monopolies.
The danger in this terminology is that most workers like to think of themselves as middle class, because that is what they would like to rise into. That is especially the case for workers who own their own home (even if mortgage represents most of the value, so that most of the home’s rental value is paid to banks, not to themselves as part of the “landlord class”), and have an education (even if most of their added income is paid out as student debt service), and their own car to get to work (involving automobile debt).
The fact is that even $100,000 executives have difficulty living within the limits of their paycheck, after paying their monthly nut of home mortgage or rent, medical care, student loan debt, credit-card debt and automobile debt, not to mention 15% FICA paycheck withholding and state and local tax withholding.
Of course, Sanders’ terminology is much more readily accepted by wage-earners as the voters whom Hillary called “Deplorables” and Obama called “the mob with pitchforks,” from whom he was protecting his Wall Street donors whom he invited to the White House in 2009. But I think there is a much more appropriate term: the 99 Percent, made popular by Occupy Wall Street. That is Bernie’s natural constituency. It serves to throw down the gauntlet between democracy and oligarchy, and between socialism and barbarism, by juxtaposing the 99 Percent to the One Percent.
The Democratic presidential debate on February 25 set the stage for Super Tuesday’s “beauty contest” to gauge what voters want. The degree of Sanders’ win will help determine whether the byzantine Democrat party apparatus actually will be able to decide on the Party’s candidate. The strong Sanders win makes the choice stark: either to accept who the voters choose – namely, Bernie Sanders – or to pick a candidate whom voters already have rejected, and is certain to lose to Donald Trump in November.
If that occurs, the Democrat Party will evaporate as its old Clinton-Obama guard is no longer able to protect its donor class on Wall Street and corporate America. Too many Sanders voters would stay home or vote for the Greens. That would enable the Republicans to maintain control of the Senate and perhaps even grab back the House of Representatives.
But it would be dangerous to assume that the DNC will be reasonable. Once again, Roman history provides a “business as usual” scenario. The liberal German politician Theodor Mommsen published his History of Rome in 1854-56, warning against letting an aristocracy block reform by controlling the upper house of government (Rome’s Senate, or Britain House of Lords). The leading families who overthrew the last king in 509 BC created a Senate chronically prone to being stifled by its leaders’ “narrowness of mind and short-sightedness that are the proper and inalienable privileges of all genuine patricianism.”
These qualities also are the distinguishing features of the DNC. Sanders had better win big!
NOTE: Featured image (photo) credit: Paweł Czerwiński
About the Author: Professor Michael Hudson is a veteran of Wall Street and Distinguished Research Professor of Economics at the University of Missouri at Kansas City (UMKC). He counsels governments on finance and tax policy, and gives presentations all over the world to groups reflecting diverse academic, economic and political constituencies.
The above article (In a struggle between oligarchy and democracy, something must give) was originally created and published by MichaelHudson.com and is republished here with permission and attribution to articles author Michael Hudson and MichaelHudson.com.
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