Class is back

Class is back

The global cost-of-living crisis has made obscene inequalities impossible to ignore.

Joel Kotkin

Joel Kotkin

Topics Identity Politics Politics UK World

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The growing likelihood of recession, at best sharply lower growth and maybe 1970s-style stagflation, seems likely to further accentuate the class and political divisions already rubbed raw by the pandemic and a global supply crisis. A majority of Americans feel we may be headed for a depression, while Britain is already experiencing negative growth.

Some, particularly on the American right, believe high prices and a sinking stock market should all but assure a GOP landslide in the Midterms later this year. Inflation and the slowdown have already helped Canada’s conservatives increase their majority last month in Ontario, the country’s dominant province, largely by winning over working-class voters.

But in the longer run, the real winners may still be on the left. Last time the economy was weakened like this – the 1930s – US progressives took the helm for almost a quarter of a century and Clement Attlee’s Labour Party took power in Britain in 1945, after serving loyally in Churchill’s wartime coalition. Once again, today’s shaky economy undermines the already weakened neoliberal order. A strong majority of people in 28 countries around the world, according to a recent Edelman survey, believe capitalism does more harm than good. Wages are stagnant, even in long-booming East Asia.

Jean-Luc Mélenchon’s left-wing alliance’s stunning surge last week in the French legislative elections affirms the progressives’ improved prospects. Along with a resurgent right-wing National Rally, Mélenchon’s gains destroyed President Macron’s chance to govern with a legislative majority. Leftists have had a field day in Latin America, too, with recent election victories in Columbia, Chile, Honduras and Mexico. Meanwhile, Russia, Central Asia, Turkey, much of Africa, China, the Philippines and Myanmar are all ruled by would-be autocrats, not always strictly leftist, but generally hostile to the neoliberal economic order.

The accelerating shift away from neoliberalism stems from the already expansive class divides that widened further during the pandemic, with CEOs earning ever more than their employees. Flawed policies, including the maintenance of ultra-low interest rates for too long and unnecessarily huge stimulus packages, have created a huge inflation crisis that the Biden administration initially dismissed as ‘a high-class problem’ that would be temporary. In truth, inflation has hit hardest those who are most exposed to higher food, fuel and housing prices – the middle and working classes – and seems likely to stay with us for a while.

James Madison rightly assumed that ‘the most common and durable source of factions’ grows from ‘unequal distribution of property’. Today, the looming recession seems likely to widen conflicts between the technocratic oligarchy, the middle class and the low-wage precariat. Members of the technocracy, epitomised by Silicon Valley, elite bureaucrats and ‘Jupiterian’ politicians like Macron, all gained power and wealth during the pandemic. To be sure, recession means less luxuriant balance sheets – the 50 richest people in the world have lost an astounding $563 billion this year – but this poses no real threat to their economic preeminence and growing political power. After all, outside of China, there’s no one left to challenge them.

In contrast, the middle and precariat classes – the latter made up of part-time ‘gig’ workers with little job security or benefits – are being pummeled by the soaring cost of rent, energy and food. Ideally, these two classes would combine to curb oligarchic power, but all too often they have distinctly different worldviews. Small-business owners and rural voters – the base of the right in Europe and North America – tend to suffer the effects of inflation, but generally blame government regulation for their problems. In contrast, the precariat seeks a programme of subsidies, rent control and expanded pensions to expel the spectre of poverty.

For the most part, the new right-wing base comes from what can be seen as the very ‘modest middle class’. These are voters who rally to Le Pen, Trump and other right-wing icons. Inflation has made their conditions worse. Even today, one-third of all US small businesses report that they can’t pay the rent, and the percentage is growing. Meanwhile, confidence in the future is at a nearly 50-year low, sparked in part by growing worries about energy and crime. With consumer confidence at its lowest level in 40 years, businesses owners may soon see an exodus of customers from their already hard-pressed firms.

For many of his voters, notes the Guardian, Trump was ‘a champion for forgotten millions’. Trump appealed most to people who work with their hands, own small shops, or are employed in factories, the logistics industry and the energy sector – those who repair and operate machines, drive trucks and maintain our power grid. Among white voters, at least, he performed worst among well-educated professionals and met almost universal opposition from the dominant classes. Like some of the populist movements in Europe, the American populist right has adopted many of the class-based talking points, particularly in terms of trade and industrial policy, which were long associated with the pre-gentrified left.

Yet the left’s own agenda still could dominate the future. In France’s presidential and legislative elections, former Trotskyist firebrand Jean-Luc Mélenchon and his alliance did exceptionally well among young people, particularly in the heavily immigrant working-class banlieues. His politics are, if anything, well to the left of the traditional Socialists, now essentially extinct. Even the ill-fated Jeremy Corbyn won more than 60 per cent of the under-40 vote in the 2017 UK election, while the Conservatives got just 23 per cent. In Germany, the Green Party enjoys wide support among the young, and seems likely to push the European giant further to the left. Similarly, in Britain inflation is also stirring labour to action, as evidenced by the rail strikes, which could set a new pattern in the coming months.

Even in America, socialism is gaining adherents, particularly among the young. In the 2016 primaries, the openly socialist Bernie Sanders outpolled Hillary Clinton and Donald Trump combined among under-30 voters, a performance he repeated in the early 2020 primaries. Indeed, millennials – now the nation’s largest voting bloc – say that they prefer socialism to capitalism.

The persistent labour shortages seem likely to continue – by 2030, Korn Ferry projects there will be a deficit of at least six million workers. It did briefly create higher wages for workers, but much of that has been overcome by inflation. Overall, in the US at least, the workers’ share of national output, which rose briefly during the pandemic, has fallen back to historic lows. Many are not even taking jobs on offer in the ‘gig’ economy, where pay and hours are often uncertain. The end of lockdowns did little to slow the ‘great resignation’ as more Americans left the workforce, expanding the pressure on welfare benefits for those who choose not to work.

To succeed, the progressives need to move away from the agenda they share with the gentry – on climate, race and gender – and towards something bolder and self-consciously redder. The new progressive icons, like New York representative Alexandria Ocasio-Cortez and Bernie Sanders, openly regard both tech oligarchs and Wall Street billionaires not as enlightened allies, but as class enemies. The conflict is epitomised by the attempts by private-sector unions to organise Amazon’s warehouses and fulfilment centres, amid widespread claims of low pay, brutal management practices and underhand tactics. The left is also promoting the organisation of workers at Starbucks.

But this isn’t just about America. The coming recession will have a global political impact. The pandemic savaged many poorer economies – Sri Lanka is a prime example – by cutting them off from sources of capital and tourism. Now Russia’s invasion of Ukraine has created massive energy and food shortages. Like the precariat in the West, the inhabitants of poor countries have little reason to embrace the current economic order, which promises increasingly little for their advancement.

The prevailing trend in these countries is towards ever-greater authoritarian control. Western diplomatic pressure on issues of the environment, human rights and Russian sanctions are being rebuffed by leaders, many authoritarian, who see keeping their people fed and employed as more important than the concerns of the Davos crowd – the woke, trustafarian offspring of the ultra-rich, the EU bureaucracy or the Biden White House.

This contrasts dramatically with the late-20th and early-21st century economic boom, which led to some remarkable gains for developing countries, even in Africa. As the stagnating West loses its self-confidence, as well as its willingness to expand prosperity, China has emerged among developing countries as an alternative, far less liberal approach to economic development.

Harder times for the young, who are famously failing to ‘launch’ into adulthood, could prove a devastating blow to fading liberal economies. The Pew Research Center has found that poll respondents in France, Britain, Spain, Italy and Germany are even more pessimistic about the next generation than those in the United States, a finding largely replicated by a 2021 Gallup-UNICEF study. Among the most pessimistic countries, however, is Japan, where three-quarters of those polled believe that things will be worse for the next generation.

Even in avowedly socialist China, where the top one per cent of the population holds about one-third of the country’s wealth, we may see greater popular dissent. As China’s growth engine has stalled, the job market for young people has plummeted, with some eschewing hard work, instead seeking to ‘lay flat’ and do as little as possible. There is also growing unrest among both the working class and among left-wing intellectuals. This has placed the ‘Marxist’ regime in the awkward position of cracking down on Marxist study groups at universities, whose working-class advocacy conflicts with the policies of the nominally socialist government. Unlike his Western adversaries, President Xi has reacted to the marked decline in social mobility by refocusing economic policy towards more egalitarian ends, with a marked retreat from neoliberal economics.

In contrast, the Western elites seem unconcerned, and even eager to benefit from hard times. James Heartfield, a British Marxist historian, describes the current rise of ‘green capitalism’ as a mechanism to utilise concern for global ecology to the ends of creating profitable, centrally imposed scarcity, under the pretext of ‘human survival.’ The problem is that the tech oligarchy and Wall Street’s efforts towards Net Zero climate emissions may not appeal to people whose jobs are threatened, or simply worry about filling up their cars, paying the rent and even putting food on the table. As Larry Summers, a former Obama administration official, has put it: ‘The willingness of people to be intimidated by experts into supporting cosmopolitan outcomes appears for the moment to have been exhausted.’

If those on the left, such as Mélenchon, Sanders or Cortez, wish to win over working-class voters, and maintain their strict environmental policies, their only logical gambit, with economic growth off the table, is to further expand welfare programmes and create a redistributive agenda. Yet this brings its own problems. Already many of Europe’s welfare states are at breaking point, as are those of several US states. In a recession, the only way to pay for these things would be to raise taxes. Some of the money might come from the upper middle class and presumably the oligarchy itself, which would threaten the current awkward alliance between woke corporatists and sections of the radical left.

Rather than go down that seemingly doomed path, policymakers could see the recession as an opportunity to reinvent the grassroots economy. Crucial to this would be finding ways to further encourage the new surge of small businesses – a welcome development since the pandemic – and taking steps to reshore industries from overseas. But the recession may be more likely to lead to either a revival of socialist methods or perhaps something more populist, with a focus on driving economic activities back to small towns, suburbs and households.

Class may have lost out in the media to the culture wars and environmental hysteria in recent years. But now, with a recession looming, class is back, and will shape the global future in ways few predicted or expected.

Joel Kotkin is a spiked columnist, the presidential fellow in urban futures at Chapman University and executive director of the Urban Reform Institute. His latest book, The Coming of Neo-Feudalism, is out now. Follow him on Twitter: @joelkotkin

Picture by: Getty.

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Topics Identity Politics Politics UK World


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