By Joe Guinan
The Democracy Collaborative
This conversation addresses long-term economic, social and environmental challenges, but goes on to consider the necessary scale of progressive interventions before concluding with several strategic entry points for solutions that are both effective and just. – The Editors
Editors: As we go into the elections and focus on the horse race, it is easy to lose sight of long-term challenges and social changes. Unfortunately, we ignore these threats at our peril. How should we approach the dilemma that short-term political imperatives are more acutely felt than more important and durable long-term trends?
Joe Guinan: I think that the right is far more prepared for the outcome of the election and rolling into action than anybody on the left is. And that would probably include the liberals and the centrists.
And beyond that, I have a macro concern, which is that I think a lot of what’s happening is being driven by, if you like, the objective forces of crisis that are a long time in the making and nobody is proposing anything that is likely to address the deep fundamental aspects of the crisis. We at the Democracy Collaborative have put together something five years ago, 2019, called the Index of Systemic Trends,1 which tracks publicly available data on what has been happening in the United States over the broad sweep of time, largely since the 1970s and the onset of neoliberalism.
What we took away from that index is that the story of the last 40 years—under Democrat and Republican alike, in so-called good times or in bad times—is that the outcomes of the political economic system for most Americans have been getting steadily worse in real terms. That’s the sign that the crisis is deeply systemic. When those indicators are declining or staying the same, regardless of the changes in political power or the business cycle, that’s when you’re really confronting something that is of the order of magnitude of a systemic crisis. And since 1970 we’ve seen seven party changes in the White House, six party changes in the Senate, and four in the House of Representatives.
There have also been seven recessions and recoveries. And yet, if you look at the data in the index across most of these indicators of economic, social, and democratic health, what we’ve seen is very little improvement and in many cases, substantial deterioration for most Americans. This is true of trends in poverty, wealth inequality, racial wealth inequality, income inequality, wage stagnation, the cost of higher education and student loan debt within that, home-ownership and racial inequality within that, corporate taxation, taxation of the rich, union density, incarceration rates including incarceration rates by race, labor force, participation rates, healthcare costs, climate change emissions, life expectancy, and on and on. It’s by no means a fully comprehensive portrait of the political economy, but it is illustrative of what we believe: that there’s a consistent direction to the current political economic system; it is failing to deliver improvement or competitive results compared to other advanced economies. And the health of the system, if you like, is in decline and deteriorating.
We’re going to be bringing out the second edition of the Index – a lot has happened between 2019 and 2024! We’ve seen the tail end of the Trump administration, we’ve seen the COVID pandemic, we’ve seen the onset of the new inflation and the cost of living crisis. We’ve seen the Bidenomics programs and also many external shocks such as the weather effects of climate impacts and also wars in Ukraine and Gaza and more. But it’s no spoiler to say the Index shows that despite all this period of extraordinary flux, we’re continuing on that downward trend.
There are a few sub stories that we can tell within the Index over the last five years. One is truly shocking: when it comes to child poverty through the COVID payments, the US briefly abolished child poverty only then to bring it back again with the end of that regime. But by and large, even in things like labor force participation rates, where there had been some uptick, what we’re looking at is essentially a “hockey-stick” dynamic. If you look at the last four years, there’s this inside-the-beltway conversation, “Why on earth isn’t Joe Biden getting more credit for what he’s done with the economy?” And if you look within those four years, there is an uptick in some of the indicators. But if you look since the ’70s, it’s a long downward trend and people aren’t getting the warm and fuzzies for the Democrats because we’ve seen at best, very marginal changes in terms of upticks in improvements across the board.
There’s nothing on the table from our side, from progressives, even from system changes at the moment, that’s in the order of magnitude that would be required to deal with the crisis. The crisis is likely to continue to intensify and to continue to throw up “morbid symptoms,” to use Gramsci’s phrase in terms of the political chaos that’s stemming from that. Because it’s not only environmentally unsustainable, it’s socially and politically unsustainable to be in a system where, to put it in its starkest terms, all the gains to the system have gone to the very top, essentially since the Nixon Administration.
None of the gains from growth, from productivity, from all the technology and changes that we’ve seen in that period have really produced material improvements. And in some ways there is a worsening for people under the pressure of increased housing costs, healthcare costs and risks, growing cost of education, and the fact that it’s no longer enough now to get an undergraduate degree to be competitive. The big concern for me is no matter what the result, almost nothing that’s on the table at the moment is likely to bend the curve on that long-running systemic crisis.
Editors: I guess there is a follow-up then to that. I guess it’s enough to say that the long-term dynamics that you’ve cited are pretty uncontroversial to us. It’s also the case that the right-wing responses can verge on the absurd. They’ll talk about things like, well, we have more access to consumer electronics, we now have iWatches and Netflix, et cetera, et cetera. But nothing that speaks to the objective factors that you’ve cited. But for many on the right, that’s not a problem. And in fact the problem is, how do we deal with the anticipated rebellions, anticipated reform projects? Can you say a little bit about how right wing conceives of these objective factors that you’ve talked about?
Joe: We have got some work to do to better understand our enemy, because I think there has been a substantial recomposition of thinking and political positioning on the right. If we aren’t careful, they will radically outflank us on some things that we’re not expecting to be outflanked on. For example, if you look at the classical commitments of the neoliberal right, since their foundation, or re-foundation, depending on how you read their story, at Mont Pelerin, and issues of global free trade, globalization, the internationalization of capital markets, the removal of nation state sovereignty over economic policy conditions, and so on. All of this is central to their post-war project, and to their tremendous success actually in delivering in many ways what they were looking for. And I think the danger is that we take the ivory tower neoliberal university professor as in some ways the exemplar of a movement that actually has shifted radically from some of those neoliberal commitments. And so, this is where we start to get into my second concern around the preparedness of the right.
But if you dig into some of the plans about where the right is headed next, there’s actually a high degree of crossover or continuity of concern. It’s just that it takes a different formulation. So, the rise of big tech monopolies and what that has meant for our public discourse, for our privacy, these are familiar concerns to the left and to progressives. What you see is a emerging vision on the right of a 100-year project by the Chinese – through TikTok and other channels – to subvert American democracy. Behind the big tech barons stand the Communist Party of China, as the right (and most liberals and Biden folks) see it, and so we need to enter into a new Cold War against the Chinese to deal with that.
There’s probably not yet solid agreement on this across the right, but the center of gravity has shifted against free trade and globalization, seeing this as unfair competition, market manipulation, et cetera, from the Chinese. But you’ll even get rhetoric about the perils of the decline of US manufacturing and of deindustrialization and of jobs being offshored overseas. Whether there’s actually any substantive content to that populist right politics or not, it does allow for a popular appeal. And we saw Trump at the factories in Indiana decrying the loss of jobs and so on, and I’m sure that we’re going to see some more of that. We also start to see weird hobby-horses appear like the abolition of the Export-Import Bank, which is something that’s dear to the heart of a lot of conservatives, and has become proxies for these issues that are real issues and that are getting to the concerns of people.
And so I worry that we are operating still with a cartoonish view of the right. From our point of view, they’ve been very successful. From their point of view, they haven’t. And there’s two elements to that. One is just the failure to accept the consequences of their actions and of getting what they wanted, as we would say. But there’s also the authentic issue, and this is where I think we need to start taking them more seriously, whereby on their own terms, they don’t consider themselves to be winning. This might sound absurd when you look at the Supreme Court and where things are going in terms of retrograde steps and so on. But let’s just take government as a share of GDP as a proxy for whether the Reagan Revolution won or not. If you go back to the data, government in the US grew from roughly 7% of the economy at the beginning of the 20th century, to where we are now, which is over 30% of the economy.
Even with the Reagan Revolution, with the promises to shrink government to the size that it could be drowned in the bathtub, the right has signally failed to do that. Now, they’ve shifted the composition of spending and the beneficiaries of spending, but they haven’t in their own terms been able to dismantle the administrative state or limit its expansion. Therefore, what they’re gearing up for in the face of the crisis is a rearticulation of a radical program to intervene in what’s been a systemically blocked system in Washington, to actually get some outcomes this time around. While we can place bets one way or the other on the historical evidence about whether they would actually move the dial on that, there’s a whole lot of things that flow from that that we need to be concerned about, in terms of what they’re attempting to do, and who’s going to get hit by that.
Editors: That makes sense. The concern about being outflanked is also a strong one to the extent that Biden’s economic nationalism, the CHIPS Act, et cetera, are ways that he’s tried, in turn, to outflank them. There is a rebirth of economic nationalism within the Democratic Party, which is both positive and negative for all the usual reasons. We can think of Europe where the right-wing, anti-immigrant parties are also the ones championing pensions and their expansion, at least for the “good French” people in the case of Le Pen, and that kind of thing. So, we can easily be outflanked and often are being outflanked.
Some of the things Biden has done, though, for example, on housing, tying conditionality in terms of rent increases to properties that are federally funded, et cetera, seem to be tiny little steps, not enough, not on the scale that you require. So, can you give us a sense of the scale that’s required to both outflank the right, but more importantly, address the secular decline that we’ve been documenting?
Joe: Let’s paint in broad brushstrokes there, but the first thing to do is to give proper due to the things that have been attempted. I think there’s been a little bit of breathlessness in the proclaiming of a new Washington consensus that’s overthrown neoliberalism, and that’s seeking to put the genie back in the bottle on globalization, and to advance onshoring, or friendshoring, which is a terrible neologism. But it is in some ways a break with what we’ve seen from the neoliberal consensus of the center left and center right for a long time. And pursuing some of that is valuable and good, and begins to chart a different course. So, we should recognize that Biden has attempted both bigger things and better things than some of us expected.
But the issue there is the danger of what myself and some colleagues have started to call a delusional moment, which is the dangerous impression that because finally things are starting to move, finally we’re seeing people beginning to address at least the symptoms of some of these deep underlying crises in a different way. We might believe there’s real action on climate, finally there’s action on inequality, finally there’s action on the labor force and trade union rights and so on, but the danger is that what we’re actually doing is taking some tentative steps up a fast-moving downward escalator. And so, to bend the curve would require far more radical and urgent and far-reaching actions in that direction. Which is not to say we don’t welcome the things that are being done, but they’re not enough to change the overall outcomes of decades upon decades of directionality in the system.
And so, to give a kind of order of magnitude to some of this, it’s interesting to think about terminology. One of the flagship programs of progressives and the left in this conjuncture has been the emergence of the demand for a Green New Deal, as being in some ways a dual response that addresses the climate crisis, but also delivers on economic inequality, and gives workers the security, if you like, to afford environmentalism. That’s essentially the bargain at the heart of the Green New Deal. The problem with the Green New Deal framing is that it implies that the New Deal itself, the originator of the concept, was in some ways more successful than it actually was historically. You look at Roosevelt coming into office with essentially a bank holiday so the banks wouldn’t collapse, and needing to move very rapidly, and in fact moving very rapidly; it all suggested the beginning of major transformation.
And looking at the first 100 days, and it’s kind of extraordinary what the New Dealers managed to do. They did an absolute 100-day legislative blitz that included agricultural relief through the Emergency Farm Mortgage Act and the Farm Credit Act. They also did Industrial regeneration through the National Industrial Recovery Act.. On Transport came the interventions through the Emergency Railroad Transportation Act. There were also interventions in the energy sector; we saw there the creation of the Tennessee Valley Authority. And think banking and monetary reform, the Glass-Steagall Banking Act, and coming off the gold standard. All of this happened at the lowest point of the Great Depression with a quarter of the workforce, 15 million people unemployed, and the banking system on the brink of collapse.
So, hats off to the first New Deal. Also hats off to many of the people that were involved in conceptualizing and advancing things that had been born and were initially experiments in the laboratories of democracy at the local and state level, for seizing the opportunity, not letting a crisis go to waste, making these big interventions. But truth be told, the New Deal at its peak was still in single digits in terms of a share of GDP. You’re talking 4% or 5%.
What actually turned things around was the Second World War. The wartime planning and the interventions in the economy that occurred there implicated upwards of 40% of US economic activity. And I’m loathe to borrow the war analogy on climate… I don’t think that’s the right framing, but I think the kind of national emergency economic planning pattern and structure and level of intervention is one that I think we should be looking to and borrowing from, in terms of what it would actually take to address climate and inequality, and do the next wave of both manufacturing and the digital revolution, in ways that are beneficial to the broad array of Americans, and indeed people around the world, rather than just once more accruing to the super elites and the billionaires.
So, nobody in power is talking about that, and that’s just way beyond the scope of current political understanding, even though we’re up against existential threats like climate collapse and the resurgence of fascism.
Editors: That’s really the kind of answer that illustrates scale in a way that people can understand, so we’re very grateful for that. And of course, we are nowhere near that, as you’ve observed repeatedly. So let’s change direction a little bit. When thinking about organizations like the Democracy Collaborative and all, you have a more sophisticated understanding of the way power works to the extent that you are considering not only national elections as a space in which power is both deployed and constructed, but also building of alternative economic institutions and that kind of thing. As you survey the solidarity economy, the potential for a next system economy, what are the signs of hope for us?
Joe: Yes, absolutely. Just to underscore the importance of that avenue of thinking, the issue that we face is that policy itself is extremely limited in its efficacy and in its impact. I think we often talk about these things as if there’s a one-to-one correlation between the intent of a policy action and the outcome that we hope to see from that. And then we’re surprised when we do a bunch of policies and we don’t see radical changes in outcomes.
The reason for that are the deep structural and institutional relationships at the heart of the economic system. And at the moment, finance capital is the house, and the house always wins. So no matter who is elected in November and what the policy and legislative program, unless it gets to the level of structural and institutional change, which is a different order of intervention, essentially, the capital markets and the big corporations and the super wealthy and the billionaire class run the institutions of the economy through the stock market, through the banking system, through control of the big economic units in the economy, management of big corporations and so on.
We therefore need to think not just in terms taking political office, but of taking power in the economic institutions of the economy. And this is where I think there’s a number of lines of inquiry that ought to be much more generally understood and discussed on the left and among progressives. We’re looking at the greatest shift in generational transfer of wealth that there’s ever been, from the baby boomer business owners to whoever their successors may be. And in many cases, their successors are unlikely to be their children, either because they don’t have them or because their children don’t want to take over the family business or for a variety of reasons. And so a lot of those businesses could potentially either go to the wall and shutter, even though they’re still viable businesses, or much more likely, they’ll be gobbled up by private equity asset strips and a lot of the value for communities, workers, and a local ecosystem view of the economy would be lost.
Or we could look at other ways of securing and transforming the ownership of those businesses through, for example, employee ownership and worker ownership models or models that give community or the public sector a stake in all of that. And we actually did some work around what it would look like to do a rescue of Main Street during the COVID pandemic, when a lot of small businesses and medium-sized businesses were at risk of going under. And there may be a role for something like a reconstruction finance corporation in helping to provide the capital that would allow the workers to take over those companies, since they know them the best, and how to run them. And that would lead to a very large shift in ownership of assets and a different dynamic in the economy. That’s one new direction we should move.
The second is we need to think differently about the public sector and the economic footprint of the public sector. And in some ways, this has been a site of extraction for neoliberal finance capital in recent decades through outsourcing, but it’s also been part of globalization and offshoring through the pursuit of lowest unit costs. And we actually need to start thinking about the procurement power of that 40% of the economy, that’s the public sector, in its interactions with the private sector in terms of going after not just lowest unit costs, which is often a false economy. All the hospital systems that had been chasing lowest unit cost in personal protective equipment for years lost all their savings and more overnight when they weren’t able to get that PPE in the crisis of the pandemic. They had to get into a bidding war against the rest of the world to try and get it out of China or the few places that were engaged in production of that.
There’s a rationale now for onshoring, and some of the instruments for doing that. How do we use the purchasing power of K-12 education, university systems, hospital systems, local government, state government, the federal government? How do we use all that to directly build the kind of economy that would underpin a thriving, healthy, more equal, more successful, more productive democracy?
And then another line of inquiry, I’ll just end with this one, is the banking system and finance, and thinking about how we displace what is essentially the driver and the locus of the new inequality in financialization using money to make money through ever more speculative activity rather than real productive investment. How do we shift from that to investment in the real economy, in jobs, in communities, in real needs, in genuine productive capacity and in the consumption that people need?
And one instrument for that would be public banks. And we’ve got a longstanding example in North Dakota. It’s not perfect. It funds pipelines and extractive activities, but it did actually shelter the state of North Dakota from the worst effects of the financial crisis and had a much better track record in terms of real economy investing. And there’s public banking efforts all around the United States that are getting it closer and closer to the finish line, whether it’s in California or in the Midwest or in New York and New Jersey and so on. And all it takes, I think, is for one or two of them to get over the line to open the floodgates on that model and for us to begin rewiring the financial system. It is at the heart of the problems that we’re now dealing with, but also needs to be at the heart of the solutions that we’re developing.
And some of this work is boring, like the procurement contract stuff. Some of it’s as simple as if you put out one giant tender, then you’re excluding most of the local and regional companies that pay better wages and recirculate locally. And if you split it up into 10 sub-tenders, then they’ve got a chance to compete or rewrite economic development rules so that worker co-ops or land trusts or other community vehicles are in contention as models for how we deploy public dollars in a different way than just funneling it as corporate welfare or to private businesses. So there’s not a lot of glamour in some of it, but it actually involves creating the basis for a new politics and a new place to stand that isn’t just tax and transfer policy. And that must build on social democratic policy levers underpinned by a labor movement at its height, which is not something that we’re going to have, at least for the foreseeable future. So how do we start on Monday morning going about that? And I think that’s part of what the Democracy Collaborative and our allies are looking at in terms of building a new economy.
- The Next Systems Project, “The Index of Systemic Trends” (Washington, D.C.: The Democracy Collaborative, May 20, 2019), https://thenextsystem.org/learn/stories/index-systemic-trends.