What Is Needed Is A Progressive Vision Of National Sovereignty

Over the past 12 months, an anti-establishment backlash has taken the West by storm: The Brexit vote in the United Kingdom, the election of Donald Trump in the United States, the rejection of Matteo Renzi’s neoliberal constitutional reform in Italy, rising support for the Front National in France and for other (mostly right-wing) ‘anti-system’ parties across Europe, the EU’s unprecedented crisis of legitimation. Although these interrelated phenomena differ in ideology and goals, they are all rejections of the (neo)liberal order that has dominated the world – and in particular the West – for the past 30 years.

Though the immediate causes of these phenomena are obvious – declining living standards, growing social inequality, fear of migrants, etc. – the current crisis has much deeper organic roots, which can be traced as far back as the 1970s. That is when the post-war Fordist-Keynesian model – which had provided the basis for a 30-year-long economic expansion – entered a deep structural crisis, paving the way for a radically different social and economic model, based upon trade liberalisation, deregulation of financial and labour markets, wage rollbacks, attacks on trade unions, privatisation of state enterprises, and fiscal retrenchment. In one word: neoliberalism.

One of the chief effects of this ‘counter-revolution’ – a conscious effort by the ruling elites to achieve a restoration of their class power, which had been severely weakened by the growing demands placed upon capital and the state by organised labour and radical social movements throughout the 1960s and 1970s, as argued by David Harvey and others – was a dramatic decline in the share of national income going to salaries, and thus of the purchasing power of labour (see here). Paradoxically, this threatened to nullify the ultimate aim of these policies: profit maximisation. Profits, after all, can only be made if there is a sufficient demand for goods and services, in which wages are a crucial component.

Financialisation

Capitalism’s response to the inherent contradictions of neoliberalism was financialisation and debt-based consumption. Households, faced with stagnant incomes and declining purchasing power, were encouraged to borrow more and more to make up the difference between spending and income, leading to a colossal rise in private debt, particularly in the United States but also in many European countries. This form of  “privatised Keynesianism” helped fuel the unsustainable asset and credit bubbles that exploded in 2008. It also allowed a tiny proportion of the world’s population to amass increasing amounts of capital and wealth without facing any significant backlash from the subordinate classes, lulled by powerful neoliberal discourses that pitted the liberatory dynamism of the ‘free market’ (exemplified by the garage inventor à la Steve Jobs) against the ossification and inefficiency of state bureaucracy (exemplified by the government pen-pusher).

Financialisation was able to temporarily offset the stagnationary effects of the post-1970s neoliberal policies of profit-maximisation. The inherent contradictions of this new finance-led regime of accumulation, however, exploded in 2007 to 2009, as the mountain of debt accumulated in the previous decades came crashing to the ground and threatening a meltdown of the global economy. Even though Western governments were able to avoid the worst-case scenario and to contain (for a while) the economic and political fallout from the financial crisis by re-instating – with even greater emphasis – financialisation as the main motor of the economy, this did not halt the overall stagnationary trend of advanced economies. With debt-based private consumption no longer available as a source of autonomous demand, due to the post-crisis ‘liquidity trap’ and the private sector deleveraging process, the inability of wage-based private consumption to sustain adequate levels of aggregate demand – due to labour’s loss of purchasing power in recent decades – became apparent. In this sense, the current stagnation should be viewed as the tail-end of the long crisis that began in the 1970s. The situation was (is) further exacerbated by the post-crisis policies of fiscal austerity and wage deflation pursued by a number of Western governments, particularly in Europe, which saw the financial crisis as an opportunity to impose an even more radical neoliberal regime and to push through policies designed to suit the financial sector and the wealthy, at the expense of everyone else.

Capitalising on dissatisfaction

Amidst growing popular dissatisfaction, social unrest, and mass unemployment (in various European countries), political elites on both sides of the Atlantic responded with business-as-usual policies and discourses. As a result, the social contract binding citizens to traditional ruling is more strained today than at any other time since World War II – and in some countries has arguably already snapped, as testified by a series of electoral uprisings that, despite their differences, all share a common target: globalisation, neoliberalism, and the political establishments that have promoted them.

Many view this neo-nationalist, anti-globalisation, and anti-establishment revolt as heralding the end of the (neo)liberal era and the ushering in of a new global order. Trump has especially alarmed politicians and commentators worldwide by announcing – and implementing – a series of protectionist measures. Without minimising the symbolic and ideological value of these decisions, the truth of the matter is that globalisation was already in trouble well before Trump’s election. Since 2011, world trade has grown significantly less rapidly than global GDP, and has now begun to shrink even as the global economy grows, albeit sluggishly. World financial flows are down 60 per cent since the pre-crash peak.

In this sense, Trump’s victory, Brexit, and the rise of populist parties ‘are but epiphenomena of momentous shifts in global political economy and international geo-political alignments that have been taking place since the 1970s’, as Vassilis K. Fouskas and Bulent Gokay write. Namely: (i) the crisis of the neoliberal economic model and ideology, which is no longer able to overcome its intrinsic stagnationary and polarising tendencies and to generate societal consensus or hegemony (in material or ideological terms), and is increasingly unable to deliver benefits even to its core supporters; (ii) the crisis of globalisation, which is no longer able to offer an escape from the inexorable pressures of overaccumulation and overproduction, largely due to increased competition from countries like China (which in turn are facing crises of overaccumulation of their own); (iii) the ecological crisis, i.e., constraints on the supply of energy and other biophysical resources that feed into the economic process and impact its functioning; and (iv) the crisis of US hegemony, which is no longer able to unilaterally enforce the global neoliberal order, neither through soft power (that is, through pro-Western multilateral institutions such as the IMF and World Bank), as it did during the 1990s, nor through hard power (that is, through brute military force), as it did throughout the early 2000s, as demonstrated by the West’s failed (so far) attempt at deposing Assad in Syria. Trump’s tough stance on China and other surplus countries (such as Germany), accused of currency manipulation, and his plans for ‘renationalising’ US economic policy should thus be understood in the context of the unfolding collapse of the neoliberal order.

What we are witnessing is not, of course, the end of globalisation – which will continue, although it will likely be characterised by increased tensions between the various fractions of international capital and by a combination of protectionism and internationalisation – but rather the birth of a post-neoliberal order. It is too early to say what this new order will look like, since there is no new coherent ideology or accumulation regime waiting in the wings to replace neoliberalism. Antonio Gramsci famously described organic crises such as the one that we are currently going through as situations in which ‘the old is dying and the new cannot yet be born’. ‘In this interregnum‘, he wrote, ‘a great variety of morbid symptoms’ – such as the ones that we have described above – tend to appear.

What has allowed these morbid symptoms’ to emerge as the dominant reaction to neoliberalism and globalisation, however, is simply the fact that right-wing forces have been much more effective than left-wing or progressive forces at tapping into the legitimate grievances of the masses disenfranchised, marginalised, impoverished, and dispossessed by the 40-year-long neoliberal class war waged from above. In particular, they are the only forces that have been able to provide a (more or less) coherent response to the widespread – and growing – yearning for greater territorial or national sovereignty, increasingly seen as the only way to regain some degree of collective control over politics and society, in the absence of effective supranational mechanisms of representation. Given neoliberalism’s war against sovereignty, it should come as no surprise that ‘sovereignty has become the master-frame of contemporary politics’, as Paolo Gerbaudo notes. After all, the hollowing out of national sovereignty and curtailment of popular-democratic mechanisms – what has been termed depoliticisation – has been an essential element of the neoliberal project, aimed at insulating macroeconomic policies from popular contestation and removing any obstacles put in the way of economic exchanges and financial flows. In this sense, neoliberalism and globalisation have not entailed a retreat of the state vis-à-vis the market, as most left analyses contend, but rather a reconfiguration of the state, aimed at placing the commanding heights of economic policy ‘in the hands of capital, and primarily financial interests’, as Stephen Gill writes. Given the nefarious effects of depoliticisation, it is only natural that the revolt against neoliberalism should first and foremost take the form of demands for a repoliticisation of national decision-making processes.

Reclaiming national sovereignty

The fact that the vision of national sovereignty that was at the centre of the Trump and Brexit campaigns and that currently dominates the public discourse is a reactionary, quasi-fascist one – mostly defined along ethnic, exclusivist, and isolationist lines, aimed at ensuring the security and protection of the ‘national community’ against the threat posed by a variety of internal and external enemies and based on an even more exploitative and authoritarian form of capitalism – should not be seen as an indictment of national sovereignty as such. History attests to the fact that national sovereignty and national self-determination are not intrinsically reactionary or jingoistic concepts – in fact, they were the rallying cries of countless nineteenth- and twentieth-century socialist and left-wing liberation movements. Even if we limit our analysis to core capitalist countries, it is patently obvious that virtually all the major social, economic, and political advancements of the past centuries were achieved through the institutions of the democratic nation state, not through international, multilateral, or supranational institutions, which in a number of ways have, in fact, been used to roll back those very achievements, as we have seen in the context of the euro crisis, where supranational (and largely unaccountable) institutions such as the European Commission, Eurogroup, and ECB used their power and authority to impose crippling austerity on struggling countries. The problem, in short, is not national sovereignty as such, but the fact that the concept in recent years has been largely monopolised by the right and extreme right, which understandably see it as a way to push through a xenophobic and identitarian agenda.

So why has the mainstream left not been able to develop an alternative, progressive view of national sovereignty in response to neoliberal globalisation? The answer largely lies in the fact that over the course of the past 30 years, most strands of left-wing or progressive thought have accepted the false narrative that nation states have essentially been rendered obsolete by neoliberalism and/or globalisation and thus that meaningful change can only be achieved at the international/supranational level, as argued by Yanis Varoufakis and others, when in fact these trends have mostly been the result of state-driven processes. Furthermore, most leftists have bought into the macroeconomic myths that the Establishment uses to discourage any alternative use of state fiscal capacities. For example, they have accepted without question the so-called household budget analogy, which suggests that currency-issuing governments, like households, are financially constrained, and that fiscal deficits impose crippling debt burdens on future generations. This is particularly evident in the European debate, where, despite the disastrous effects of the EU and monetary union, the mainstream left continues to cling on to these institutions and to the belief that they can be reformed in a progressive direction, despite all evidence to the contrary, and to dismiss any talk of restoring a progressive agenda on the foundation of retrieved national sovereignty as a ‘retreat into nationalist positions’ inevitably bound to plunge the continent into 1930s-style fascism.

This, however, is tantamount to relinquishing the discursive and political battleground for a post-neoliberal hegemony – which, as we have seen, is inextricably linked to the question of national sovereignty – to the right and extreme right. It is not hard to see that if progressive change can only be implemented at the global or even European level – in other words, if the left’s choice is reactionary nationalism or progressive globalism it has lost the battle.

It needn’t be this way, however. A progressive, emancipatory vision of national sovereignty radically alternative to that of both the right and the neoliberals – one based on popular sovereignty, democratic control over the economy, full employment, social justice, redistribution from the rich to the poor, inclusivity, and  effectively the socio-ecological transformation of production and society – is not only necessary; it is possible. This needn’t necessarily come at the expense of European cooperation. On the contrary, there is ample evidence that the vice-like grip of the single currency, by exacerbating intra-European divergences, causing widespread social devastation and fuelling national resentments on a scale unseen in the post-war era, is now endangering the beneficial aspects that have accompanied the formation of the European Union, as demonstrated by Europe’s reaction to the migratory crisis. The true value of the European project is in its capacity to deliver a rule of law throughout Europe and engender multilateral cooperation on matters such as immigration, climate change, human trafficking, and global concerns that single nations cannot solve alone. Returning to national governments the monetary and fiscal tools needed to provide for the well-being of their citizens would not undermine that sort of cooperation. On the contrary, it would provide the basis for a renewed European project – and more in general for a new international(ist) world order – based on multilateral cooperation between sovereign states.

First published by Green European Journal