Explaining neoliberal politics through economics, or Harry Shutt for beginners

Published online 22 December 2006.

The insanity of the Bush Administration has proved difficult for many political writers to explain: here I offer the writings of Harry Shutt (especially his most important work, The Trouble With Capitalism, as a key ingredient in an analysis of present-day economics and politics.  References, unless otherwise stated, are to this work.

In reading political discourse over the past few years, I sense a similarity of pattern, with more-or-less the same characterizations:

Bush –- village idiot who controls the US government
Neocons –- mad rulers with incredible power to do harm
Republicans –- party of fundamentalist Christian cultists and neocons, rubberstamp party for Bush
Democrats –- spineless, well-intentioned fools who are overawed by Bush and the neocons

These stereotypes are, by and large, close to the mark, so their acceptance as given begs a number of questions: how did Bush and the neocons get, and maintain, so much power?  Why are the Democrats spineless?  Why is the current regime faced with so much of what (from a traditional standpoint) looks like insanity, from fiscal imprudence to disdain for civil rights to indifference to the loss of human life?

Much of the Bush/ neocon axis can be explained in terms of stories about Karl Rove and about Bush’s immediate financial backers.  These stories do not explain, however, how a President as thoroughly neurotic (yet pedestrian) as George W. Bush could have gained power.  The public blind spot in this regard is quite sizeable: do check out, for instance, the comments listed in Amazon.com about Justin Frank’s Bush on the Couch, starting with Publishers Weekly:

The author’s exegesis of Bush’s personality traits-the drinking problem, the bellicose rhetoric, the verbal flailings and misstatements of fact, the religiosity and exercise routines, the hints of dyslexia and hyperactivity, the youthful cruelty to animals and schoolmates, the smirk-paints an intriguing, if exaggerated and contemptuous, portrait of a possibly troubled public figure. But Frank’s attempts to translate psychoanalysis into political analysis are unconvincing. Indeed, if Bush’s reneging on campaign promises is a form of clinical “sadism,” and his budget deficits an “unconscious attack on his own parents,” then Karl Rove, the Cabinet, and both houses of Congress belong in group therapy with him.  (from the amazon.com page)

Publishers Weekly attempts to distort Frank’s case here by inserting a moment of denial, thus keeping the mystery alive.  If you want to think about Bush’s sadism, start with his treatment of Death Row appeals, or Iraqis, and if you want the unconscious attack on Bush’s parents, look at W.’s rejection of his father’s wing of the Republican Party.  George W. Bush is neurotic, and this translates into neurotic policy, neurotic backers, and, ultimately, a neurotic political system.  How did things get this way?  That’s the mystery, and we pretend that things are otherwise at our risk.

The narratives that treat the Christian Right as a threat to American democracy have only found one piece of the puzzle.  They have gotten beyond the blame upon Bush and his immediate cabal, to look for his backers.  W. is in power because, clearly, he has powerful backers.  But the multitudes of the Christian Right are mere foot soldiers – if they have been recruited to advance the political interests of Bush and his Republican Party, it might be because they have become captivated by W.’s status as “born-again Christian.”  This is at least a start.  But, generally, I find that the fact that W. can count on large numbers of Christian Right soldiers to advance his cause does not itself explain the Christian Right’s power.  Sure, the Christian Right might account for 25% of the American public, and their power is concentrated in certain Plains states and states in the Deep South.  But they do not, all by themselves, explain Bush’s power.  The Republican Party is not controlled by fundamentalists, but rather by the wealthy capitalists who control the economy in places where fundamentalists live.  “Christian Right” explanations of Bush power certainly do not explain the acquiescence of the Democratic Party in many of Bush’s initiatives.

When we get to financial explanations, however, we certainly have a key to understanding Bush’s power.  We can see the power of finance over Presidential politics expressed out loud in the sheer amount of money used to finance Presidential campaigns, courtesy of tray.com’s FEC page.  Financial explanations also account, to a certain extent, for the acquiescence of much of the Democratic Party in many of Bush’s initiatives.  Both Democrats and Republicans are leaning heavily upon capital, and capital supports Bush.  But a financial explanation of Bush’s power, in itself, does not account for why the financial might of the US would commit itself to a President like Bush.  If the financial Powers That Be have nearly $800 million to throw into two major-party Presidential campaigns, one of which must necessarily lose, why haven’t their resources been directed toward someone more appropriate for the office than George W. Bush?

After all, previous political eras in American history have been directed by the wealthy and powerful – what directs this era to be governed by the “worst President ever”?

This appears to be even more of a puzzle when one considers the enormous effort spent by various powers to prop up Bush Junior’s regime.  Consider, for instance, the numerous media failures to investigate Bush regime lies, the failure to contest both stolen elections, and the acquiescence, reaching deep into the ranks of the Democratic Party, to many of Bush Junior’s more pernicious initiatives.  W. is practically begging to be impeached, tried, and convicted – yet the machineries of finance, industry, and media continue to keep him in power despite the obvious possibility that they could spend far less time, money, and credibility maintaining the power of a less problematic President.  What accounts for this situation?

For an answer, I believe, we must look at the dynamics of neoliberal economy, as exposed by various authors (see, for instance, Robert Brenner’s The Boom and the Bubble, or Levy and Dumenil’s Capital Resurgent).  The one guide that I think expressed neoliberalism most concisely is Harry Shutt’s book The Trouble With Capitalism.  Many of the major texts of neoliberal economics describe the qualitative difference between economic life before, and after, the 1970s.  But few are as articulate as Shutt when he describes why the current economic era, the Age of Financial Capital or neoliberal governance or whatever it should be called, is the beginning of the end for the capitalist system as a whole.

For Shutt, the main disparity dominating this economic era is the disparity between investor expectations and actual global economic growth.  As global economic growth (outside of China) has slowed significantly since the ‘70s, so, indeed, investor expectations have gone in the opposite direction, expanding as opportunities to reap a material surplus have decreased.  So, explains Shutt, investment in this era has gone increasingly into speculation, creating what are typically called “bubbles.”  The cause of all this is described by Shutt as follows:

…the availability of investible funds has risen almost continuously in real terms since World War II, and from around the early 1970s the growth of fixed investment opportunities has slowed down. (110)

This creates an economic reality in which capital becomes increasingly desperate to exploit any surplus wealth that can be found.  When the global growth rate averages maybe 3-5%, yet profit expectations range much higher, surpluses must be found and exploited above and beyond economic growth per se.  This is done mainly by increasingly leaning upon government, such that

the weight of official opinion is still clearly convinced that the primary duty of government in the global economy is to prop up corporate profits at all costs despite the demonstrable reality of a surplus supply of capital (87).

For Shutt, this surplus supply of capital explains so much about the economy in this era, especially as regards the domination of finance capital over the economy as a whole.  This, in turn, explains the stagnation in real wages to the mass privatization of government assets (50-51) to the vast expansion in both personal (81) and government debt (112) to the expansion of “creative accounting” (215) (e.g. Enron) to an economy based increasingly upon “anarchic speculation.”

So where does George W. Bush fit into Shutt’s equations?  Well, the invasion and occupation of Iraq, fruitless as it might seem, constitutes more of this “anarchic speculation” that rules the economy of the world Shutt describes, which is our world.  Since, in this era, there is too much capital chasing too few opportunities for investment, capital searches desperately for the cheapest sources of labor and the biggest opportunities for government welfare.  And invading Iraq is an opportunity for government welfare.

And that’s what invading/ occupying Iraq is all about.  A fraction of capital profits immensely from the occupation of Iraq, and plans to continue to do so, so anyone who is “playing the game” in the political world has hitched her/ his star to the continuation of this occupation, regardless of the looming political catastrophe it appears to incite.

And this, and not some saner path to corporate profits, is made more likely by the increasing hunger of capital for 1) raw profits and 2) new sources of speculative profit.  Bush, of all people, is probably what capital is looking for in a President because, of all possible Presidents, his loyalty to capital is the most unstinting.  He runs the biggest deficits, and promotes the biggest tax cuts.  His personality defects are doubtless pushed aside (and covered over in the media) because of his devotion to capital’s cause in an era of expanding capital surplus.  His born-again Christianity, and disdain for civil rights, are doubtless accepted as part of the overall package.

We might also, with the summary judgment of John Bellamy Foster, imagine that we have reached the end of rational capitalism.  Since economic life has lost its veneer of rationality, Foster argues, political life is irrational too.  After having reviewed for us the history of Keynesianism, including its regression as “global stagnation gave rise to a global casino economy as capital sought an outlet for its surplus,” Foster concludes:

The obvious conclusion is that there is no space for a rational politics of the left in line with the logic of capital. All pretensions to the contrary have proven illusory. Yet it is equally true that capitalism is unable to accommodate anything that could be considered a rational politics of the right. With the return of stagnation, and the rise of neoliberal global restructuring, conservatism has been reduced to making “free market capitalism” work by removing all barriers to the accumulation of capital in every sphere. (Foster)

And George W. Bush, we might consider, is a fitting President for a time when rational politics, either or right or of left, has died.

The Trouble With Capitalism was published in 1998 –- before Bush Junior’s Presidency — yet none of Shutt’s later books really does much but restate the message of this one in even more extreme tones.  Shutt’s proposed solutions, like his theories of the existing order, are phrased at a rather general level.  To sum up his diagnosis: Capitalism, as it is currently constituted, is doomed.  New technologies will just exacerbate the current glut of capital (93), and “emerging markets” are likely to depress wages further, thus stagnating overall consumption (192).  Shutt wants something more collective, more democratic, and more considerate of human beings and the environment to replace the existing order, but is not quite sure what.

If you just want the raw theory of Harry Shutt, something (as I have argued here) that might just make Bush insanity comprehensible, pick up The Trouble With Capitalism.


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