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The Political Economy of Obama's Re-Election

Wednesday, 14 November 2012 00:00 By Richard D Wolff, Truthout | Op-Ed

Please support Truthout’s work by making a tax-deductible donation: click here to contribute.

Barack Obama.(Photo: Ruth Fremson / The New York Times)The Right just suffered a defeat, the middle continues to weaken amid elusive economic recovery and the resurgent Left in Europe grows and strengthens. Many conditions for resurgence of OWS or its reincarnation are in place.

Capitalism's crises, especially when deep and long-lasting like today's, polarize its politics. Left and right are reinvigorated by improved opportunities to advance their respective economic agendas. The middle, long in power and deeply complicit with capitalism, gets blamed for the crisis and its social costs. The resurgent right uses the crisis to advance classic demands on behalf of business and the rich for yet more wealth, income, and freedom from government regulation and taxes. The resurgent left uses the crisis to argue that capitalism's injustice, inefficiency and waste show the need for transition beyond it. The middle tries to hold on, hoping that capitalism's intrinsic instability, its recurring cycles, will produce an upturn before the people abandon the middle. Such an upturn could "stabilize" politics, undermine the appeal of the Left and Right, and be credited to the middle's policies. This struggle of right, left and middle provides an entry point into the political economy of Obama's re-election.

Political polarization caused by capitalist crises is clearest today in the economy most damaged, so far. Greece's two main parties of the middle alternated power for decades, but they suddenly dropped to a combined 35 percent of the vote in the 2012 elections. Left and right parties surged into sudden political prominence. They are winning mass support as people abandon the political middle. They resent the crisis and bailouts chiefly of banks, corporations, stock markets and the rich. They hate austerity policies that shift the costs of crisis and bailouts onto them by cutting public jobs, services and supports just when they are most needed.

A parallel drama unfolds in the US. The crisis since 2007 produced a resurgent right in the tea parties. They blamed the crisis on poor people abusing credit, immigrants abusing US law and institutions and governmental economic interventions. A few criticized Wall Street, but quieted when reminded about the Right's chief financiers. Thus the resurgent right married social concerns (oppositions to abortion, birth control, gun control, church-state separation, etc.) to enthusiastic support for capitalism.

Tea party members expressed that marriage by reviving old tirades against "socialism." They secured financing not only by carefully avoiding any critique of capitalism, but also by insisting that capitalists would resume prosperity and growth if freed of government regulations and taxes. The right sought to use the crisis to advance the classic capitalist agenda of maximizing wealth, income and freedoms for the corporate elites and the richest 1 percent to 10 percent of individuals.

The Left in the US lacks the Right's financing opportunities. It also inherits the last 50 years of state persecutions and corporate attacks that destroyed once-strong political parties (populist, socialist and communist) and labor unions' former militancy, size and power. A resurgent left slowly and arduously re-gathers people and resources to organize itself into a social force. Occupy Wall Street (OWS) thus emerged only years after the tea parties in the US, and after a resurgent left arose in Europe. OWS was far less organized and financed than either of them. Its nonetheless astonishing growth demonstrated the vulnerability of the middle (traditional Republican and Democratic establishments) and the powerful potential of a new left.

The middle, as servant/guarantor of capitalism, fundamentally opposes an anti-capitalist left. The middle likewise fears that the Right's program could generate a popular backlash threatening capitalism. Occupying the middle in US politics (as traditional Republicans and Democrats always have), Obama's job is to protect the economic status quo and manage crisis turbulence like a steady pilot. He works to undermine the appeal and/or organizations of both resurgent right and left while waiting/hoping for the capitalist cycle's next upturn. Upturns happen when wages and costs fall far enough to offer profit opportunities that induce capitalists to invest again.

Obama offers "hope and wait" for an upturn while not significantly increasing taxes or regulations for corporations and the rich. That is what the political middle does. Obama's slight increase in regulation (e.g. Dodd-Frank) and merely talking about raising the richest individuals' tax rates further galvanized the Right and its financing. Obama had taken such small steps to counteract left accusations that the costs of crisis and bailouts were being shifted onto average people through mass unemployment, home foreclosures and austerity policies. Crises polarize by making the political middle increasingly difficult to hold.

Because of the tea parties' size and financing, Obama tried to accommodate, moderate and compromise more than repress them. That cost him the enthusiasm of his supporters since 2008. Because of the ultimately greater threat of OWS's mass appeal and because the OWS organization and financing were weak, Obama repressed more than accommodated it (coordinated mayors bulldozed encampments, police harassed, etc.). That produced a deeper enmity whose consequences will soon unfold.

The resurgent right captured control of a significant portion of the Republican Party. It forced the Romney campaign to waver between middle and right. Thereby the Right's interpretation of the causes and cures for the economic crisis became the major challenge to the middle. While Romney wavered, Obama championed the middle. Meanwhile, a repressed OWS (and others such as the Green Party) could not make candidates contend with interpretations of the crisis as the product of a capitalism sacrificing the 99% for the benefit of the 1%.

The 2012 election thus tested what the resurgent right could achieve when functioning as a massively-funded, major component of Romney's campaign. Obama's victory shows that the Right lost to the middle; too many voters rejected its analyses and programs. Without a seriously contending left, the 2012 majority preferred the middle, despite having lost confidence in it continuously since 2008.

The crisis continues and may worsen over the next year or two. The economic decline that helped produce OWS has deepened (e.g. average real weekly wages fell 2.5 per cent from October 2010 to October 2012). The Right just suffered a defeat. The middle weakens further as economic recovery remains elusive. The resurgent left in Europe grows and strengthens. Many conditions for resurgence of OWS or its reincarnation are in place.

Copyright, Truthout. May not be reprinted without permission.

Richard D Wolff

Richard D. Wolff is Professor of Economics Emeritus, University of Massachusetts, Amherst where he taught economics from 1973 to 2008. He is currently a Visiting Professor in the Graduate Program in International Affairs of the New School University, New York City. He also teaches classes regularly at the Brecht Forum in Manhattan. Earlier he taught economics at Yale University (1967-1969) and at the City College of the City University of New York (1969-1973). In 1994, he was a Visiting Professor of Economics at the University of Paris (France), I (Sorbonne). His work is available at rdwolff.com and at democracyatwork.info.

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The Political Economy of Obama's Re-Election

Wednesday, 14 November 2012 00:00 By Richard D Wolff, Truthout | Op-Ed

Please support Truthout’s work by making a tax-deductible donation: click here to contribute.

Barack Obama.(Photo: Ruth Fremson / The New York Times)The Right just suffered a defeat, the middle continues to weaken amid elusive economic recovery and the resurgent Left in Europe grows and strengthens. Many conditions for resurgence of OWS or its reincarnation are in place.

Capitalism's crises, especially when deep and long-lasting like today's, polarize its politics. Left and right are reinvigorated by improved opportunities to advance their respective economic agendas. The middle, long in power and deeply complicit with capitalism, gets blamed for the crisis and its social costs. The resurgent right uses the crisis to advance classic demands on behalf of business and the rich for yet more wealth, income, and freedom from government regulation and taxes. The resurgent left uses the crisis to argue that capitalism's injustice, inefficiency and waste show the need for transition beyond it. The middle tries to hold on, hoping that capitalism's intrinsic instability, its recurring cycles, will produce an upturn before the people abandon the middle. Such an upturn could "stabilize" politics, undermine the appeal of the Left and Right, and be credited to the middle's policies. This struggle of right, left and middle provides an entry point into the political economy of Obama's re-election.

Political polarization caused by capitalist crises is clearest today in the economy most damaged, so far. Greece's two main parties of the middle alternated power for decades, but they suddenly dropped to a combined 35 percent of the vote in the 2012 elections. Left and right parties surged into sudden political prominence. They are winning mass support as people abandon the political middle. They resent the crisis and bailouts chiefly of banks, corporations, stock markets and the rich. They hate austerity policies that shift the costs of crisis and bailouts onto them by cutting public jobs, services and supports just when they are most needed.

A parallel drama unfolds in the US. The crisis since 2007 produced a resurgent right in the tea parties. They blamed the crisis on poor people abusing credit, immigrants abusing US law and institutions and governmental economic interventions. A few criticized Wall Street, but quieted when reminded about the Right's chief financiers. Thus the resurgent right married social concerns (oppositions to abortion, birth control, gun control, church-state separation, etc.) to enthusiastic support for capitalism.

Tea party members expressed that marriage by reviving old tirades against "socialism." They secured financing not only by carefully avoiding any critique of capitalism, but also by insisting that capitalists would resume prosperity and growth if freed of government regulations and taxes. The right sought to use the crisis to advance the classic capitalist agenda of maximizing wealth, income and freedoms for the corporate elites and the richest 1 percent to 10 percent of individuals.

The Left in the US lacks the Right's financing opportunities. It also inherits the last 50 years of state persecutions and corporate attacks that destroyed once-strong political parties (populist, socialist and communist) and labor unions' former militancy, size and power. A resurgent left slowly and arduously re-gathers people and resources to organize itself into a social force. Occupy Wall Street (OWS) thus emerged only years after the tea parties in the US, and after a resurgent left arose in Europe. OWS was far less organized and financed than either of them. Its nonetheless astonishing growth demonstrated the vulnerability of the middle (traditional Republican and Democratic establishments) and the powerful potential of a new left.

The middle, as servant/guarantor of capitalism, fundamentally opposes an anti-capitalist left. The middle likewise fears that the Right's program could generate a popular backlash threatening capitalism. Occupying the middle in US politics (as traditional Republicans and Democrats always have), Obama's job is to protect the economic status quo and manage crisis turbulence like a steady pilot. He works to undermine the appeal and/or organizations of both resurgent right and left while waiting/hoping for the capitalist cycle's next upturn. Upturns happen when wages and costs fall far enough to offer profit opportunities that induce capitalists to invest again.

Obama offers "hope and wait" for an upturn while not significantly increasing taxes or regulations for corporations and the rich. That is what the political middle does. Obama's slight increase in regulation (e.g. Dodd-Frank) and merely talking about raising the richest individuals' tax rates further galvanized the Right and its financing. Obama had taken such small steps to counteract left accusations that the costs of crisis and bailouts were being shifted onto average people through mass unemployment, home foreclosures and austerity policies. Crises polarize by making the political middle increasingly difficult to hold.

Because of the tea parties' size and financing, Obama tried to accommodate, moderate and compromise more than repress them. That cost him the enthusiasm of his supporters since 2008. Because of the ultimately greater threat of OWS's mass appeal and because the OWS organization and financing were weak, Obama repressed more than accommodated it (coordinated mayors bulldozed encampments, police harassed, etc.). That produced a deeper enmity whose consequences will soon unfold.

The resurgent right captured control of a significant portion of the Republican Party. It forced the Romney campaign to waver between middle and right. Thereby the Right's interpretation of the causes and cures for the economic crisis became the major challenge to the middle. While Romney wavered, Obama championed the middle. Meanwhile, a repressed OWS (and others such as the Green Party) could not make candidates contend with interpretations of the crisis as the product of a capitalism sacrificing the 99% for the benefit of the 1%.

The 2012 election thus tested what the resurgent right could achieve when functioning as a massively-funded, major component of Romney's campaign. Obama's victory shows that the Right lost to the middle; too many voters rejected its analyses and programs. Without a seriously contending left, the 2012 majority preferred the middle, despite having lost confidence in it continuously since 2008.

The crisis continues and may worsen over the next year or two. The economic decline that helped produce OWS has deepened (e.g. average real weekly wages fell 2.5 per cent from October 2010 to October 2012). The Right just suffered a defeat. The middle weakens further as economic recovery remains elusive. The resurgent left in Europe grows and strengthens. Many conditions for resurgence of OWS or its reincarnation are in place.

Copyright, Truthout. May not be reprinted without permission.

Richard D Wolff

Richard D. Wolff is Professor of Economics Emeritus, University of Massachusetts, Amherst where he taught economics from 1973 to 2008. He is currently a Visiting Professor in the Graduate Program in International Affairs of the New School University, New York City. He also teaches classes regularly at the Brecht Forum in Manhattan. Earlier he taught economics at Yale University (1967-1969) and at the City College of the City University of New York (1969-1973). In 1994, he was a Visiting Professor of Economics at the University of Paris (France), I (Sorbonne). His work is available at rdwolff.com and at democracyatwork.info.

Related Stories

Tea Party Rebels Quickly Tamed
By Jim Hightower, Other Words | Op-Ed
Economic Alternatives to Capitalism
By Gar Alperovitz, Richard D Wolff, Truthout, Economic Update | News Analysis
Occupy and the Ballot Box
By JA Myerson, The GC Advocate | News Analysis

Hide Comments

blog comments powered by Disqus