First there was the “Tea Party” and now there are the various “Occupy Wall Street” movements. The former was from its start better organized and financed than the latter, and one is on the right while the other is on the left, but both are responses to similar frustrations and fears besetting America. Analogous movements, some of them already heading toward more violent confrontations, are springing up in Europe as well. It is surely a coincidence that the uprisings of the “Arab Spring” are occurring at the same time, because the problems facing politically repressed Arab societies are so different from those of the advanced and wealthy West, but that coincidence increases a worldwide sense that we are on the verge of greater political and social conflict.
America’s problems were precipitated by the financial collapse and housing price declines that erupted in 2008, the ensuing rapid rise in unemployment, and very widespread economic insecurity. Europe at first seemed to be doing better, but the recent Euro crisis may actually turn out to be even more of a problem, particularly for southern Europe.
Much of the Tea Party consists of those who were already angry before they coalesced into an organized group. They were the mass base of the Republican right, some (but not all) of it consisting mostly (but not only) of southern white racists who have never reconciled themselves to the civil rights revolution of the 1960s and 1970s. There were also the socially conservative Christians who felt marginalized by what they perceived to be a secular American elite, and a growing number of middle and working class Americans who saw that they were losing their hold on the American dream of a secure and prosperous life. Many of them blamed immigrants, particularly Spanish speaking ones, who were easy targets. These partly overlapping segments of the population were galvanized into action by the Obama election and the economic crisis. Their strong nationalism and anti-foreign sentiments have also made them fearful of Muslims who are seen as part of the larger conspiracy to destroy America. The populist reaction that emerged under the Tea Party rubric has been supported by libertarians and neo-conservative foreign policy hawks who until very recently lacked mass support, and also by at least some big moneyed interests eager to continue on the path of deregulation and lower taxes for themselves.
Against this formidable coalition on the right, the Occupy movement has tried to appeal to quite different constituencies. These include the declining labor movement, teachers, and other civil servants whose jobs are under attack, all manner of minorities who know that the populist right despises them, and liberal intellectuals afraid of the cultural repression inherent in the conservative shift that the Republicans promise. Certainly some in the middle and working classes are starting to perceive that their declining economic fortunes are not going to be fixed by decreasing the size of government and giving more tax breaks to the rich, but it is very likely that, at least among the whites in those classes, majorities will move farther to the right as they become more frightened, not to the left.
The Occupy movement began late because for at least the first two years of the Obama administration the liberal left thought it could rely on the President to further their cause. Only as it started to become obvious he is more of a centrist, and that his administration is not doing nearly enough to solve the underlying problems that beset the United States, has this kind of protest begun to enlist some support.
Describing this does not, however, tell us much about the deeper underlying causes of the growing discontent. Nor do either the Tea Party on the right or the Occupy movement on the left offer any viable solutions because both target only visible symptoms of what they dislike rather than the real forces that are behind the economic and social instability in the most advanced parts of the world.
What is going on is that the global economy is entering a new era, and as has happened in some previous shifts of this kind, neither the domestic institutions of the industrial societies nor the international system are able to handle this. They must adapt and change, but the reaction to the consequent stress has more often than not also produced a violent conservative reaction.
The first leading industry of the modern era, starting with the English Industrial Revolutions in the late 18th century, was based on textile production. In the 1830s and 1840s, this was replaced by iron and railways, and in the 1870s or so by organic chemicals, steel, and then a bit later by heavy electrical machinery. Each shift provoked depressions and social unrest. The first two phases were dominated by the British, but the third relied much more on advanced scientific research and the education of a highly skilled labor force, and in this respect Britain fell behind Germany and the United States. The strain in international relations as Germany surpassed both the United Kingdom and France in its industrial and scientific might was the basic reason for the catastrophic First World War. After that came the age of automobiles, mass produced home electrical machines, petrochemicals, and an astonishing communications revolution. But here, the means of financing this and dealing with the social upheaval the changes produced were only worked out at first in the United States, and even there not very well. A Great Depression and another World War occurred before this age, dominated by the United States, flowered in full. In the 1970s the dominance of the United States was threatened as another change took place, this time led by the production of new electronics and the invention of modern computing, but in the end the United States remained the key power and guarantor of the international system. Despite some predictions in the 1970s that the age of American dominance was over, this did not happen at all as its main rival, the Soviet Union, was far more inept in adapting.
Now, what is happening is that a new age is once again upon us, but the United States is not taking it well. Biotechnology and amazing advances in health care will lead the way, as will new sources of energy. But there is resistance to change and a failure to adapt quickly; and for the first time since World War II, a new industrial power, China, seems poised to challenge American dominance. America’s institutions, and Europe’s, are facing another change: a huge demographic transition. Birth rates have fallen and the population is aging in the advanced societies, thus producing a crisis. How will health care be financed, and how will older populations be accommodated? The two are related because health care, unlike other leading products of the past, is very heavily demanded by older, not younger people. How will sufficient levels of research and education be paid for? How can old fashioned nationalism be made to fit into a globalized economy where people can move more easily than ever?
Europeans, including the relatively successful Germans, have not yet adapted to their demographic changes, and in the United States there seems to be little awareness of the fact that deep changes in the economy present challenges that cannot just be solved by going back to old formulas. While markets can adapt very well to short term changes in demand, private enterprises are not very good at planning for long term structural changes that do not promise fairly short term profits. Just as public high schools and advanced university education and research had to be financed by governments in the past, so do they have to be in the future as well. Just as governments played a vital role in building infrastructure in the past, either directly or by grants and special contracts, so will they have to find ways of helping to finance new energy sources and more advanced health care because the original investments are unlikely to bring quick profits. After all, the internet itself was invented by the American defense department, and almost none of the major advances in technology over the past 70 years have come without government support.
Therefore, the response of the right, to further deregulate and diminish the role of government, is doomed to failure. If such conservative policies are enacted in the United States, as they were in the 1920s and early 1930s and as the British Conservatives are trying to do right now, they will only produce another severe depression.
One of the consequences of the changes that have occurred is that the relatively unskilled parts of the working class, and much of the middle class, have lost their power to demand higher wages. Only the most skilled can obtain any security. So rising inequality, which is worse in the United States than in other advanced societies, but is a problem everywhere, is not just caused by the greed of a few Wall Street financiers but is a deep structural problem that depresses both economic demand and any sense of social justice. Taxing the very wealthy and regulating financial speculation, while not harmful, will not go very far in addressing the fundamental problems at hand.
This means that neither the Tea Party populism of the right nor the weaker populism of the left hold any prospect of making things better.
What is to be done? Obviously, the first step is to recognize what is actually going on, that we are in a transitional moment that requires major institutional adaptation. One of the major tragedies in the United States is that those of us who are educators have failed to explain the nature of change to the larger public, leaving the field open to quack plot theories that proliferate on both the right and the left. Certainly, some academics have tried, and there are worthwhile studies about what is going on, but too much of the population has almost no grasp of the full extent of the problem. This is particularly striking at the elite level where presumably college educated leaders seem as bereft of understanding as those without such credentials.
Starting in the 1930s, but much more after World War II, the United States and Western Europe made the required changes to avoid another depression. Educational opportunities were vastly expanded. Research was paid for. New ways were found of supporting consumer demand. International financial institutions were created to stabilize markets. Pensions systems were enlarged. Vast infrastructural projects were built. Americans led the way in a particularly farsighted way, while their chief competitors in the Soviet Union created a creaking system that tried to artificially construct a late nineteenth century industrial structure based on steel and defense that neglected mass consumption and flexible markets.
What will happen now? Over the past century, the mixture of government investment, institutional reform, and capitalist markets has kept the United States in the lead, and enabled it to back up the global economy. Despite the rise of China, that country is not nearly strong enough to take on such a stabilizing role, and there is little indication it is even eager to do so. If, therefore, the United States does not rise to the occasion once more, chaos and a very long-lasting world depression will certainly ensue. This would undoubtedly be accompanied by increasingly violent social protest and bitter confrontations between ever more radicalized leftist and rightist forces, as happened in Europe in the 1930s. This time, the United States itself would be affected, and neither Asia nor any other part of the world would remain stable.
We can write off right wing populism as a possible solution because it only promises to revert to a mythical free market past that never existed. But the Occupy Wall Street movement is not much better. Not only is it still too marginal and unable to mobilize sufficient support, but it also fails to address the real work that needs to be done. What has to happen is that elites in the United States have to come together to understand what is required, and to educate the public. Despite deep political disagreements in the United States about what course to follow after World War II, a majority of the political leadership, both Republican and Democrat, did come together to agree on important policies and to explain them to the public. Because there has been no World War this time, it may be difficult to recapture that sense of unity, but that is exactly what is called for; yet, it is not happening. It was the hope of many that President Obama could lead the way. In fact he has achieved some significant successes, far more than his enemies or even his supporters on the left are willing to acknowledge. But he has failed to create a strong and united political movement to carry out the necessary work of awakening the public about the dangerous present situation, or to even begin to explain how much change is necessary.
Ultimately, the fate of the United States, and probably of the world as a whole will depend more on whether or not a reformist and more united political elite emerges than on the well meaning but so far ineffectual Occupy Wall Street movement. This could take place, but if it does not, we are all going to be in much more trouble than most of us realize.