Jeff Faux is the founder and former president of the Economic Policy Institute. He is a contributing editor of American Prospect, and a member of the editorial board of Dissent. His articles and commentary have appeared in numerous publications including: The New York Times, The Nation, The Washington Post, USA Today, and Harper's.
Among other things, Faux has been a consultant to governments at various levels, businesses, labor unions, and community and citizen organizations. His new book The Global Class War was published by John Wiley & Sons earlier this year. I reached him in Washington, D.C.
Gerry McCarthy: In The Global Class War you write that: "The lack of a language that accurately reflects the evolving class politics of the global market hardly seems accidental. Just as the discussion of economic class is resolutely ridiculed by the national media as some loony 'conspiracy theory,' the idea of a global governing class with its own interests is similarly dismissed in the echo chambers of the international punditry." When you raise the issue of a corporate investor class do you find people dismiss this as a conspiracy theory?
Jeff Faux: As I try to point out in the book, this is not a conspiracy theory where the problem is some individuals getting together and deciding how to screw the working poor of the world. All markets create a class structure and a politics of class. In other words: A struggle among the classes over who gets what. In stable societies this struggle is resolved --and it's a continuing thing-- in a social contract.
There's no question in most people's minds that in every modern society we know of, there's an upper class, super rich, middle class, working class, the poor and the very poor. Almost everyone acknowledges that. Some people say it's not important. Yet it's hard to believe that for the average citizen of almost any society it doesn't make any difference if you have a lot of money versus having no money.
It's not a surprising phenomenon that when you create a global society and economy that you're going to have a global class structure. That point has not been disputed. It's an interesting question you raise and I'm surprised by it. The reaction of most people who don't like to think about this --and who are opposed to the way I see the world-- is to ignore it. Or to say: It doesn't matter. Or to turn the conversation around by saying: You're just developing a conspiracy theory. But no one I've debated (or who has written to me) has denied that a class system exists. Also: They've never denied it's logical as we're creating this global political economy and society that it's going to have a class system too. But some people just don't want to go there.
I gave a luncheon talk on my book to a group of mostly Republican lobbyists and presidents of trade associations in Washington, D.C., a couple of months ago. While they didn't like my conclusions about what to do --there was no challenge that, there was a developing global class system and that the interests of American members of this class don't coincide with the interests of ordinary Americans. Most of the people say: That's inevitable. Or they say: That's the way the world works and we best ignore it, shut up about it, and get along with our business.
GM: In a recent article in The London Review of Books, the philosopher Slavoj Žižek writes about the "twin cities of globalization" Davos and Porto Alegre. He argues that: "The tone of the Davos meetings is now predominantly set by the group of entrepreneurs who ironically refer to themselves as 'liberal communists' and who no longer accept the opposition between Davos and Porto Alegre: their claim is that we can have the global capitalist cake (thrive as entrepreneurs) and eat it (endorse the anti-capitalist causes of social responsibility, ecological concerns etc.) There is no need for Porto Alegre: instead, Davos can become Porto Alegre." Is he kidding? What do you make of this?
JF: I don't know if he's kidding. But to me it's not very credible or convincing. We're talking about power here. The meetings that occur at Davos every year are symbolic. As I try to point out in my book, they're more like the conventions of a political party. What you see on television is not where the deals are made, but it's an important symbolic event. The same is true with Davos.
It's true that over the last few years the heads of some NGOs have been invited to Davos. But they're also invited to be on advisory committees of the International Monetary Fund (IMF) and the World Bank. Almost every large corporation has some favourite NGOs they support who go to a few press conferences to show how a corporation is being a good global citizen. That's just co-optation. It's been going on for centuries. It's continuing to go on. The idea that there is a class of people and institutions who over the past two decades have done everything they can to break the bonds between themselves and the national communities they come out of --but are now going to change their behaviour in any dramatic way-- is naďve.
Davos can arrange funding to buy an airplane ticket for all the people who go to Porto Alegre and bring them to Davos. But it wouldn't change anything.
GM: At one point in The Global Class War you write that: "For a constructive resolution to emerge from the coming economic crisis, American politics will have to return to the subject of our common future --a subject that was banished from political life after the election of 1980." This was a major turning point in American politics wasn't it? Can you talk to me about this?
JF: If you look over the history of the last almost century (starting with the election of 1932) there have been two watershed elections. One was 1932 with Franklin Delano Roosevelt that was driven by the Great Depression, where you had a deflation in the economy (as economists would call it). The next one was 1980 with Ronald Reagan. Those two elections changed the direction of the economy.
The immediate cause of Reagan's election was the great inflation of the latter part of the 1970s. People forget that consumer prices were going up at 14 percent and interest rates were almost 20 percent. It was that economic crisis that brought Reagan into office. Reagan used it to institute the conservative policies that we've been living under for the last 25 years.
I believe that the next watershed election will be driven by the consequences of globalization to the average working American family. As I point out in my book, we're on a path that will inevitably lead --and it's already starting-- to substantially lower living standards. That's because of the economic forces I talk about in the book: The huge trade deficit which is relentlessly piling up debt connected to the huge consumer debt we have and the housing bubble.
I don't know when or how what I'm talking about is going to occur. But it's hard to find an economist who when confronted with this will not admit that living standards will have to fall. When that happens, we're going to have another watershed election. I can't tell you whether that's going to go to the right or left. It could go many different ways. But that's the next one that's coming. And it's going to come sooner rather than later.
Part of the explanation for Bill Clinton opening up yhe economy to globalization in an irresponsible way is that he governed under the shadow of Reagan. NAFTA was a Ronald Reagan idea. It was conceived by Reagan. It was negotiated by George Bush I. And it was delivered by Bill Clinton. You cannot understand what happened by looking at this just through the politics of two parties. You can only understand it by analyzing it through a class structure.
GM: In a recent article for The Nation you explain that in the United States, Canada, and Mexico, "it was the leaders of the political parties that had historically claimed to represent ordinary people --the Democrat's Clinton, the Liberal Party's Jean Chrétien, and the Institutional Revolutionary Party's Salinas-- who delivered NAFTA to their global clients undercutting their own constituencies." This is still worth talking about isn't it?
JF: Yes. Especially since NAFTA was the prototype for the World Trade Organization (WTO) and the entrance of China into the world and U.S. economy. It's pretty hard to do an analysis of all 200 plus countries with 6 billion people. But with NAFTA we can take a much clearer look at how the global class system works. It's clear that as Jorge Castaneda (who later became Mexico's foreign secretary) said: NAFTA was "an agreement struck for the rich and powerful in the United States, Mexico and Canada, an agreement effectively excluding ordinary people in all three societies." That's what globalization is today.
I always remind people this is not about trade, because trade is only a little piece of this. My view is not that we shouldn't continue to trade with the world. America has always been a trading nation. I get up in the morning and I drink coffee --and we don't grow much coffee in the U.S. So it's not about building walls. It's about what the rules are for this new society we're creating.
In the United States, Canada, and Mexico you had in the twentieth century a long history of struggle to bring a social contract to capitalism. It's what made capitalism work. You had protections and rules that provide for the sharing of benefits. What globalization has done is allow these large corporate enterprises to escape from those rules.
While they talk about the current mode of globalization as being future oriented --in one sense it's bringing us back to a nineteenth century capitalism in which government sides with the corporate class in its suppression of wages and working conditions. We're going backwards to the nineteenth century in our institutions rather than developing institutions in the twenty-first century which would provide a social contract for the global economy.
GM: Toward the end of your book you write about the need for a "Continental Bill of Rights" and a "Citizen's Continental Congress" to deal with the corporate investor class. Was this a difficult thing to write about? Has it been misinterpreted when you've talked to people about it?
JF: Yes --in Canada, Mexico and the U.S. I don't know what to do with the 6.5 billion people economy. No one has any credible idea of how you begin to bring a social contract there. It's so complicated. But here we are in North America. We've already crossed the line and developed this continental economy. I was an opponent of NAFTA, but you can't put the toothpaste back in the tube. It's out there. The question is: Now that we've created a continental economy where the elites from all three countries are bound together in common political cause, it seems to me that what those institutions, people, and activists who care about the life of the ordinary person ought to do (in all three countries) is figure out a way to build the kind of countervailing political power that crosses borders, just the way the political power of elites cross borders.
By saying this I recognize there are people --for example friends I know in Canada-- who say: Oh my God, the last thing we want to do is have anymore to do with the U.S. I understand that, but the problem is that we're still thinking in these national categories when the borders have been obliterated by the economy.
Language is very important here. If you ask: Who benefited from NAFTA --Canadians, Americans or Mexicans? It's not a useful question, because the rich and powerful in Canada, the U.S. and Mexico benefited and working people paid the price.
It's not to suggest that there should be one nation in North America. But at least to suggest that we have to develop a politics that recognizes that the average worker in Canada has more in common (in terms of his or her future) with the average worker in Mexico and the U.S. than he or she has with the person at the top of a multi-story building in the financial district of Toronto. That's what is important to understand.
I often give speeches to American groups --including America labor unions. When I started doing this almost 20 years ago I would say: Your enemy is not the Canadian, Mexican, Brazilian or Chinese worker. Your enemy is the person who has the heel of his boot on all of your necks. I would see some people's heads nod. A few years later I would receive some polite applause. Then a few years later I would receive an astounding applause. Now I can receive a standing ovation on that line.
People I know from own experience are beginning to get it. One of the most important things we need to do is develop the kind of relationships at the grassroots between in all three of these countries, because if we don't hang together we're going to hang separately.
GM: In the last chapter of the book you write about how there is little consciousness about being a North American among people. You add that: "Despite common struggles with industrialization and discrimination, there are few histories of the North American labor movement, North American race relations, or the North American women's movement. A search of the U.S. Library of Congress finds no citation for a history of North America." Shouldn't this be a wake up call for people?
JF: I hope it will be. I'm confident about the idea, because it's inevitable. It may not happen next week or the next decade. It may not happen while I'm alive. But we have to develop a cross-border countervailing power. We have to develop a model of how to create a social contract across borders. The Europeans are struggling with that. So it's not like this would be the only place dealing with it. For the last 50 years the Europeans have been developing and expanding. They've become a multi-national society, and there's a big struggle going on for social Europe. One of the things that prevents that from happening is the dominance of the U.S. The Europeans are told America doesn't have any of these social protections --so you should not have any of these social protections.
We need to open up another front that would not only help the ordinary person in Mexico, Canada, and the United States --it would also help raise the consciousness and inspire people in other places around the world. For example: In the cone of South America they have Mercosor --which is a developing regional economy with Brazil, Argentina, Paraguay, and Uruguay.
The way to the ultimate goal of having a social contract in the global economy is probably to do it region by region. It could be an exciting alternative to what I call the nineteenth century economics that dominate globalization now.
Language is important again. In the U.S. we read about the "Chinese economic threat." But look at this more closely. It turns out it's not China versus the America (which are the terms we use to think about this and the press teaches us to think about it). But it's a business alliance between the Chinese commissars who provide cheap labor (often at the point of a bayonet) and American and other multi-national corporations who provide the technology and capital. What is that? Is that a Chinese threat? Is that an American threat? What is it? We have to struggle to develop a language that explains this.
On another level: The discussion of poverty in the world is almost exclusively talked about rich and poor countries. But there are rich people in poor countries and poor people in rich countries. What's going on in the world is an alliance between the rich in both rich and poor countries.
We have to become clearer about what we're talking about. Another example. We talk about free trade as if this was all Economics 101 activity with countries trading with each other. Even the first director of the World Trade Organization Renato Ruggiero said. "We are no longer writing the rules of interaction among separate national economies. We are writing the constitution of a single global economy." In my view that constitution is one that recognizes just one citizen: The corporate investor.
GM: You've written that: "As globalization's squeeze on ordinary Americans continues, the political price will rise for those who continue to give priority to bringing Burger King to Baghdad over healthcare to Baltimore. It's worth remembering that Franklin Roosevelt, who was as elite and privileged as one could get, responded to the economic crisis of his time by becoming --as they muttered in the best clubs-- 'a traitor to his class.'" Do you think we need another Roosevelt for our times?
JF: It wasn't clear that Roosevelt was going to be Roosevelt until after he was elected. It's not that I don't believe people make a difference. They do. But the context is also important. The problem is that if we wait for the catastrophe it's going to be immeasurably harder on everyone. In a world where countries and elites have access to nuclear weapons (and given the proclivity of some of the U.S. ruling class for foreign adventures and seeing themselves as an imperial force in the world) things could become very nasty.
The time is right for a political leader to tell a story. Reagan told a story. When you tell a story you have villains and heroes. Reagan's villains were the "liberals," bureaucrats, and left-wing academics. He painted a picture about those people taking the country in the wrong direction.
Part of the problem is that when Democratic leaders are faced with this they become scared that they're going to alienate the business class. For example: John Kerry tried to do a little populist politics during the last presidential campaign when he talked about "Benedict Arnold corporations." I don't know if anyone under 35 in America knows who Benedict Arnold was. But that's another question. Yet Kerry understood (and his pollsters understood) that there is an important message out there. People are suspicious of the incredible distortions of income and wealth that's been going on in this country for the past 20 years.
Kerry tepidly used the phrase "Benedict Arnold" corporations." He didn't use it much. But a few months after the election he actually apologized to a business group.
What we've seen so far are Democrats who try to become a little populist in order to be elected. Then as soon as they get into office the tune changes. The same was true with the former Canadian Prime Minister Jean Chrétien. He campaigned in 1993 against NAFTA. Then as soon as he got into office he supported it. So it's difficult.
One of my hopes is that if you look at the Democratic Party over the past 20 years they have consistently tried to butter themselves up to the business class --except for election time when they make all these promises and break them. But the chickens are starting to come home to roost. There's a lot of suspicion out there about politicians from both parties. People want to have a vision of the future that includes everybody.
When I said in my book that the notion that we have a common future was taken away in 1980, I meant that in the U.S. (at least from 1932 to 1980) there was a sense that Americans were in it together. There was a social contract. There was lots of tension between the working class and the rich. There were labor tensions, and there were tensions over race. But overall there was a sense that if part of the population is not doing well, it's going to bring down the rest of us. Without that sense we would never have been able to have a successful civil rights revolution in the 1960s in America.
Let me give you an example. In 1976 we had the bicentennial of the American Revolution (two hundred years since the Declaration of Independence). One of the things that went on in this country is that in cities and states people got together in their communities and started asking the question: What do we want our city, state, and community to be like in the year 2000? It was a time of reflection and collectively thinking about where we were going.
I was around then and spoke to some of these groups. Some of them were just doing chamber of commerce boosterism. But some were discussing land planning. For example: What would we like Atlanta or Detroit to look like in the year 2000? Some of those community-planning events dealt with serious issues like poverty and race. But it was all in the context of where do we want to go together. That stopped dead after Ronald Reagan was elected. The future turned out to be not something that we were going to march towards together, but something that the individual had to guess at in order to make sure he or she was going to be safe in this future. In other words: The future became an issue for the individual alone. It became about guessing where the stock market was going to go, what jobs would be good 10 to 20 years from now, and where housing prices were going. That's a different process than a community asking itself where do we want to be in 20 years? And what would we like for ourselves and the next generation that comes after?
We have to go back to that. But we're in a global economy. So we have to go back to it recognizing that we're not alone in the world. A first step toward this would be for the citizens of all three countries to begin to talk to each other about the kind of continent we want 20 years from now.
Gerry McCarthy is Editor of The Social Edge.
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