Occupy – the impact and legacy

In September of 2011, a social phenomenon erupted near Wall Street, New York City, as thousands of demonstrators gathered to express their outrage toward what they perceived as deeply flawed economic and political systems. Their protest, and subsequent encampment on the Zuccotti Park lawn, would be emulated by collective actions in the United States and in various countries around the world. Though their concerns were nearly as inchoate and diverse as the participants themselves, the core of their message was clear: the status quo—in which exorbitant quantities of wealth accrued at the top of the income distribution, the (U.S.-based) bankers whose actions had inflamed the crisis received massive federal bailouts and scant punishment for their malfeasance, the global ecosystem was in peril, and liberal democracy had apparently been hijacked by oligarchs and corporate interests—was no longer acceptable.

This thesis examines the historical and contemporary antecedents of the Occupy movement, the impact of the uprising on public discourse and policy, the serious problems that motivated thousands of people to take over streets and public spaces in the fall of 2011, criticism toward the movement, its eventual disappearance (at least from its encampments, and the mainstream media’s view), and some of the institutions, initiatives, and consequences the movement has produced.

I would like to recognize the contributions to this project of both my primary and secondary thesis supervisors, Professors Kirk LaPointe of the UBC School of Journalism, and Elvin Wyly of the UBC Faculty of Geography, respectively. Both have provided indispensable guidance to me as I strode along the (rather tortuous) path toward completion of the thesis. I also thank both men for their patience, as the timeline for this project (as I am sure is the case with many projects) was far lengthier, and delayed more frequently, than originally planned.

Credit and thanks are also due to the staff and faculty at the UBC School of Journalism, including the Facility and Technical Coordinator of the School, Barry Warne, and Research Advisor, Brianne Howard, for all of the assistance and expertise they have provided along the way. And, as always, I’m grateful for the time and perspective shared with me by sources who contributed to this thesis, including Rabble founder Judy Rebick, RT America and MediaRoots reporter/commentator Abby Martin, author, filmmaker and law professor Joel Bakan, Adbusters founder and editor Kalle Lasn, Professor of Economics Emeritus at the University of Massachusetts-Amherst Richard Wolff, Occupy Wall Street participant, writer, lawyer and activist Marina Sitrin, and Occupy Vancouver participant and activist Min Reyes.

Finally, although the opportunity to interview former New York Times foreign correspondent and author Christopher Hedges did not present itself over the course of this project, his insight and influence are evident in this thesis. I commend Mr. Hedges for the work he does, and his efforts to foment activism in the name of social, economic, and environmental justice.

To all who are willing to stand up and take action, in the name of peace and justice, for the health of our world, and for the welfare of future generations

1.1 Introduction

In the fall of 2011, a social phenomenon sprung into existence in New York City, capturing the imagination of millions, and inspiring many more to rethink what was possible. But although Occupy Wall Street is distinct and novel in many important ways, is also firmly rooted in the legacy of social uprisings that have preceded it. Much like prior pushes for change, Occupy is a popular reaction to political and economic agendas which, as far as its participants are concerned, have enhanced the station of domineering interests, while exacerbating the plight and diminishing the voice of marginalized groups in society. What’s different about Occupy, however, is its scope; the movement is broad-based, diffuse and inclusive. Rather than serving a limited, easily identifiable constituency, or set of interests, OWS claims to represent the interests of the majority, and the collective pursuit of liberty, democracy, opportunity, solidarity, community. As the movement’s mantra goes: “We are the 99 per cent.”

1.2 Neoliberalism, globalization, and corporatism

The goals and passions of protesters who have joined the Occupy movement are diverse, from preserving biodiversity, to ending corporate personhood, to denouncing the proliferation of nuclear energy, to acknowledging the impact of the colonial legacy on Aboriginal people. But inchoate as these objectives appear to be, there is a common thread that intertwines nearly all of them: the ideology of neoliberalism that emerged from the University of Chicago in the 1970s, the distinctive form of political economy it has produced, and its awkward, rankling rescue from the jaws of death, beginning in 2008, through an historic bequest of corporate welfare.

In The Strange Non-Death of Neoliberalism, Prof. Colin Crouch of Warwick University describes the ideology and the economic model it has produced, and investigates why it failed to perish—or at least to suffer a rightful loss of credibility among the political elite of the developed world—in the wake of the worst financial crisis since the Great Depression. The primary consequence of neoliberalism, as Crouch illustrates, has been a growth and consolidation of corporate power. By extension, other societal consequences, like the criminalization of dissent and the despoilment of natural resources, have followed.

As the name suggests, neoliberalism is (at least superficially) a revival of many ideas espoused by classical liberalism, a mindset that emerged in the enlightenment salons of post-revolutionary France, and later evolved in 19th-century Britain and the United States. Liberalism’s earliest proponents favoured the laissez-faire approach to most questions, emphasized the promotion and protection of egalitarianism and civil liberties (at least for white men), and, importantly, lauded the virtues of economic and commercial freedom. Among the ideological architects of free-market liberalism were David Ricardo and Adam Smith, the latter of whom espoused the belief that markets would lead to equilibrium, fair working conditions, accurate pricing and distribution of goods and services, under conditions of perfect liberty (that is, unimpeded by state intervention or other forms of coercion). To Euro-American societies in the throes of a bloody exodus from the tyranny of monarchs and empire, the idea of a diminished role for the state, and the freedom of the individual to choose, held understandable appeal.

Neoliberalism—a revival of the liberal notion that free markets offer fairness and the efficient distribution of wealth and resources better than market interventions ever could—experienced a dramatic surge in the 1970s, concomitant with a string of important historical events: the 1971 decision by U.S. President Richard Nixon to detach the U.S. dollar from the last vestiges of the gold standard, which led to the implementation of fiat money in global finance, and the installation of the U.S. dollar as the world’s reserve currency; and an extended period of “stagflation” in the United States, the consequence of an economic recession (which produced high unemployment) contemporaneous with a pair of oil shocks in 1973 and 1979 (which, along with the abandonment of the gold standard, the sudden annulment of Nixon’s price controls, and the unpaid debts the U.S. government accrued through the Vietnam War, produced dramatic and sustained inflation). It was in this context of a mounting “misery index,” that the ideas of economists Friedrich Hayek and Milton Friedman—both opponents of government intervention in the economy, the welfare state, social programs, and the fiscal stabilization approach advocated by John Maynard Keynes—began to garner more widespread appeal. Beginning under President Carter, and accelerating under President Reagan, sectors of the American welfare state first constructed under Franklin Roosevelt, and expanded under Eisenhower, Lyndon Johnson, Richard Nixon and Gerald Ford, began to be dismantled. This dismantlement has continued in the years hence, while similar neoliberal conceptions have come to dominate the political economy of Canada, Europe, Russia, India, Brazil, China, and most of the world’s developing countries.
Under Reagan, one of neoliberalism’s inevitable consequences arose, as wealth disparities between the poorest and richest Americans began to rapidly broaden. Crucially, Reagan further broke from tradition by trampling America’s long-standing antitrust regulation, designed to prevent large firms from gaining too much market share (Crouch, 54-55, also noted in Klein No Logo, 163). (The iconic president Theodore Roosevelt, among other Republican stalwarts, had been a staunch proponent of suchlike regulation in his day.) Reagan’s decision laid the groundwork for global “competition,” which forms the intellectual basis of capitalism, to achieve its logical end—corporations began to expand, merge, and dominate ever-increasing market shares, enhancing their own scope, reach, and earning potential, while effectively reducing consumer choice. Neoliberalism’s stock continued to rise throughout the 1980s (it had been credited, however dubiously, with bringing an end to the 1970s stagflation through savage cutbacks to public services), into the 1990s and eventually the 2000s, with stark results for both public policy and society as a whole. Free trade agreements like NAFTA created further means and incentives for corporations to cut costs and maximize revenues by shipping manufacturing jobs overseas, sub-contracting to foreign factories, and seeking out countries and markets wherein infrastructural needs and demand for labour, technology and components could be met, but also wherein environmental and safety regulations were laxest, taxes and wages lowest, and labour unions severely restricted or non-existent.

A further consequence of this process has been the increasing influence of multinational corporations and their owners and executives—most of whom were once American, but now owe allegiance to no nation—over the political landscape of the nations and jurisdictions in which they do business. Political leaders, anxious to attract investment, “capital” and private-sector jobs, have played along with the amoral profit- and rent-seeking mission, slashing taxes and dismantling public programs to reduce corporate expenses—an approach Western political euphemists, who lack the authority to impose forced labour and outlaw collective bargaining as totalitarian states like China freely do, describe as “enhancing competitiveness,” “controlling spending,” “fiscal discipline,” and “creating a ripe environment for job creation.”

The race-to-the-bottom mentality of globalization and so-called free trade, political corruption, the infamous Citizens United ruling by the U.S. Supreme Court, a burgeoning (and increasingly villainous) financial sector in Western countries whose constituents subsume ever larger capital flows while imposing ever more burdensome debt loads (Hudson, 1998) and occasionally even bet against their debtors’ ability to repay, a sharp decline in manufacturing, union membership and middle-class jobs in the West, and the persistence of a neoliberal orthodoxy on the policy agenda despite its failings, have combined to inflict numerous socially undesirable outcomes. For instance, the climate change denial movement largely consists of propaganda and pseudo-science from a fossil fuel industry anxious to maintain and expand its profits. All the while, climate change and ocean acidification continue their steady march toward the point of no return.
Deregulation, often spun as “cutting red tape,” leaves an increasing expanse of the natural environment and Indigenous territory unprotected, resulting in unprecedented loss of biodiversity and destruction of both natural and human assets. “Free” trade, idolized by Reagan, Thatcher, Mulroney, and Clinton, has facilitated a reduction in consumer prices for many imports, offset by a migration of middle-class jobs from the wealthy countries to overseas destinations like China, Malaysia, Indonesia, the Philippines, and Bangladesh (Fletcher, 2010).

1.3    Responses to corporatism

Much has been written about popular responses to the increasing influence of corporations within the public sphere. Within this body of literature, Naomi Klein’s No Logo distinguishes itself from the work of Crouch and others, by contending that neoliberalism and corporatism have not necessarily been determined by a growth in the sheer scale of the multinational firms themselves, but rather, by the prominence of the brands and marketing identities they seek to promote.

Klein argues that as corporations like Nike, Reebok, Apple and Microsoft have invested greater sums in their public image, partly owing to advances in communications technology, they’ve sought to reduce direct expenditures on the manufacture of products. This has led many large firms to outsource labour not only to foreign countries, but to foreign subcontractors (in an arrangement which resembles, for instance, Apple’s business relationship with China’s FoxConn Corporation). The consequence of this behaviour is that while logos, corporate images, insignia and advertising play an increasingly influential role in developed countries, the size and payroll of the firms themselves have not increased to nearly a commensurate degree. Rather, multinationals place orders with their subcontractors, who guarantee delivery of a given stock of product at a specified price, by an agreed-upon deadline. To achieve this, subcontractors and their suppliers exploit workers, bar collective bargaining and unionization initiatives, and confine much of their activity to export processing zones (EPZs), or free trade areas, in which most taxes, fees, tariffs and labour regulations do not apply. Among the examples Klein cites is the town of Rosario, in the Philippines, where an EPZ provides the majority of the community’s employment, but simultaneously undermines the growth of its economy by paying poverty wages, underselling local competitors and contributing next to nothing to Rosario’s treasury.

Klein describes various forms of activism in opposition to this model of corporate profiteering that have evolved since the 1960s, including “culture-jamming,” or altering advertising and corporate logos to reveal social ills like anorexia among fashion models, third-world worker exploitation, or rainforest destruction by chocolate producers in search of palm oil; consumer activism and online knowledge-sharing around products and where and how multinational firms conduct their business, the potential for which has exploded in the age of the Internet and social media; and “street parties,” or large social gatherings in the 1990s (and later the 2000s) with a view to simultaneously reclaiming public spaces, and denouncing corporate overreach. All of these ideas have had a significant impact on the Occupy movement—it was culture-jamming magazine Adbusters that first called on activists and concerned citizens to occupy Wall Street, while the constant exploitation of workers and the environment by multinational firms is among the movement’s chief grievances, and the desire to reclaim public spaces from private interests has motivated Occupy activists across the Western world to pitch tents and stay a while.

1.4 The global economic crisis, disillusionment, and the impetus for Occupy

Ballooning inequality and the diminution of the middle class, cutbacks to public services like higher education and social transfers, unscrupulous predatory lending tactics by oversized financial institutions, and the introduction of credit cards and increasingly complex financial instruments, have all contributed to an unprecedented spike in consumer credit and household debt since 1980. (According to the Bank of Canada, our country’s gross domestic product has grown roughly fivefold since then, while consumer credit has increased tenfold.) It was a fraud of repackaged, falsely-advertised subprime mortgage debt that precipitated the economic collapse of 2008, a crisis mitigated only through recapitalization of the culpable institutions by befuddled federal administrations. Politicians, some of whom (like current U.S. President Obama) received generous campaign contributions from these same institutions, were (at least ostensibly) faced with two unsavory options—nationalize the monstrous banks and dissolve them into smaller, localized institutions to promote a long-term structural economic recovery, or accord them loan guarantees from the federal coffers on few, if any, conditions.

Conscious of the fickleness of their electorates, benefiting from the support of their wealthy bidders, and limited to brief terms in office, politicians nearly unanimously chose the latter option. As a result, billionaire bankers have been spared both judicial reprisals and the justice of market discipline, as their too-big-to-fail banks (and obscene publicly-collateralized salaries) further enlarged through the crisis. Meanwhile, multinational corporations, having whiled away the recession by paying down debts, laying off workers, outsourcing, offshoring and automating more jobs while successfully ducking state taxation, have watched their profits soar to record highs.

At street level, on the other hand, the economic recovery has been anemic, characterized by low-paying and increasingly precarious jobs, and accompanied by further public-sector cutbacks, bankrupted municipalities, and disintegrated pension funds. A post-crisis race-to-the-bottom mentality has also sparked a money creation and currency devaluation contest among the large economies, and has demanded continual, frequently draconian austerity measures, especially in Europe, but also in the U.S., Canada, and other developed nations. Recent history suggests there is method in this madness, however; to borrow the primary concept of Klein’s The Shock Doctrine, in many jurisdictions, the financial crisis has become a weapon of politicians and business interests, who have capitalized on popular disarray in the wake of the 2008 meltdown, and consequent federal budget deficits, to implement a project of accelerated government service reduction, privatization and deregulation—a sort of rocket-propelled neoliberalism.

Spain and Greece, who unwittingly relinquished their monetary and fiscal autonomy with the adoption of the Euro in 1999 and 2001 respectively, have been victimized most severely by the cutbacks, and transformed most rapidly and perilously by the subsequent neoliberal marketization. But Canada, the U.K. and the U.S. have also suffered austerity to varying degrees, while our leaders have resorted to the familiar neoliberal program of deregulation, crippling cuts to government programs deemed unimportant, privatization, corporate welfare, resource exploitation, systematic undermining of labour union authority, artificially sustained asset bubbles, and copious political propaganda.

The above factors, along with the general impunity enjoyed by the perpetrators of the crisis, and a media establishment that often appears to disproportionately represent the interests of the elite, served to elevate the rightful indignation of the citizenry to a fever pitch by the summer of 2010. Public dismay erupted in the form of the G-20 protests in Toronto, the largely misguided U.S. Tea Party movement, the student-led demonstrations in England, the Indignados of Spain, the Arab Spring uprisings of the Middle East and North Africa, labour protests in Madison, Wi., and eventually Occupy Wall Street. (The student-led Printemps Erable of 2012 and The Idle No More movement of winter 2012-13, while distinct from their antecedents, are both reactions to different aspects of the same neoliberal process.)

1.5    The tenor of a movement

Occupy Wall Street began as a hodge-podge of dissatisfied citizens, united primarily by their dissatisfaction, but not necessarily in the issues they sought to confront, nor the potential solutions (if any) they hoped to advance. It’s no coincidence that “Hey hey, ho ho, the status quo has got to go!” quickly became a signal chant of the uprisings—clear and unambiguous, but sufficiently generic to encompass Occupy’s wide-ranging discontent and diverse participants. There were some notions upon which the protesters managed to reach broad consensus, however: namely, that the wealth disparity in America and other Western nations was escalating out of control; that  affluent lobbies had ingratiated themselves in the halls of power, to the detriment of the general public; that an economy built on debt peonage, the quest for perpetual growth and unchecked environmental exploitation was unsustainable; and above all, that corporations were not persons.

Todd Gitlin, a veteran of protest movements and political activism since the 1960s, is well placed to offer commentary around the long legacy of civil dissent that forms the foundation for the Occupy movement. In Occupy Nation, he offers a reasoned, eloquent and informative perspective focused on the New York uprising, its precedents and sources of inspiration, and what may lay ahead for the movement.
Although the occupation of Wall Street on September 17, 2011 would have appeared spontaneous to most outside observers, Gitlin notes that organizers had begun to plan the congregation months in advance. Adbusters editor Kalle Lasn issued his “call to occupy,” along with the post-script “Bring a tent,” on June 9. On June 14, a group of anti-austerity protesters established “Bloombergville” in Zuccotti Park—a tent village inspired by the Hoovervilles of the 1930s, which held daily general assemblies during its brief lifespan. By September 17, the Twitter hashtag #occupywallstreet had spread like wildfire; social media thus became, in a way reminiscent of the Arab Spring uprisings and Iran’s 2009 election protests, a redoubtable vehicle for sharing information among activists and observers, a forum by which organizers could coordinate their plans, sympathizers, share and reaffirm their grievances, and political thinkers, expound on the causes they hoped to champion.
While many Occupiers complained about the “media blackout” their movement suffered in the early going, Gitlin argues the contrary, a position corroborated by communications specialist Bill Dobbs of the Occupy PR Working Group (1: 16/21). But even though, as Dobbs contends, news reports abounded, Gitlin notes that quality and fairness of representation was frequently lacking. One of the first analytical news articles on the Manhattan encampment came from Ginia Bellafante of the traditionally liberal New York Times on Sept. 23, 2011—under the headline “Gunning for Wall Street, with Faulty Aim.” In a manner consistent with much of the early Occupy media coverage, Bellafante’s piece portrayed the movement as disorganized, dominated by “hippies” and fringe elements, intellectually vacuous, and lacking in clarity, articulacy, coherence and leadership. As Gitlin writes:

Disparagement and incomprehension were not hard to derive from news media who were drawn to the most garish and photogenic sights in the encampment, the outré and the     scruffy, with their scatter of protest slogans, their anger at capitalism, their general     disrespect, their apparent disorder (Preface, 3/4).

Considering the dismissiveness of many early media critiques of Occupy, the staying power of the movement must have come as a surprise to some journalists and policymakers. Soon, President Obama and others began to not only acknowledged the movement’s legitimacy, but attempted to co-opt its message for their own political purposes. The president, in particular, was keen to exploit Occupy as a sort of “liberal answer” to the Tea Party movement, by resurrecting the rhetoric of American wealth disparity, and insisting that multinational corporations and the country’s moneyed minority “pay their fair share” and “play by the same set of rules” (Scherer, 2011).
However, to ascertain the attitude of Occupiers toward the White House, it’s crucial to acknowledge the Obama administration’s perpetuation of and expansion upon the virulently illiberal policies of his predecessor (thoroughly examined in feminist cultural critic Naomi Wolf’s The End of America)—including state surveillance, impunity for members of the corporate and governmental elite, contrasted with ferocious law enforcement and soaring incarceration rates for the laity, escalated drone warfare, contravention of civil liberties, corporate cronyism, expanded “free” trade, environmental laxity, and friendly-faced austerity. Meanwhile, the gulf between rich and poor has widened under Obama’s watch, just as his signature healthcare law afforded a handsome and practically inescapable windfall to profit-driven medical insurers. For the president to take for granted the support of the Occupiers would be more than presumptuous, as demonstrated by the fervent protests at last year’s Democratic Party Convention in Charlotte, N.C. In reality, the U.S. Occupy movement is largely a reflection of disillusionment toward the commander-in-chief and the powerful interests he represents, rather than implicit support for his agenda, which many Occupiers would characterize as no more than the lesser of two evils (Gitlin, 1: 19/21).

1.6    The general assembly

Many aspects of the process and manner of organization characteristic of Occupy—the General Assembly; “twinkling” and “de-twinkling” one’s fingers to display approval or disapproval; horizontality; the cacerolazo (also prominent at the Printemps Erable protests); and consensus-based decision making—owe their origins to prior social movements and established institutions (Gitlin, 4:1-10, Kaufmann, 47-49, Sitrin, 8-10). Others—like the “Human Mic”—originated within Occupy itself, arising from a need for non-electronic vocal amplification in keeping with a New York city noise bylaw (Gitlin, 4: 1/10). In due course, these tactics spread, disseminated through the use of social media, to sister Occupations throughout the continent and the developed world.

Occupy’s encampments are deliberately designed to represent microcosms of a more collectivist, more sustainable society, of the sort Occupiers hope will prevail in the future. Over the course of their presence in public spaces, Occupy encampments have developed their own models of political economy and division of labour, their own libraries and places of learning, their own methods of resource allocation and citizen engagement. Participants in the Occupy movement aspire to an ideal of cooperative living, consensus-based decision-making, sustainability, egalitarianism, a robust and accessible public commons that encourages the sharing of ideas, and the prioritization of “people before profit.” (These ideals are echoed by longtime activist, professor and political theorist Noam Chomsky in his eponymous Occupied Media pamphlet.) But the Occupy sociopolitical model has not been without its challenges, setbacks and regrets: laborious general assemblies that tested Occupiers’ patience and commitment to the consensus approach; the incidence of problems from the wider world, like male sexual violence against women, drug and alcohol abuse, homelessness, racism, and petty crime; painful but necessary confrontations arising from various forms of privilege (Maharawal, 37-39); police crackdowns and mass arrests; chilly and inclement weather that seemed to beg the question of Occupiers’ commitment to their cause.

1.7    Christopher Hedges’s indictment of unrestrained capitalism,
    and reason for hope

One of the most prominent, vocal and consistent supporters of the Occupy movement to emerge from the U.S. media establishment is journalist, author, and former New York Times war correspondent Christopher Hedges. In the non-fiction opus Days of Destruction, Days of Revolt, which he co-authored with veteran political cartoonist Joe Sacco, Hedges articulates a scathing critique of unfettered capitalism and its destructive consequences—or, in the parlance of economics, negative externalities.

Among the problems Hedges explores is the persistent economic inequalities along racial lines that have plagued America since the days of slavery, and that have increased post-crisis. Indeed, a disproportionate number of victims of the subprime mortgage fraud, and subsequent home foreclosures, were African-American, Hispanic, and other members of historically marginalized groups; by contrast, the investors and executives who have reaped the benefits of the profit-seeking mentality, easy credit, preferential loans and inflated home values are disproportionately white. Hedges also investigates the de facto debt slavery of Mexican undocumented migrants (many of whom are farmers impoverished by the combination of NAFTA and American corn subsidies) in Immokalee, Fl.; mountaintop strip mining in West Virginia; and the abject poverty of the Oglala Lakota people at Pine Ridge Indian Reservation in South Dakota. The picture he paints of America’s prospects, and by extension, the trajectory of the global economic system, is grim:

The decline of America is a story of gross injustices, declining standards of living,     stagnant or falling wages, long-term unemployment or underemployment, and the     curtailment of basic liberties, especially as we militarize our police. It is a story of the     weakest forever being crushed by the strong. It is the story of unchecked and unfettered corporate power, which has taken our government hostage, overseen the dismantling of our manufacturing base, bankrupted the nation, and plundered and contaminated our natural resources. Once communities break down physically, they break down morally (69).

However, Hedges provides reason for optimism in the book’s final chapter, describing the Occupy movement in its incipient stages as “a revolution,” and revolt against the established order as “our only hope”:

There comes a moment in all popular uprisings when the dead ideas and decayed     systems, which only days before seemed unassailable, are exposed and discredited by a     population that once stood fearful and supine. This spark occurred on September 17,     2011, in New York City when a few hundred activists, who were easily rebuffed by police in their quixotic attempt to physically occupy Wall Street, regrouped in Zuccotti Park, four blocks away. They were disorganized at first, unsure of what to do, not even convinced they had achieved anything worthwhile, but they had unwittingly triggered a global movement of resistance that would reverberate across the country and in the capitals of Europe. The uneasy status quo, effectively imposed for decades by the elites, was shattered (226).

What the new world order Occupy activists hope to construct would look like is unclear, but the unanimous opinion of Occupiers, along with the movement’s supporters, is that the status quo is not working; the corporate-dominated neoliberal economic system, while churning out desirable consumer products in mind-boggling quantities and enriching a privileged few beyond reason, entails environmental and human costs too unconscionable and devastating to bear.

1.8    Winter 2011, and the dissolution of the occupations

Gitlin and others identify many of the myriad vulnerabilities to which the movement began to succumb by the winter of 2011. Popular sentiment soured in some cities, as locals tired of the inconvenience posed by the encampments, and the cost to taxpayers of daily police monitoring. The weather grew colder, compelling some less hardy Occupiers to depart, and eliciting ridicule from unsympathetic ideologues on Fox News, Sun News, and at the National Post. Confirmed reports of sexual assault and sexual harassment of women emerged from the Zuccotti encampment (Resnick and Taylor, ed. by Taylor et al., 187-188). General Assemblies, operating on the basis of horizontality and consensus, were wont to descend into tedium and frustration. The number of homeless and drug-addicted—many of them victims of the same neoliberal, corporate system in the protesters’ crosshairs—began to increase, engendering both internal conflict, and a popular perception of the movement as unhygienic and undesirable (Gluck and Herring, ed. by Taylor et al., 169). In the case of Occupy Vancouver, the tragic passing of 23-year-old Ashlie Gough by drug overdose provided the pretext for the tent city’s court-ordered eviction in November of 2011. Strife arose in Oakland and elsewhere, as protesters debated the merits of non-violence, versus the embrace of a “diversity of tactics”—a euphemism for physically fighting back against economic violence and police crackdowns (Schneider, ed. van Gelder, 39-45). In the same vein, “Black Bloc” protesters—a menacing faction that has aroused heightened suspicion from activists since black-clad undercover police officers posed as agents provocateurs at a 2007 union protest in Montebello, Qc.—began to wreak havoc on store windows and private property, inviting belligerent police intervention. By the winter of 2011, for various reasons and justifications, most of Occupy’s tent cities had been uprooted.

1.9    Shortcomings of the available literature, and whither
    Occupy from here?

Due to its novelty, the Occupy movement proper has generated scant literary treatment. However, the same cannot be said of the historical precedents that nourished it—among others, the civil rights and anti-war protests of the 1960s, anti-nuclear activism in the 1970s and ‘80s that continues to the present day, LGBT rights marches, movements for universal suffrage and women’s reproductive freedoms, Mexico’s Zapatista rebellion, anti-authoritarian cacerolazos in Argentina and Chile, general strikes, student strikes, anti-corporate, anti-globalization and anti-austerity uprisings, and labour union unrest across the Western world. From many of these past events, Occupy has borrowed pieces of its own intellectual scaffolding; this is why some examination of the history of protest movements is necessary, in order to glean a thorough and cogent understanding of Occupy’s roots.

The literature examined in this review presents primarily an unsympathetic view of the global socioeconomic system in its current form, but it’s worth noting that this system is not without advantages; as mentioned previously, multinational corporations have succeeded in producing desirable, useful products at modest prices, which ostensibly benefits the deal-seeking Western consumer. The ingenuity facilitated by corporate investments in research and development has produced modes of interpersonal communication and technological advances beyond the wildest dreams of our ancestors. High-level competition between corporations has also enabled the production of new and more powerful tools; Samsung and Apple persist in their efforts to one-up each other in the smart phones market, which can only result in further breakthroughs and enhancements to our way of life. And it’s undeniably true that such competition could not exist absent some form of competitive market discipline, if not pure market freedom. The personal ingenuity of entrepreneurs, like Facebook founder Mark Zuckerberg, has enabled them to attain spectacular wealth, while introducing valuable new tools to our civilization. Even newfangled financial instruments, like credit-default swaps, complex derivatives, mortgage-backed securities and collateralized debt obligations, may one day become safer, more effective means of capital allocation, helping the economy to prosper and distribute resources more effectively.

That said, however, there is no law of nature which dictates that capitalism is the only means by which to achieve prosperity while encouraging ingenuity and personal initiative, or that these aims cannot be accomplished more ethically and sustainably than they are at present. And while the free market extolled by neoliberal theorists excels at price discovery and rooting out inefficiencies, it fails catastrophically at mitigating the externalities of unfettered capitalism, preserving elements of “social good” which markets may fail to reflect, and averting the logical consequence of competition—the oligopolistic consolidation of corporate power that has come to dominate the world economy, and much of the world’s popular media, at the time of this writing.

Another unavoidable shortcoming of the extant literature around the Occupy movement, is its lack of discussion of ongoing Occupy projects. In the time since the publication of the works cited in this review, the movement’s physical presence has largely dwindled, but its intellectual, activist fervour endures in the form of the Strike Debt/Rolling Jubilee endeavour—a lottery designed to relieve distressed debtors of their burdensome obligations; the Occupy Sandy project, which seeks to distribute aid to residents of the Tristate Area still homeless, or without heat and electricity, in the wake of the devastating hurricane last October; local Media Co-op initiatives that allow valuable but typically unpublished perspectives to enter the public discourse; and numerous evolving movements, discussion groups, and online fora.

While some have expressed pessimism over Occupy’s future, or asserted that the disappearance of the encampments in 2011 heralded the death of the movement (Caplan, 2012), an abundance of evidence supports the notion that Occupy still has an valuable purpose to fulfill, that its presence has already influenced subsequent social movements, like the Printemps Erable and Idle No More, and that the discussion it sparked around wealth inequality, environmental degradation and the scourge of unfettered corporate power, will inform public discourse, discussions of economics, and political theory for years to come.

2.1    Kalle Lasn

The head office of Adbusters Magazine is anything but conspicuous. Were it not for my foreknowledge of the precise address and a small sign pointing the way, I likely would have walked right by, assuring myself that I must have come to the wrong place.
In stark contrast to the ornate glass and steel monuments that emblematize the Commanding Heights of global finance, the workplace of Adbusters’ crew of culture-jammers lies at the foot of a wooden staircase, in a residential neighbourhood, sheltered from view behind a solitary conifer. Everything about the location is unassuming – the slope between West Broadway and False Creek in Vancouver’s Fairview neighbourhood, bookended by the Granville and Cambie bridges, is a decidedly under-hyped area of the city, characterized by a smattering of specialty medical clinics and lines of derivative row houses. The Adbusters office itself is little more than a glorified basement suite with a handful of computers, well-worn hardwood floors, walls lined with bookshelves proffering back-issues of the publication, books and miscellany.

At first glance, this hardly seems the sort of place you’d expect the seed of a revolution to germinate – that is, until you meet the magazine’s founder.

“One of the big things that drives me now,” explains Kalle Lasn, in his trademark Estonian-Australian lilt, “is this feeling that [we’re] living through kind of a crisis moment, where – ecological crisis, political crisis, financial crisis and psychological crisis – all these crises are kind of feeding off each other now. And the future just doesn’t really compute.”

“I think we’re living through a moment in human history where we’re waking up to the fact that ‘business as usual’ doesn’t work anymore.”

2.2    A life of tumult

Lasn spent his formative years in transition, at a time of great social and political upheaval. Born in Tallinn in 1942, he and his family were uprooted after Stalin’s Soviet Union seized Estonia from Nazi control; for the tiny Baltic state, it was the geopolitical equivalent of tumbling from the frying pan into the fire. Part of Lasn’s childhood was spent in the angry, ideologically charged atmosphere of a displaced persons camp in Germany, prior to his family’s resettlement in Australia in 1949.

For the youngster, the sentiments of culture shock and displacement were profound and perpetual, and would play a significant role in the development of his worldview. But equally as important in his intellectual maturation, he says, was a shifting perception toward the world’s sole remaining superpower.

“I grew up at a time when America was the big hero, you know, the country that liberated the world from the Nazis. I remember in Germany, after the Second World War, getting Hershey bars from the GIs! Wonderful guys, you know; innocent, ‘Aw, shucks’ kinda guys.”

During his youth, America was practically deified in Australia, Lasn recalls, and it was a sentiment he largely shared. But in the 1960s – a transformative decade for many throughout the Western world – Lasn’s attitude toward Uncle Sam began to change.

“Bit by bit by bit, after the Vietnam War, and after travelling around the world, [I discovered] that things weren’t quite the way I thought they were. So basically, this love affair with America turned sour.”

Among the reasons for his change of heart, he cites not only Vietnam, but the events in Iraq, and the “sheer arrogance” of a nation that believes it is acceptable to continue to consume far beyond its share of the planet’s non-renewable resources—an ideology he views as deeply problematic, yet one upheld as a model for the world’s developing countries.

“We [North Americans] are basically living off the backs of future generations, and there’s just something inherently immoral about that.”

Since 1989, Lasn’s work has targeted advertising—the siren song of consumerist propaganda.

“Culture jamming,” or the disruption of advertising and corporate memes in order to communicate a satirical message and toss a wrench in the machine of conformity, is a tactic that first appeared in 1984, and has since been adopted by numerous artists, intellectuals, anarchists and protest movements. But Lasn is an icon in counter-consumerist circles, thanks to the renown and longevity of Adbusters. And in 2011, his magazine became the megaphone by which to broadcast a message of revolution, one that found a receptive audience in Manhattan and elsewhere.

Still, Lasn believes the fuel that nourished the conflagration was already in place; all he did was provide a spark.

“What really gave birth to Occupy Wall Street was, I think, this feeling—not just by a few thousand people in New York, but hundreds of millions of young people around the world—who  feel that the future doesn’t work. And they’re saying ‘Unless I stand up and fight for a different kind of future, I’m not going to have a future.’”

“This core impulse that the future doesn’t compute is manifesting itself in all sorts of ways.”

3.3    A turbulent period of economic history

Indeed, recent history has been laden with turmoil. In late 2007, the house of cards on which America’s real estate and derivatives markets had been built began to show signs of fatigue. By 2008, a full-scale crisis—the worst since the Great Depression—swept the globe, leading policymakers to adopt controversial “bailout” measures to avoid a wholesale economic collapse. In the United States, Great Britain, Canada, and the European Union governments responded to the imminent demise of giant, systemically integral financial institutions with some of the largest transfers of wealth in human history, amounting to trillions of dollars of largesse from federal treasuries. And while the rescue packages succeeded in preventing crisis from spiraling into catastrophe in the short term, they have also preceded government austerity, persistent unemployment and underemployment in many countries that have accompanied sizable losses in individual net worth—not to mention a justifiable outrage that soon made its way to the streets.

President Barack Obama took office in January 2009, and was immediately saddled with the precipitous decline of the U.S. economy, a fall he attempted to break with federal stimulus spending of $787 billion the next month. By April of that year, however, anger over the bank bailouts, a relatively puny initiative to help underwater mortgage-holders threatened with home foreclosure, and Obama’s moderately Keynesian economic strategy, had inspired a new protest movement of radical American fiscal conservatives—the Tea Party—which featured an ideological emphasis on low taxes, dramatic cuts in government spending, punctilious adherence to the U.S. Constitution, and contempt for the country’s new Commander in Chief, whom Tea Partisans frequently benighted as “foreign” and “un-American.”

But the Tea Party uprising was only the beginning of what would soon become a global wave of protest against the establishment, and against an economic system that had left the once prosperous Western middle class in its dust.

3.1    Economic and political forces at work

Many will remember the 2008 economic crisis as an isolated aberration, but the reality is much more complex than that. Just as a supernova represents the demise of a supermassive and highly unstable star, the collapse of 2008 owes to policy changes in the decades that preceded it, changes that culminated in the rise of fiat currencies, evisceration of government regulations, stagnation in workers’ wages, skyrocketing public and private debts, and an unprecedented, credit-driven explosion in real estate prices.

As the 1960s came to a close, America took a deep breath, following a turbulent decade that included the assassination of a president, his aspiring brother, and an iconic civil rights leader, the invasion, sensation and rapid disintegration of The Beatles, the struggle of American people of colour for desegregation and equal rights, the catastrophic Vietnam War, a raft of potent substances designed to alter one’s perception of what was real, and one small step for a man that altered everyone’s perception of what was possible. All the while, the so-called Baby Boom generation was coming of age in Western countries, and activists of various political stripes were beginning to question the dominant forces of imperialism, capitalism, colonialism, and white supremacy that informed much of the political, economic and cultural discourse at the time.

The decade that followed, though perhaps less dramatic than its predecessor on a social level, ushered in changes at the economic level that would transmute the course of 20th-century history.

3.2    Nixon’s closure of the gold window

In the late 1960s and early 1970s, the U.S. and other industrialized economies entered a period of price inflation, the causes of which were multifarious. The U.S. was left with substantial debts at the end of the Vietnam War, which its president, Richard Nixon, attempted to pay down by printing money rather than raising taxes, as economists of the Keynesian school would have recommended, or slashing government spending, as economists of the Austrian school may have favoured. In 1971, Nixon also took the decision to unshackle the U.S. dollar from the gold window to which it had adhered since the 1930s—and under the new arrangement, the convertibility of U.S. dollars to gold was abandoned entirely in favour of the floating currency regime (variable exchange rate) that exists today.

While some historians and conservative economists attribute Nixon’s abandonment of the gold standard to his government’s profligacy and reticence to make potentially unpopular political decisions (at least in public), according to research professor, economist and economic historian Michael Hudson of the University of Missouri at Kansas City, the Republican president simply had no alternative.

“Nixon didn’t have a choice,” Hudson explained in a 2011 interview with Thom Hartmann. “In the 1950s, ‘60s, and early 1970s, the entire balance-of-payments deficit was military spending. The private sector was just exactly in balance. So there was no more gold to cover the currency.”

In other words, prior to 1971, the U.S. government had pegged its currency to the price of gold at a ratio of $35 to one ounce. However, due to the expansionary fiscal and monetary policies adopted by Nixon to repay foreign creditors for his country’s massive military spending (owing to Vietnam, Korea, and an ongoing arms race with the Soviet Union), and the limited supply of available gold, the president was forced to transfer from a gold-backed currency, to a “fiat” currency.

However, the consequences of his decision were monumental, as not only did the U.S. Federal Reserve—and all of the world’s central banks—suddenly  inherit the ability to create unlimited amounts of money at will, but private banks could lend at an immense scale as well. And along with this power, financial institutions in the U.S., U.K., Canada and elsewhere acquired a capacity for growth—in both size and assets—to proportions that had lain beyond the realm of possibility under the gold standard regime.

3.3    Stagflation

In the U.S., Nixon’s hefty spending on military debts and money printing to pay off foreign creditors, and his adoption and abandonment of price controls in an effort to mitigate rising prices, exacerbated he inflationary trend that prevailed in the late 1960s and 1970s. But as evidenced by the fact that the majority of industrialized countries were experiencing high inflation simultaneously, there was another crucial factor at play: a series of abrupt spikes in the price of petroleum, which then—as now—was the fuel that powered the engine of the global economy.

In 1971, the U.S.—the world’s heftiest consumer of petroleum—reached peak oil production domestically, and was forced to turn its sights to foreign energy sources. But the OPEC countries—many of which were Arab-majority states—initiated a collective embargo in 1973 in response to the West’s alliance with the state of Israel. The resultant scarcity induced an oil price shock that came to a head by the end of the year, and by March of 1974, the cost of West Texas intermediate (WTI) crude had climbed by more than 134 per cent. A more moderate but persistent rise in petroleum prices ensued between mid-1974 and April of 1979, when the people of Iran—one  of the world’s primary oil exporters—deposed their nation’s ruling Shah in an Islamic revolution and seized control of export and refining capacity. By the summer of 1980, WTI’s price on global markets saw a two-and-a-half-fold rise on its cost the previous spring.

Given that oil was so integral to the global economy, a rise in prices was the ineluctable outcome of the oil shocks. Welfare states that had been established before World War II in the U.S. and U.K. contended with a combination of high inflation and economic recession, as the rate of the rise in prices always seemed to outpace their rate of expenditure. The result was labeled “stagflation” by Milton Friedman, an economist who rose to prominence during this period of tribulation. But rather than oil shocks, Friedman was convinced that stagflation was the product of excessive government spending and an expansionary monetary policy (or money creation). Thus, predictably, he prescribed reductions in spending—and a contraction of the money supply—as the solution to the problem.

4.1    Ronald Reagan, Margaret Thatcher, and their antecedents

Jimmy Carter, Ronald Reagan’s predecessor in the Oval Office, was saddled with the ripple effect of the Iranian Revolution on both America’s society, and its economy. Not only was the country in recession; consumer prices were skyrocketing due to a sudden constriction in the oil supply, and government spending did not seem to be helping to alleviate the problems Americans faced, as the rapid pace of inflation continued. Carter was also forced to deal with a hostage crisis, as Iranian revolutionaries stormed the U.S. embassy in Tehran and captured 52 American consular officials, who would be held in captivity for nearly 15 months. In 1980, the beleaguered incumbent squared off in an election campaign against a charismatic Republican challenger and former Hollywood film actor, Ronald Reagan, who won over the bulk of the American electorate by posing a simple question: “Are you better off than you were four years ago?”

Across the Atlantic, meanwhile, similar forces were combining to shape the future of British political economy. To that point in history, successive Labour governments had fashioned an economic system that incorporated aspects of capitalism and state socialism, including government control of a national steel company, British Petroleum, the National Health Service, education, much of the banking sector, and even automaker and airplane manufacturer Rolls Royce. Conservatives, meanwhile, had been loath to privatize these core institutions when elected to power in the postwar period, as Keynesian, interventionist principles continued to dominate mainstream economic thought. Britain was struck by a balance of payments deficit in the 1960s, as politicians in the Labour Party repeatedly capitulated to the demands of their constituency, the trade unions, even as the rise in Britain’s prosperity slowed relative to its major competitors, Germany, Japan, France, and the Soviet Union. In 1967, the administration of Harold Wilson devalued sterling in an effort to restore export competitiveness and imposed austerity measures—which briefly helped to erase the country’s trade deficit, but weren’t sufficient to sustain a revival of British industry—and the latter decision understandably vexed trade union leaders.

When stagflation struck in the 1970s, the subsequent Labour government of James Callaghan (who held a minority mandate from 1976 to 1980) imposed wage ceilings on Britain’s militant public-sector unions and slashed government spending, moves which many workers and their representatives perceived as a betrayal of the party’s foundational values. Riots and general strikes broke out, as the savings and purchasing power of wage-confined union workers rapidly eroded, and they took to the streets to vociferate their dismay. Their actions incited a backlash, however, as unions and their allies quickly drew disdain from much of a British electorate weary of service interruptions, high personal income taxes, and economic mediocrity. In 1980, Conservative leader Margaret Thatcher became Britain’s first female prime minister, and soon proceeded to pummel the unions into submission.

Neoliberalism—so-called because it purports to revive the laissez-faire notion of classical liberalism espoused by 19th-century economists Adam Smith and David Ricardo—is an ideology that embraces privatization or marketization of public assets and services, reductions of the tax burden for the wealthy and corporations whenever feasible (or in some cases, not so feasible), and (at least ostensibly) minimal government intervention in the workings of the economy. Although Thatcher and Reagan were not the first national leaders to undertake a neoliberal economic program, they were the first elected heads of government to do so. Previously, neoliberalism had characterized the military dictatorships of Augusto Pinochet in Chile and General Suharto in Indonesia, both of whom subscribed wholeheartedly to the tenets of the belief system, developed at the University of Chicago in the 1960s, and bolstered by Milton Friedman, Friedrich Hayek and their associates, who would become affectionately (and later, scornfully) known as “The Chicago Boys.”

In both Chile and Indonesia, implementation of the new system was achieved by brute force; from the 1973, CIA-supported coup d’état that overthrew the government of Salvador Allende in the South American country, Pinochet’s forces undertook an aggressive campaign of union-busting, outlawing collective bargaining, and violent repression of “leftist” dissidents. Pinochet privatized the vast majority of Chile’s government services. Public schools became chartered schools, taxes on the wealthy and on corporate profits were eradicated, labour and finance regulations were abandoned, and tens of thousands of workers were laid off as public institutions were sold to the highest bidder. Social security was privatized—leaving millions of Chileans’ life savings subject to the whims of the stock market. The minimum wage was eliminated, and the currency was artificially devalued. Friedman and Hayek theorized that this approach would lead to unrivaled prosperity for the majority of Chileans, and that the wealth generated by unfettered capitalism would lift millions out of poverty as it “trickled down” from the moneyed oligarchs. Needless to say, the outcome did not accord with their predictions.

Both Reagan and Thatcher lauded Chile as an example for their own countries, and frequently alluded to the economic growth delivered by the “Chilean miracle” from the late 1970s to 1981 as an a priori vindication of the wisdom of neoliberalism. And while it’s true that Chile experienced extraordinary economic growth during this period, Thatcher and Reagan omitted a rather crucial element from their analysis: that Chile’s rapid growth stages were interspersed with equally spectacular troughs of economic recession (Klein, 2007). Between 1973 to 1986—when riots on the streets forced an exasperated Pinochet to expel the Chicago Boys from his country, re-nationalize many of the institutions he had privatized, and abandon nearly all of their recommendations—Chile’s real GDP did not budge. Neoliberalism had not made Chile wealthier on the whole; rather, it had merely left the nation’s economy jarringly volatile. Nor had wealth cascaded down from the commanding heights as the Chicago Boys had asserted. If anything, the privatization of social security and the banking sector and the deregulation of finance had merely attracted a class of foreign speculators, who squandered the savings of millions of Chileans—but not before lining their own pockets and fleeing the country. Thus, rather than trickling down as promised, wealth was actually hoovered up from the middle class and the poor, broadening wealth inequality to levels beyond reason and leaving more than twice as many Chileans in poverty in 1989 as in 1970. The real value of wages fell by more than one third between 1973 and 1976, and then experienced a long period of stagnation that continued well into the 1990s. Meanwhile, corporate profits erupted like a geyser.

As Chilean economist Orlando Caputo observed at the time, “The Chilean system is easy to understand. Over the past twenty years, $60 billion has been transferred from salaries to profits.”

4.2    The roots of neoliberal propaganda

Of course, strongmen like Suharto and Pinochet held a distinct advantage over their British and American allies, Thatcher and Reagan: being despots, they had no need to win elections. Clearly, for the Iron Lady and her Hollywood Republican counterpart, imposing neoliberal ideals on an unwilling electorate was not an option. In order to effect revolutionary changes, they would need to persuade their compatriots to buy in. And that’s exactly what they set out to do.

The discord of the period in which they pursued power, rife with rampant inflation, oil shocks, a belligerent Soviet Union, economic stagnation and a hostage crisis in Iran, all were events upon which the candidates—and later heads of government—seized in order to convey their message to a public that was, fortunately for Reagan and Thatcher, receptive to the notion of a change in course.

In the context of the Cold War, both leaders played upon the image of strength and defiance, contrasted against the perceived wishy-washy nature of their political adversaries. Both emphasized the need for self-actualization and individual achievement—defined in strictly pecuniary terms—and the suppression of any consideration toward the community, the collective, or society around them. (Thatcher infamously asserted in a BBC interview that there was no “society,” only individuals and families.) Both promised—as the Chicago Boys had—that the accrual of wealth by those at the apex of the income pyramid would trickle down to the masses below, raising everyone’s standard of living while the wealthiest in society gradually progressed from very rich, to outrageously rich, to ineffably rich. Furthermore, cuts in taxes and a severe reduction in government “size” and “interference” (that is, role in the redistribution of wealth) would unleash “free-market” capitalism to its fullest potential. Both also maintained that social spending—particularly President Roosevelt’s New Deal programs, President Johnson’s Great Society, and Britain’s post-war welfare state—would need to be curtailed in order to provide those living in poverty an “incentive” to climb out of it on their own. As Reagan would commonly quip, he was determined to “starve the beast”—the beast, in this case, being “big government.”

However, as University of British Columbia law professor and director of the film The Corporation, Joel Bakan, points out, the reality of what took place was actually quite different from what Reagan and Thatcher described.

“[Thatcher, Reagan and other neoliberal leaders] didn’t really want to get the state out of the economy,” Bakan noted. “They wanted to get the state out of the business of redistributing wealth, and of regulating companies, and of delivering social services, and of creating a kind of robust public sector. But they still wanted the state to do things like create corporations, protect property rights…in fact, they wanted the state [involved in those areas] even more.”

Rather than serving the public good, as was its ostensible purpose, according to Bakan, the state began to assume a new role, and the public’s perception of the state’s role soon followed.

“What happened in the 1980s is that the state sided with capital, rather than trying to promote egalitarianism in society.”

Indeed, despite the affectations of Thatcher and Reagan, neither leader actually managed to reduce government spending. Reagan, after hiking taxes in 1982, initiated an ambitious reform of the tax code that saw dramatic reductions in income tax (the top personal income tax rate plummeted from 70 per cent to 28 per cent, while the nominal corporate tax rate dropped from 48 to 34 per cent). However, government outlays actually increased every year under his presidency, as his severe reductions in social spending were more than offset by a hefty increase in the military budget and expanded Medicare coverage. Thus, much of the prosperity of the “Reagan boom” was financed through deficits and stimulus in the form of tax cuts. It was, in point of fact, a Keynesian economic boom.

Thatcher, meanwhile, also presided over government spending that increased each year, although, similar to Reagan, her moves to privatize an array of Crown corporations—some of which were profitable, others less so—enabled her to drop the top personal income tax rate from 83 per cent to 60 per cent. In part, this was done in order to curtail brain drain, as large numbers of Britons were moving away hoping to avoid high taxes at home.

While both Reagan and Thatcher cut government services, they increased expenditures on the military and the police. As Bakan explained, investment in security and the curtailment of civil liberties are developments that frequently accompany neoliberalism.

“That’s really what neoliberalism is: putting all of the coercive power of the state on the side of corporations, on the side of property interests, rolling back taxes on the wealthy, and corporate interests, and rolling back regulation of corporations.”

Over the decades that followed, this is precisely what happened—not only in the U.S. and Great Britain, but also on an increasingly multinational scale. And the consequences have been profound.

4.3    The consequences of neoliberalism

The goals and passions of protesters who have joined the Occupy movement are diverse, from preserving biodiversity, to ending corporate personhood (or the recognition of the corporation as a legal person), to denouncing the proliferation of nuclear energy, to acknowledging the impact of the colonial legacy on Aboriginal people. But inchoate as these objectives appear to be, there is a common thread that intertwines nearly all of them: a denunciation of the ideology of neoliberalism that emerged from the University of Chicago in the 1970s, the distinctive form of political economy it has produced, and its awkward, rankling rescue from the jaws of death, beginning in 2008, through an historic bequest of corporate welfare.

In The Strange Non-Death of Neoliberalism, Prof. Colin Crouch of Warwick University describes the ideology and the economic model it has produced, and investigates why it failed to perish—or at least to suffer a rightful loss of credibility among the political elite of the developed world—in the wake of the worst financial crisis since the Great Depression. The primary consequence of neoliberalism, as Crouch illustrates, has been a growth and consolidation of corporate power. By extension, other societal consequences, like the criminalization of dissent and the despoilment of natural resources, have followed.

Beginning under President Carter, and accelerating under President Reagan, sectors of the American welfare state first constructed under Franklin Roosevelt, and expanded under Dwight Eisenhower, Lyndon Johnson, Richard Nixon and Gerald Ford, began to be dismantled. This dismantlement has continued in the years hence, while similar neoliberal conceptions have come to dominate the political economy of Canada, Europe, Russia, India, Brazil, China, and most of the world’s developing countries (thanks, in part, to restructuring programs advocated by the World Bank and International Monetary Fund).

Under Reagan, another of neoliberalism’s inevitable consequences arose, as wealth disparities between the poorest and richest Americans began to rapidly broaden. Crucially, Reagan further broke from the tradition of the Republican old guard (most notably Theodore Roosevelt) by trampling America’s long-standing antitrust regulation, designed to prevent large firms from gaining too much market share (Crouch, 54-55, also noted in Klein No Logo, 163). Reagan’s decision laid the groundwork for global “competition,” which forms the intellectual basis of capitalism, to achieve its logical end—corporations began to expand, merge, and dominate ever-increasing market shares, enhancing their own scope, reach, and earning potential, while effectively reducing consumer choice. Neoliberalism’s stock continued to rise throughout the 1980s (it had been credited, however dubiously, with bringing an end to the 1970s stagflation through deep cutbacks to public services), into the 1990s and eventually the 2000s, with stark results for both public policy and society as a whole. Free trade agreements like NAFTA led to the reduction or elimination of many protective tariffs, allowing a freer flow of consumer goods across borders and oceans. But those pacts also created further means and incentives for multinational corporations to cut costs and maximize revenues by shipping manufacturing jobs overseas and sub-contracting to foreign factories (see literature on the “global assembly line”, incl. Knox et al.).

Then as now, the mission of large profit-seeking enterprises involves maximizing productivity and profitability while minimizing costs. And particularly since the 1980s, free trade deals have helped remove many impediments to the free movement of capital. Big businesses have tended to shift production toward locations where industrial development is relatively advanced, spare parts available and economies of scale manageable. But they have also frequently sought out low-wage nations with few environmental protections and severe restrictions on the ability of employees to bargain collectively (Wolff, 2013).

It’s no coincidence that so many of the manufactured goods we use or consume on a daily basis are “Made in China.” And as author and journalist Naomi Klein observes in No Logo, corporations have invested much of the enhanced profits derived from the offshoring of production into unprecedented product marketing campaigns in the U.S., Asia, and throughout the Western industrialized world.

A further result of this process has been the increasing influence of multinational corporations and their owners and executives over the political landscape of the nations and jurisdictions in which they do business. Political leaders, anxious to attract investment, “capital” and private-sector jobs, have played along with the profit- and rent-seeking mission, slashing taxes and dismantling public programs to reduce corporate expenses—an approach Western political euphemists, who lack the authority to impose forced labour and outlaw collective bargaining as totalitarian states like China freely do, describe as “enhancing competitiveness,” “controlling spending,” “fiscal discipline,” and “creating a ripe environment for job creation.”

The race-to-the-bottom mentality of globalization and so-called free trade, political corruption, the “Citizens United” ruling by the U.S. Supreme Court that permitted unlimited corporate donations to American political organizations, corporate personhood, a burgeoning (and increasingly villainous) financial sector in Western countries whose constituents subsume ever larger capital flows while imposing ever more burdensome debt loads (Hudson, 1998) and occasionally even bet against their debtors’ ability to repay, a sharp decline in manufacturing, union membership and middle-class jobs in the West, and the persistence of a neoliberal orthodoxy on the policy agenda despite its failings, have combined to inflict numerous socially and ecologically undesirable outcomes. For instance, the climate change denial movement largely consists of propaganda and pseudo-science from a fossil fuel industry anxious to maintain and expand its profits. All the while, climate change, biodiversity loss and ocean acidification continue their steady march toward the point of no return.

Deregulation, often spun as “cutting red tape,” leaves an increasing expanse of the natural environment and Indigenous territory unprotected, resulting in unprecedented loss of biodiversity and destruction of both natural and human assets. “Free” trade, idolized by such leaders as Reagan, Thatcher, Brian Mulroney, and Bill Clinton, has facilitated a reduction in consumer prices for many imports, offset by a migration of middle-class jobs from the wealthy countries to overseas destinations like China, Malaysia, Indonesia, the Philippines, and Bangladesh (Fletcher, 2010). New trade and investor protection pacts in Canada and elsewhere promise to undermine meaningful Indigenous sovereignty, compromising the right of First Peoples to impose laws and regulations of their own on industrial activities within their jurisdictions. And cuts to both statutory and effective tax rates on corporate profits, in the name of “competitiveness,” have squeezed government treasuries.

In Canada, corporate tax receipts fell as a percentage of the federal tax base from 25 per cent in 1955, to 12.2 per cent in 1998, before rising modestly to 13.2 per cent in 2011 (however, with new corporate tax cuts announced under the purview of the federal Conservatives, this proportion will shrink again). In the U.S., corporations contributed nearly one third of federal tax revenue in 1952. By 1998, this had fallen to 11.5%. And in 2011, a mere 8.7% of the total tax base was corporate in origin—in spite of the U.S. having the highest statutory corporate tax rate in the industrialized world. This puny supplement has led some neoliberal commentators in the media—like Fareed Zakaria—to call for the abolition of corporate tax altogether in order to “stimulate the economy.” Meanwhile, not only has a greater proportion of the tax burden shifted to the citizenry, and the middle class in particular, but cutbacks in government services have left some Americans paying more for less. Despite enjoying extraordinary profit margins and rewarding their executives with unprecedented salary figures, corporations are paying less tax on their profits than at any other point in the past century.

Further results of the stagnation of wages, which has coincided with skyrocketing home prices, university tuition, and in the U.S., medical costs over the past 40 years, has been the expansion of both the financial sector (far more capital became available as corporate profits zoomed), and a commensurate explosion of both public and household debt (Hudson, 2010; Wolff and Barsamian, 2012). The latter owes largely to speculation and the titillation of real estate investors who saw an opportunity to enrich themselves with minimal effort, but has produced an unprecedented level of mortgage indebtedness for those who do not own their homes outright. Meanwhile, non-mortgage indebtedness nearly always accompanies mortgage borrowing because of the opportunity cost associated with high monthly housing payments. But ballooning student loans to cover unaffordable university tuition, the difficulty of saving money in a low-interest rate environment, and widespread credit-card usage to compensate for the failure of wages to keep up with the costs of housing and higher education, have also contributed to this self-reinforcing debt expansion.

Economist Richard Wolff, professor emeritus at the University of Massachusetts Amherst, explains this phenomenon here:

4.4    Reagan and Thatcher’s big lie, and the emergence of “the 1%”

As Wolff illustrates, beginning in the mid-1970s, real wages in the U.S. stopped rising for the first time in a century. And beginning in the 1950s, economic growth—rather than simply a result of happenstance and the westward expansion of the American colonial project—became a foothold of election campaigns. When the 1980s arrived, newly elected leaders Ronald Reagan and Margaret Thatcher knew they would need to persuade citizens of their respective countries that everyone’s prosperity would grow under a neoliberal program, if the mythical “free market” were permitted to allocate resources and labour according to its whims. Further, wealth accumulated at the top of the income distribution, they averred, would eventually “trickle down” to the middle and lower classes, enriching the wealthiest and poorest members of society all at once. Neoliberalism was marketed, in other words, as the best of all possible worlds—prosperity attained with minimal effort, the capitalism envisaged by Smith and Ricardo at its finest (despite significant differences between extant neoliberalism and the form of capitalism that Smith and Ricardo exalted).

However, this “trickle down” effect had been the opposite of the experience of countries where neoliberalism had already been implemented by brute force, like Pinochet’s Chile, Leopoldo Galtieri’s Argentina, and Suharto’s Indonesia. Indeed, rather than making its way down from top to bottom, neoliberal economic programs have instead consistently vacuumed wealth up, from the working class and the poor to the wealthiest members of society, through a collapse in the real buying power of middle-class wages, the exorbitant cost of privatized public programs and services that had formerly been free, the privatization of social security, which leaves millions vulnerable to the wild vicissitudes of a deregulated market, and dramatic increases in the cost of things like housing and post-secondary tuition.

What truly occurs then, in effect, is a transfer of the cost of keeping society running from high-income earners to low-income earners, and from asset owners to non-owners of assets.

Everywhere it has been applied, neoliberalism has tended to involve a series of distinctive components. Working-class citizens encounter union-busting and a stagnation or decline in real median wages, while an untenable spike in both public and private debt maintains economic growth and fuels the development of asset bubbles—until they burst. Powerful lobbying interests promote, and achieve, deregulation of industry and high finance, contributing to further instability in asset prices, commodities, and the financial sector. Propaganda, repression, or a combination of the foregoing, drives the rise to power of political leaders who favour corporate interests over the public interest, in spite of their affectations to the contrary. The foundations of meaningful democracy and national sovereignty erode, owing to secretive free trade and foreign investor protection pacts. Spending on security and the military increases in periods of economic expansion, while austerity predominates in hard times, both of which exacerbate the deleterious impacts of the business cycle for working people. GDP growth typically hits a wall when the debt bubbles that had fueled economic growth burst, at which point neoliberal governments generally favour austerity policies and deregulation in a quest to unshackle the forces of private-sector “job creation”.

The deterioration of public infrastructure tends to embolden calls for further privatization of the commons, which may deliver substantial improvements to a privileged few, but further raises costs for those least able to pay. All the while, sublime, unprecedented profits accrue to the corporate elite—“the 1%”—while the fortunes of the everyman gradually deteriorate. It’s an ideology rife with contradictions: homelessness, joblessness and perpetual want are juxtaposed with ludicrous fortunes and excess; the employer class exalts in its unparalleled “freedom” while thousands of peaceful protesters are beaten, tear-gassed and arrested; politicians promise long-term prosperity while extricating and liquidating non-renewable natural resources as rapidly as the present state of technology will permit; spectacle, trivia and pithy truisms become prized forms of knowledge, while investigative journalism departments are understaffed, public journalism is dismembered, and state funding for post-secondary education is inadequate to keep pace with growth in the number of students attending advanced institutions.

Neoliberal politicians demand never-ending GDP growth and preside over a perpetual rush to sell off natural resources, desecrating the environment and Indigenous territory in the process, all in a futile effort to cancel generationally compounded debts. Neoliberals obsess over “balancing the budget” and “eliminating the deficit,” goals they typically pursue through some combination of shifting liabilities from the public sector onto the private sector, reducing government services, or by transferring wealth from future generations and the ecosphere to present-day corporate coffers through resource extraction. While neoliberal booms are typically rapid and conducive to dazzling gains on the stock market, downturns tend to be vertiginous and crippling for the poor and working classes. Wealth inequality remains stable or increases modestly during good times, which are driven in large part by unsustainable debts and credit bubbles. In times of collapse, on the other hand, the gulf between rich and poor broadens, unemployment rates soar into the double digits, corporations hoard cash while awaiting the return of credit-driven aggregate demand, and well-paid jobs with benefits tend to become scarcer.

When faced with economic contraction and stagnation, neoliberal enthusiasts consistently advocate further dismantlement of regulations and the welfare state, on top of the cutbacks that have already occurred, using reductions in interest rates as a tool to expand the money supply. (However, declines in interest rates also tend to coincide with diminishing savings, and increasing household debt.) “Streamlining” and “cutting of red tape” is combined with further austerity in pursuit of the elusive balanced budget, and yet more tax cuts for corporations that do virtually nothing to stimulate long-term job creation or enhance the prospects of the middle class, but prove consistently efficacious at bolstering the fortunes of a privileged few—along with public debts. Though neoliberal politicians may periodically and marginally raise taxes on individuals with above-average incomes, usually as part of a political campaign platform, tax hikes on capital tend to be negligible under such regimes, and outweighed by a long-term pitch toward a corporate tax rate of zero. Meanwhile, the share of taxation left to the majority of the population swells. Hence, working people become allies of the 1% in demanding more reductions in the tax burden, groused by nettlesome consumption taxes, pinched by a rising cost of living, and dismayed by the erosion of government services, as their tax dollars seem to pay for less and less every year.

In the U.S., Canada, the U.K. and other industrialized countries in particular, however, neoliberal ideology has not been solely responsible for the events that led to the 2007-’08 crisis, or the broadening gap between rich and poor that now exists. As Wolff argues, much of the stagnation of wages in the 1970s is attributable to structural changes in American capitalism.

“What changed in the 1970s, was basically the end of the labour shortage,” which had been a persistent challenge for American capitalists since the latter half of the 19th century, Wolff recounts. In addition, “American corporations began looking for cheaper places to produce, because they were now being confronted with competition from the Europeans and the Japanese, who had recovered from World War II. And by the 1970s, American corporations were moving production out of the United States, particularly in manufacturing. So that lessened the demand for labour inside the United States.”

But there were also important technological and demographic factors at play.

“A new wave of innovation, this time the computer, also lessened the demand for labour, and at the same time, the supply of labour went up,” Wolff explains. “The Women’s Liberation Movement brought millions of American women out of their [traditional] roles as mother and homemaker and into the job market. And a whole new immigration wave—not from Europe, but mostly from Latin America—added.”

While the supply of labour increased, demand for labour dropped. “And as every capitalist knows, if you don’t have to pay your workers more, as you used to, then you don’t do it,” Wolff notes.

Indeed, the capitalist class to which Wolff refers did not raise wages absent the necessity to do so, and saw spectacular profit margins in the years that followed. Sometime around the middle of the 1970s, the American dream of an ever-rising standard of living for all citizens perished. But it would take several decades and four consecutive neoliberal mandates before the country experienced the full impact of that historic shift. In the mean time, Wolff explains, players in one particular sector of the U.S. economy “made out like bandits” on the strength of scintillating gains at the top of the income distribution.

5.1     Big credit, big deposits, big banks

As the wealth of the employer class surged since the 1970s, bank deposits and credit followed suit.

“In the last 40 years…you’ve had an unparalleled, historic boom, in which the growing productivity of labour accrues entirely to profits, and not at all to wages,” said Wolff.

“This produces two phenomena that explode the financial sector and banks: on the one hand, a vast amount of wealth is created that accrues, in money form, to the employer class…And they put that money in the bank…At the same time, the working class of Americans is basically shattered; the American dream of an ever-higher standard of living is no longer possible with wages that don’t go up. And one of the solutions found by the American working class is to turn to debt, in a way that they had never done before.”

As much as neoliberal apologists like to trumpet the beneficence of the “job creators,” the true engine of the economy is aggregate demand. Producers can generate products and services all they like, but unless a sufficient number of consumers are able and willing to pay for these products and services, producers will be unable to earn a dime, and an economy can’t possibly grow absent an explosion of credit and debt—the likes of which the U.S. and many other countries have experienced in the neoliberal era.

The following charts illustrate

1.  total U.S. household credit market debt outstanding, since 1970 (Fig. I);

(Retrieved from St. Louis Fed web site http://research.stlouisfed.org/fred2/series/CMDEBT)

2. U.S. mortgage debt compared to GDP over roughly the same period (Fig. II);

(Retrieved from FX Investment Strategies http://www.fxinvestmentstrategies.com/2010_02_01_archive.html)

and 3. U.S. federal government debt, since 1940 (Fig. III);

This spectacular buildup, needless to say, is not sustainable; total debts outstanding in the U.S. economy now exceed the ability of debtors—both public and private—to repay them. This mountain of borrowing combined with the reckless activities of Wall Street institutions that bid up the price of homes through speculation, peddled sub-prime mortgages to clients who would eventually be unable to service them, and then sold or lent toxic liabilities in the form of debt-backed securities (to which credit rating agencies, equally complicit in the crisis, ascribed their highest degree of confidence) to precipitate the 2007-’08 economic crisis.

Ultimately, the cost of avoiding a second Great Depression would have to be borne by someone.

5.2     Foreclosure crisis

Wall Street’s biggest banks enjoyed spectacular profits prior to the 2007-‘08 collapse, before their fortunes temporarily turned sour. In 2009 and 2010, the big banks initiated foreclosure proceedings against millions of American mortgage holders, many of whom were “underwater”—i.e., confronted with a real estate collapse that had reduced the value of their homes to a level below the value of their mortgages. Some of these were landlords or speculators who abandoned ship at the first sign of trouble, leaving hundreds of thousands of residences in the U.S. vacant at a time when homelessness had simultaneously skyrocketed in most American cities. Others had fallen behind on their payments as a result of chronic illness, injury, or unexpected rate hikes imposed by the banks. But there was still another large category: Those who faced wrongful foreclosures, many of whom had never missed a payment. By April of 2013, it was revealed that these completely innocent victims numbered close to 4 million—nearly a third of the total (Nasiripour, 2013).

www.youtube.com/watch?v=exxRes2JiJE

As MSNBC host Chris Hayes explains in the above video, the average settlement Wall Street banks paid to the victims of wrongful home foreclosure amounted to a mere $500, pursuant to subsequent court rulings—seldom sufficient to cover a month’s rent in America’s largest housing markets.

Of course, the air of inevitability hangs over any economy in which private debts escalate to a scale at which repayment—even by the gainfully employed who enjoy consistently good health and manage to avoid unanticipated adversity—nears the threshold of arithmetic impossibility, as it had in the U.S. by 2007. Furthermore, a disproportionate number of mortgage holders who fell victim to the Wall Street banks’ predatory lending practices were people of colour. And according to data retrieved by the Pew Research Center, among individuals whose net worth declined most due to the Great Recession, African-Americans and Latinos—who tend to hold fewer assets on average than their white American counterparts—are also dramatically overrepresented.

Fig. IV

Fig. V

Hence, the catastrophe of 2007-’08 not only revealed in America enormous class divides long concealed by an economy built on hollow, fictitious prosperity; it also made plain what millions of Americans know in their hearts but are still reticent to say: that wealth disparities, throughout the country’s history, have been entrenched along racial lines, that they remain entrenched along those racial lines, and that the American experiment in capitalism has, for all its champions, fallen miserably short of rectifying the injustices of its colonial past.

5.3     Canada at risk?

Incidentally, in Canada, household debt is now at a record high, even higher on a per-capita basis than private debt levels in the U.S. prior to the collapse. And given that inequality in our country has also increased since the crisis, with record numbers of Canadians relying on food banks and a federal government with no apparent interest in addressing the situation (when UN Special Rapporteur Olivier de Schutter issued a report criticizing the state of food security in Canada last year, Immigration Minister Jason Kenney and Health Minister Leona Aglukkaq both chided him for “lecturing a wealthy country”), Canada’s claim to economic stability would appear to be tenuous at best. Household and consumer debt in the country, as of March 2013, totaled more than $1.5 trillion—close to 90% of GDP, and rising.

As research economist and balance-of-payments expert Michael Hudson is fond of saying, “Debts that can’t be repaid, won’t be repaid.” His observations are echoed by Steve Keen, an Australian economist who specializes in the study of the link between private-sector debt and economic recessions—a process called “debt deflation.” In his book Debunking Economics, Keen notes that private-sector debts play an integral role in both precipitating and prolonging economic recessions, but that this connection is still little understood by the majority of neoclassical economists. It is a reality which, in Canada as in most other Western countries, ought to be cause for alarm. And the efforts of the Canadian federal government to balance its budget by 2015, by essentially removing equity from the economy through austerity measures, will only exacerbate the already colossal burden of private indebtedness.

Fig. VI

(Retrieved from Saskatoon Housing Bubble http://saskatoonhousingbubble.blogspot.ca/2011/12/saskatchewans-real-gdp-growth-from-2005.html)

But how did the forces of greed, rent-seeking and excessive credit get so far out of control in modern capitalism? And more perplexingly, why did the 2007-’08 crash not elicit a louder, more profound public critique of the flawed economic system that caused it? How has America—and nearly every other industrialized country, Canada included—simply bailed out its irrationally oversized banks and carried on with a status quo doomed to usher in more pain and suffering for millions in the years to come?

Part of the answer to that question may lie in the disintegration of the constituency that has historically played a prominent role in holding the failings and iniquities of capitalism to account: the left.

6.1     Forcing Roosevelt’s hand

Following the stock market crash of 1929, America—and most of the Western world—was thrust into the Great Depression. After the Republican administration of Herbert Hoover proved ineffective at alleviating the despair, Franklin Roosevelt, the Democratic candidate, defeated the incumbent in the election of 1932. Roosevelt began with a fairly moderate platform as a candidate, but as the Depression wore on with no end in sight, he began to set his sights on a more ambitious goal, in part, because he had little choice.

At that time in the U.S., powerful socialist, communist and labour interests still held sway in the political system. Many of them took the Great Depression as a sign that capitalism had outlived its usefulness as a mode of economic organization. They soon began to agitate vociferously for change, for revolt, and for a more humane, more equitable society. America was teetering on the brink of a revolutionary moment. Roosevelt, appreciating the gravity of the situation, responded to the advice of British economist John Maynard Keynes, by advancing the New Deal, various government relief and employment programs, and Social Security. Importantly, he also established the federal Securities and Exchange Commission, Federal Deposit Insurance Corporation, and Glass-Steagall Act, which separated commercial and investment banking while prohibiting various forms of speculation. Roosevelt invested extraordinary sums of money in direct state hiring campaigns, and massive infrastructure projects like the Hoover Dam.

But much of the American business community was not content to see its taxes hiked, and the forces of the free market so brazenly contravened. And since the end of World War II, the event that ultimately lifted America out of the Dirty Thirties, business interests have taken various steps to claw back the benefits afforded by the New Deal welfare state.

Although Franklin Roosevelt may be remembered in the modern era as a populist, or even a leftist, one could also argue that his policy decisions achieved precisely their desired effect. Roosevelt’s New Deal was financed in large part by corporate America, as the Democratic presidential candidate managed to persuade a sufficient proportion of the country’s moneyed class to invest in relief programs and reforms. The New Deal, in other words, was a sort of compromise between the American oligarchy and the workers of the country, undertaken in the interest of preserving the capitalist system.

As time passed, the once mighty American left began to rust, deteriorate, and eventually disintegrate. By the end of Senator McCarthy’s campaign of terror in the 1950s, Marxism, communism and even socialism had become dirty words in America. Although Keynesian economic orthodoxy would continue to prevail until the 1970s, the post-World War II era was a period in which tremendous damage befell the liberal, socialist, labour and social democratic movements. They have not recovered since, and in fact, the decline of the traditional left continues to this day.

But by the 1990s, the leftist bloc was a shadow of its former self. Trade unions—the pillar upon which America’s middle class was built—had been broken, their membership (and bargaining power) shattered in the wake of the 1945 Taft-Hartley Act, through the McCarthy era, and even more precipitously under President Reagan’s two terms in office. The U.S.S.R. had suffered an economic, political and military collapse—which many capitalists took as a sign that their ideology had prevailed. And neoliberalism had supplanted Keynesianism as the predominant school of thought in capitalist economics. After all, neoliberalism was working swimmingly; the stock market was on a robust upswing, and the U.S. was enjoying unprecedented prosperity. Or so it seemed.

Fig. VII

(Source: U.S. Bureau of Labour Statistics, via Dr. Mark J. Perry http://mjperry.blogspot.ca/2011/01/asdf_30.html)

6.2     The rightward drift of the Democratic Party

By President Bill Clinton’s inauguration, the Democratic Party had radically shifted from its New Deal identity, leaving behind many of Roosevelt’s reforms and the Johnson administration’s War on Poverty. Under Clinton, the Democrats reached fundraising parity with the traditionally “pro-business” Republicans. And despite his assurances to the contrary on the campaign trail, Clinton would do little to uphold the interests of America’s working class; in fact, his policies resulted in a further diminution of American workers’ fortunes. In 1996, he fulfilled a campaign promise to reform the welfare system—by reducing its generosity and introducing a “workfare” component. As a consequence, the U.S. to this day possesses arguably the least beneficent social safety net of any industrialized country, and the results—like one in five American children contending with food insecurity on a daily basis in 2013—speak for themselves. Clinton also developed an affinity for neoliberal globalization and a love affair with so-called free trade, which culminated in NAFTA, and—as if to reaffirm in whose interest the newfangled trade deal would operate—he systematically precluded the second component of a true free market, the free movement of labour, by militarizing the border between the U.S. and Mexico for the first time.

But he wasn’t done there.

Toward the end of Clinton’s second term, remembered as a boom period in American history, privately held debts had already reached historic proportions (and were, in fact, exacerbated in 1998 by the first federal budget surplus since 1969). But the Commander in Chief was enamoured of the neoliberal myth of the self-regulating market. His administration’s repeal of Glass-Steagall in 2000 furthered the deregulatory mission undertaken by Reagan. Suddenly, without meaningful antitrust laws, Wall Street banks were free to grow to titanic scales. And without any effective firewall between investment and commercial banking, speculation, complex derivatives contracts and securitization soon produced tens of trillions of dollars in hypothetical assets, distorting market signals and engendering spectacular price volatility in everything from housing, to soy, to petroleum. It was in this context that the dot com bubble inflated and burst, and that the housing bubble began to swell, only to enlarge to a perilous magnitude under the eight-year tenure of George W. Bush.

Bankers and investors made hay in the deregulated environment, undertaking ever more haphazard bets on ever-riskier financial instruments in pursuit of astronomical fortunes. Debt continued to mount, and as the wealth of the 1% swelled exponentially above and beyond the listless lot of the majority, a house of cards was built that would tumble within a decade, and drag much of the global economy into a severe recession.

7.1    The Arab Spring

Though America (somewhat disingenuously) prides itself on its penchant for upholding liberty and democracy, its policies toward the Middle East and North Africa have tended historically to be inimical with both of these principles. By the beginning of 2010, many allies of the U.S. in the region were draconian strongmen: among others, President Zine El Abidine Ben Ali of Tunisia, Egyptian dictator Hosni Mubarak, and the despotic military ruler of Libya, General Moammar Qaddafi. But on December 17, 2010, a single act of defiance inspired millions of Arabs to take to the streets.

Like so many of his compatriots, vegetable vendor Mohamed Bouazizi, aged 26, was neither an attention-seeker, nor a man in quest of celebrity, opulence or prestige; his objective, according to his aunt, Radia, was to save up enough money to buy a pickup truck, a giant step up from the burdensome, rickety cart he was obliged to haul about, every day, under the burning sun. But when Bouazizi’s vegetable cart was seized by a local policewoman, who proceeded to fine the merchant a day’s salary, spit in his face and insult his dead father, Bouazizi decided enough was enough.

After his attempt to lodge a complaint with the local municipal office was rebuffed, Bouazizi proceeded to publicly douse himself in fuel, and set himself alight. Though he survived his self-immolation, he would succumb to his extensive burns in hospital less than three weeks later. But his solitary protest served as a powerful symbol for his compatriots. They too decided the time had come to demand better than the corrupt autocracy with which they had been saddled for generations. And their rage overcame their fear.

7.2    Wall Street’s role in the Arab Spring

Interestingly, while Wall Street became the target of justifiable ire in the U.S., the impact of the big banks’ misdeeds on what would become the Arab Spring was equally significant.

In the modern economy, digitized capital is far freer than it has been in the past to leapfrog across international borders, owing allegiance to no state. Investors, some of whom have amassed preposterous fortunes by placing bets on the vicissitudes of the stock market, have developed means of gambling on the dollar value—both present and future—of commodities as diverse as gold bullion and seaweed. And in so doing, in pouring their wagers into goods as a collective bloc, these speculators, in turn, play a substantial role in affecting what the final asking price of those goods will be.

Tunisians and Egyptians are the most substantial per-capita consumers of wheat in the world, and Egypt imports more wheat that any other nation. Its population of over 80 million continues to depend heavily on bread, tabouli and other cereal-based foodstuffs for basic nutrition. But beginning in December of 2010, a price shock struck global food markets, leaving increasing proportions of citizens in North Africa hungry, angry, and desperate. By May of 2011, the price of wheat—and its derivative products—had increased by 91% over the previous year, leaving millions wondering why such an integral staple of their diet had suddenly become inaccessible. Many would have looked to the regimes of Mubarak and Ben Ali for answers and found none. Egyptians had lived with the indignity of dictatorship for decades, and many had opted to maintain a low profile, as their Tunisian neighbours had, to avoid incurring the wrath of their despot’s merciless posses of goons. But the unprecedented spike in the cost of bare necessities was the straw that broke the camel’s back. And it was the manipulations of speculators half a world away, compounding the challenges of severe drought and lower-than-usual crop yields, that made the increase possible.

As the 20th century became the 21st, some of Wall Street’s largest firms—in particular Goldman Sachs—began buying up reams of futures in food staples like wheat, perhaps anticipating that climate change, rising global population and increased government mandates for ethanol and biofuels would send the prices of these commodities skyward. Indeed, the aforementioned factors all contributed modestly to rising prices, but Goldman Sachs et al. became self-fulfilling prophets, inflating an asset bubble for which they themselves provided the fodder. In 2005, a period of decline in the real price of wheat over more than a century on the Minneapolis Grain Exchange abruptly halted, and immediately reversed. By early 2008, a steep upward trend had developed in the price of cereals and soybeans, precipitating a food crisis, and by the end of that year, more than 250 million people had joined the ranks of the world’s famished. Like the U.S. housing bubble, however, the food bubble was bound to burst; by the end of 2008, in fact, wheat prices on the Minneapolis exchange tumbled precipitously from their ethereal height. But the fall brought little relief to North African consumers, as grocers continued to charge lofty prices to compensate for their unanticipated losses. And as the American economy stabilized and began to “recover” under the auspices of the Obama administration, speculation propelled the price of wheat upward again, like as much rocket fuel.

Fig. VIII

Global wheat prices from 1993-2013. Both volatility and prices increased after the year 2000, reflecting the speculation of investors. Meanwhile, roughly a billion more people were subjected to food insecurity when wheat prices reached a record high in April 2008. Source: Index Mundi

Particularly if they’ve become accustomed to life in a totalitarian state, people do not typically take to the streets en masse. But when lives are on the line, as the lives of tens of millions of Arabs were, rebellion is ineluctable. Beginning on January 25, 2011, Egyptians—emboldened by the actions of Bouazizi and their neighbours to the north—hastened to Tahrir Square to demand the resignation of Mubarak.

7.3    Building momentum

Not long afterward, protests spread throughout the Arab world, while anti-austerity marches and demonstrations blossomed in Europe. Greek protesters clashed with riot police in Syntagma Square. In Madrid and throughout Spain, Los Indignados rejected the brutality of the conditions imposed on their country in order to secure a loan from the European Central Bank. After the collapse of real estate prices (again, inflated by reckless banks and their investors) had already left millions of Spaniards destitute, the nation’s coffers empty, and valued social services in the crosshairs of vulture capitalists, many of them, like their Egyptian and Tunisian brethren, were quite literally fighting for their lives.

Kalle Lasn of Adbusters, who admits that few things excite him quite like the prospect of a peaceful revolution, was in Vancouver, watching on television as a torrent of indignation flooded scores of countries. The ideal moment had arisen, he and his Adbusters editorial staff reasoned, to issue a call to action, a manifesto for citizens of the world to challenge the powerful in their lofty perch, to storm the walls of their modern Versailles at the mouth of the Hudson.

“We knew that the moment was ripe for something big to happen,” Lasn explained. “And I think that we were quite smart, and lucky I guess, to some degree, in zeroing in on something that’s quite provocative. We basically said ‘Ok, there was regime change in all these other places…and now, let’s go for regime change in America. Let’s occupy the iconic heart of global capitalism, which is Wall Street, and just take it over. Occupy the damn place!’”