The future of capitalism

Capitalism’s heart occupied – where will it all lead?

By Rupert Cromwell, Sunday, 9 October 2011

Back in December a humble fruit vendor in Tunis, scorned and humiliated by those in power, set himself ablaze. With his deed he ignited an Arab revolution. Ten months later and 5,000 miles away, might something comparable just possibly be happening? In other words, could some small, at first apparently inconsequential rallies be the spark that lights the fuse beneath the frustration, anger and confusion of an America beset by economic and financial crisis?

Let it be clear at once, the US is not on the brink of anarchy. Since the “Occupy Wall Street” movement held its first gathering in a lower Manhattan park on 17 September, demonstrations have taken place in at least 16 other big cities across the country. Put every one of them together, and the participants would number only in the tens of thousands at most.

They have no leader, no single specific goal, and no manifesto. In New York, police have used pepper spray, and last weekend arrested hundreds of protesters whom they accused of trying to block the Brooklyn Bridge. But, mostly, the atmosphere has been peaceful and good-natured, with some of the engaging dottiness of fringe meetings at British Liberal Party conferences of yesteryear. A couple of Wall Streeters have even managed to stage a counter-protest, telling demonstrators: “Instead of holding a sign, go to business school.”

No one is throwing bricks through the windows of Citibank or Morgan Stanley. There has been none of the violence of the recent riots in London or the Paris banlieues, nothing to resemble the anti-globalisation street warfare during the 1999 World Trade Conference in Seattle, or the angry street marches that turned IMF meetings here into besieged encampments.

Nor do the rallies have the feel of the mass movements of the 1960s, for civil rights and an end to the Vietnam war, when you palpably felt a nation’s conscience on the march. Nor, despite some claims, is New York’s Zuccotti Park, where the demonstrations began, the American equivalent of Tahrir Square in Cairo. At least, not yet.

For something surely is afoot when the chairman of the Federal Reserve, the symbol of central bankerly restraint, expresses sympathy with the unruly American street. “They blame the banks for getting the country into this mess, and they’re dissatisfied with the policy response in Washington,” Ben Bernanke told a congressional committee last week, “and at some level, I can’t blame them.”

Mr Bernanke was simply making the obvious point, that Occupy Wall Street has struck a deep national chord. Ever since the Tea Party emerged in 2009, Democrats have wondered why there wasn’t a comparable galvanising movement on the left. Now there may be. The most significant piece of news last week was that some unions are now joining the protesters.

For decades, big labour has been in decline in the US, its membership falling and its voice increasingly unheard in the national debate. But it remains a financial and organising pillar of the Democratic party; Occupy Wall Street may be the perfect platform to reassert its demands. Remember, too, that in 1968, it was not students alone, but an alliance of the students and the unions, that briefly brought France to the brink.

Barack Obama, too, is paying heed, as he adopts a more populist tone to push a $450bn jobs plan, including higher taxes for the rich. “Class warfare”, Republicans complain, but the president reckons his best hope of re-election lies in portraying his opponents as heartless protectors of the rich, opposed to measures that would quickly create jobs for ordinary people (the “99 per cent who don’t have lobbyists”, as an Occupy Wall Street banner puts it).

Thus far, however, Mr Obama has not explicitly endorsed the protest movement, and his caution is understandable. Over the years, populism has never much helped Democrats seeking the White House. George McGovern in 1972, Michael Dukakis in 1988 and Al Gore in 2000 all played the populist card to varying degrees, and all of them lost. So did John Kerry in 2004, despite likening CEOs who outsourced jobs abroad to the Independence War traitor Benedict Arnold.

Much further back, at the Democratic convention of 1896 – during a massive economic and financial crisis comparable with today’s, when banks failed and millions lost their jobs – the party’s nominee, William Jennings Bryan, delivered one of the most electrifying political speeches in US history. “You shall not press down upon the brow of labour this crown of thorns,” he thundered. “You shall not crucify mankind upon a cross of gold.” His words, according to The New York Times the next day, unleashed “a wild, raging, irresistible mob” in the convention hall in Chicago. But Bryan was defeated in the presidential election that year, as he would be in two more, in 1900 and 1908.

Much the same, let it be said, applies to Republicans. Drink too deep of the pure ideological waters of the right, and they, too, lose, as Barry Goldwater did in 1964. The party’s embrace of the real Tea Party may have similar consequences next year, inspiring true believers but – just as Obama-esque populism might do from the other end of the spectrum – alienating the independents and centrists who decide every election.

Nor are the demonstrators especially enamoured of this particular Democratic president. “The protesters are giving voice to a broad-based frustration about how our financial system works,” Mr Obama told a press conference last week. But he did not nail his colours to the Occupy Wall Street mast. His reluctance may merely reinforce suspicions on the left that deep down he is not one of them, but a maker of pretty speeches who, when the crunch comes, caves in to the banks and health insurance companies and their Republican protectors.

And there’s another reason mass economic protest has rarely achieved results here. Whatever the country’s problems, a belief in “the American Dream” – that opportunity was equal for all and that anyone, however humble his origins, could make it – would prevail. This time, though, could be different.

Occupy Wall Street has arrived when Main Street continues to take a fearful beating. Unemployment is forecast to remain high for years, and people are trapped in debt. For two decades, real incomes have stagnated at best for the vast majority of people in a country that regards ever-rising prosperity as a birthright. This may be the first generation of Americans who are less well off than their parents.

Meanwhile, the rich get ever richer. Income disparities are wider than at any time since the Wall Street crash of 1929, and almost 50 per cent of financial wealth in the US is now in the hands of 1 per cent of the population. Rarely, too, has disgust been greater at what cynics describe as “the best political system money can buy”, a system in which elections cost billions of dollars, but produce nothing but gridlock and endless partisan squabbling. If ever there was a time for people power, one might argue, is it not now?

No one can say where the protests will lead. Maybe the demonstrations will die out like cicadas in winter’s first frost. Maybe the movement will be co-opted into the broader Democratic Party, or maybe what Eric Cantor, the House Republican majority leader, disdainfully describes as “a growing mob” will emerge as a serious political force in its own right. One thing, though, is certain. The election of 2012 will be an ideological contest like few others – a referendum on the future of capitalism as currently practised in America. or

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