“Reconstructing a Politics of Pluralist Democratic Solidarity"
A Talk with Joseph M. Schwartz
— David Waldstreicher, Editor
Joseph M. Schwartz,
of Political Science
In 2002 Joseph M. Schwartz of Temple’s Political Science department wrote an essay about “casino capitalism and lemon socialism,” whereby the quest for short-term profits and high stock prices in deregulated markets leads to bad investments, shifty accounting practices, little consideration of long-term growth, and costly failures like the Savings and Loan and Enron scandals. The ensuing bailouts, as Federal Reserve Chairman Ben Bernanke is reported as having stated in the March 11 New York Times, only emboldened financiers to riskier practices, confident that they would be saved by the government if things ever turned sour. As Joe put in a recent article in Tikkun magazine, “American capitalism has privatized gain, but socialized risk.”
At a moment like this, folks once called utopians and radicals now look like the sober analysts, if not prophets. Seven years later, Joe’s “casino capitalism and lemon socialism” piece is part of a middle chapter of his ambitious and rewarding new book, The Future of Democratic Equality: Rebuilding Social Solidarity in a Fragmented America (Routledge). The method of the books mirrors its message. Part critique of contemporary political theory, part essay in political economy and recent history, its eight linked essays seek to trace how “social solidarity” became a minor, muted theme in both politics and theory while economic inequality increased in the United States. Social mobility rates are lower here than in Western Europe, where people usually work many fewer hours in the year. The lower effective paychecks of the last several decades have forced more spouses into the workforce and led to rampant borrowing. Yet many Americans are not aware that most of the benefits of our version of the welfare state (social security, Medicare) go not to the poor, but disproportionately to the middle class. Meanwhile, according to Schwartz, many political theorists abandoned the critique of structural economic, race, and gender inequality in favor of exploring the politics of identity, globalization, and cosmopolitanism – perhaps as a sort of compensation for the failures of progressive politics at home.
Recent events may have Joe wishing he were not in fact so prophetic. At a TAUP meeting last semester he got up, gave a brief analysis of the economic and political climate, and urged the union to continue to press for greater non-economic rights for NTTs but to compromise on the compensation front while there was still at least a 2.25% across the board pie to divide over the next few years. Not long after, the administration rescinded that offer. Yet perhaps because he sees inequality having political as much as economic causes, Joe retains his optimism about the possibilities of a truly democratic politics.
Is the excitement around Obama – his election, and his high approval ratings – a sign of rising “social solidarity”?
The massive participation in the Obama campaign by young people, African-Americans, and social justice activists of all races arose both out of a rejection of the disastrous domestic and foreign policies of the Bush administration, but also from a belief that the symbolism of electing an African-American to the presidency might help mitigate race and class inequality. The relatively progressive nature of Obama’s initial budget proposal responds to this social base. He’s the first president in many years to talk about a (very moderate) progressive restructuring of our tax system, expansion of public funding for healthcare, education, and alternative energy, and (minimal) cuts in useless “defense” spending.
But we should not underestimate the constraints placed on Obama by corporate power (and the role of money in politics) and by the right’s ideological dominance over the past 30 years. Obama is not calling for a single-payer health care system to replace the wasteful redundancy of competing private insurers; nor is he calling for rolling back the Reagan era tax cuts or for serious cuts in weapons systems whose rationale died with the Cold War. Nor has the Obama administration talked about fighting
inner-city poverty or the mass incarceration of Black and Latino youth.
More significantly, the country is still very ambivalent about public spending and about taxation – despite anti-tax, conservative governments gutting such formerly great public institutions as the California educational system. The right – ever since Reagan’s racialized attack on “welfare queens” – has long succeeded in focusing public attention on means-tested programs that were designed to fail. If Reaganites were right to claim that private goods are inherently great and public goods are inherently shoddy, why does every American aspire to make enough money to live in an affluent suburb where well-funded public schools and other public amenities are first-rate. I’ve long thought that the left’s slogan should be “Bring Suburban Social Democracy to all Americans…or one, two, three Lower Merions!”
This country would have witnessed much saner public policy in the 1980s onwards if we had won universal health care and child care support in the 1960s. That would have eliminated the need for means-tested Medicaid and AFDC. And if all single-and-dual parent families had access to high-quality public funded pre-school and infant care, as they do in France, the ability of the right to mobilize a segment of the working class (of all races – those just above the eligibility line for means-tested programs) against “welfare” would not have been possible. Medicare and Social Security are unlikely to be gutted precisely because they serve all Americans, regardless of race or class.
Will the collapse of the financial and mortgage markets, and revelations of their excesses, alter or undermine the free market ideology which seems to explain so much about the limits of social policy in the U.S.?
For a time, we’ll see a retreat in the conservative mantra of “deregulate” everything. And the conservative universal panacea of “tax cuts” (and upward redistribution of income and wealth) has been somewhat discredited (though it doesn’t stop them from claiming deficit spending did not help us get out of the Depression). If FDR had not tried to balance the budget in 1937, he might not have needed the massive deficit spending of World War II to get us out of the Depression. That is, the New Deal worked from 1932-1937, when FDR retreated to standard conservative balance-the-budget policies.
The Republican program is to gut the stimulus package (particularly by cutting direct aid to the states) and then to crow, if Obama fails, “see, government spending doesn’t work!”
But as few mainstream Democrats are social democrats (or even advocates of a moderate Keynesian mixed economy), the Democratic party leadership has not done an adequate job educating the public as to how this global economic crisis derives from an unregulated, widely speculative financial system (which tried to make “money on money” rather than from investment in productive activity) and also from the steady decline of the purchasing power of working people across the globe. Essentially, the global working class has not been paid sufficiently high wages (just look at China) to consume the massive amount of goods their productive efforts create.
To compensate for the loss of purchasing power they experienced over the past 30 years, American working families turned to credit cards and borrowed against inflated home equity values. Once the housing bubble burst, as all financial bubbles eventually do (see the mergers-and-acquisitions boom of the 1980s and the internet stock craze of the late 90s), the intricate financial world of collateral debt obligations and credit default swaps came tumbling down, taking with it working families’ ability to maintain their living standards.
So the real question is what will replace the neo-liberal policies of deregulation, de-unionization, and privatization (of public provision) that both the Republicans and moderate Democrats embraced from Jimmy Carter onwards. Absent massive social pressure from below, I don’t think Obama will be willing to “nationalize” insolvent banks (even though public funds now constitute the bulk of their equity), nor will he propose strong regulation of the financial industry, particularly the “shadow banks” of hedge funds and private equity partnerships.
Unless we see a reemergence of social movement activity similar to the 1930s and 1960s (among the unemployed, foreclosed, and exploited working people), I doubt we’ll see the passage of the Employee Free Choice Act (that would restore the legal right to form unions in the U.S., something that has not existed since Reagan declared open war on the right to organize) or strong federal action to force banks to eat some of the depreciation in home values and thus allow working families to stay in their “underwater” homes.
You have recently called for “nationalizing the insolvent banks” (see In These Times, May 2009, forthcoming), as “the only road out of the financial crisis.” What does history – or theory – tell us about what this would mean?
If the Obama administration does not immediately engage in massive efforts to stabilize the housing market and to restore health to the financial sector (so that credit again starts flowing to support productive purposes, such as car loans and capital investment), there will be no vigorous economic recovery. And if there is no economic recovery, those swing white working class voters in Ohio, Indiana, Michigan, and Pennsylvania who put Obama over the top will shift back to the Republican column. Paul Krugman is absolutely correct to argue that Obama has to move aggressively and swiftly or else he will fail. The Obama administration is afraid of the new “n” word – “nationalization.” Obama should not be afraid to make clear that there is a long history of capitalist nations “nationalizing” distressed financial institutions, including during the Great Depression in the U.S.
Obama needs to be honest and up front about the financial crisis; Bank of America and Citigroup have already been de facto nationalized by the infusion of taxpayer equity whose value swamps that of these firms’ market equity (ditto AIG). But until the federal government removes the “toxic assets” from these firms’ asset sheets, they are not going to use the equity infusion to lend out new funds; rather they will shore up their balance sheets and buy up smaller, healthier banks.
The FDIC should do what it has always done before – “unwind” insolvent banks, otherwise known as nationalization. This worked to restore financial health to our failed Savings and Loans in the late 1980s, to insolvent Scandinavian banks in the early 1990s, and (all too belatedly) to Japanese banks in the late 1990s. The FDIC should immediately seize the insolvent banks, strip the shareholders (of their presently near-valueless stocks); take the “toxic assets” off their books (and place them into a Resolution Trust Company); and then restructure the banks so their asset sheets can support renewed lending. Once the sickly financial firm has regained its health, the FDIC should re-sell it to new private investors, with the proceeds going to repay the taxpayers.
The public could also recover more of the public funds that the Treasury and Federal Reserve have either granted or lent to private firms by shoring up the housing market and then re-selling “recovered” “toxic assets” to private investors. The value of those assets is tied to the health (or sickliness) of the housing market. That’s why passing Congressional legislation granting bankruptcy judges the ability to “cram down” distressed mortgages is crucial to overall economic recovery, as is the creation of a Depression-style Home Loan Corporation with the power to lower the real value of “underwater” mortgages (with the federal authority splitting the loss in equity with the banks). Once the housing market stabilizes and begins to recover, the “toxic assets” will gradually regain value – value that the public treasury should be able to recover by selling the seized assets to private investors.
What do you make of the recent reappearance of the word “socialism” in the media? Is it still mainly a slur word?
Anti-socialist rhetoric in United States politics is not deployed to stop a socialist movement that is on the verge of taking state power and democratizing control over corporate governance (I wish!). The center and right deploys this rhetoric whenever the most moderate reforms threaten to impinge on the unfettered power of corporate America. So modest progressive tax reforms are “socialist;” single-payer health insurance (that is, a national health care plan similar to “Medicare for All”) is “socialist” because it would eliminate the role of for-profit private health insurers. Last I looked, France, Canada, and Taiwan all have single-payer health insurance systems and they are democratic capitalist states just like the United States.
Newsweek declares on its front cover “We Are All Socialists Now” because we are inching our way (ever so hesitantly…and in politics “she who hesitates dies”) towards a more Western European-style mixed-market economy. Now last I looked, there were not a ton of worker or state-owned firms in Western Europe. Until people in the United States realize that Europe’s greater “de-commodification” of basic human needs (moving from private provision to public provision) and its shortening of the work week and greater mandated vacation time leads them to be more egalitarian and humane societies than our own, it is going to be very hard to achieve greater equality in the U.S. We now have the honor of the lowest rates of upward social mobility of any advanced capitalist nation (according to The Economist, no revolutionary socialist rag!). And, certainly, if anti-socialist rhetoric can help prevent universal health care, imagine how the right will use it to gut stricter regulation of our financial system. Until the U.S. public comes to understand that the democratic socialist goal of using democratic political power to regulate the behavior of powerful economic entities should inform progressive politics we’ll remain, in my view, the “least developed” of advanced democratic societies.
Where does a public university like Temple fit in the story of a decline in social solidarity? What do you think will happen to places like Temple in a recession or depression of the kind we are facing?
As the G.I. bill demonstrated for the white working class, access to higher education is a powerful means for upward social mobility. What most Americans don’t know is that the percentage of Americans receiving college degrees has been stuck at 25 per cent or so since 1980. Meanwhile, Western Europe has caught up and surpassed us (see the recent work of economists Lawrence Katz and Claudia Golden). So it’s crucial that institutions such as Temple remain accessible and affordable to students from working class and modest middle class backgrounds. Anyone qualified to attend college and truly interested in doing so – should not be prevented from matriculating due to financial need.
But American society places too much of a burden on higher education for achieving greater social mobility. Until we integrate housing, education, and the labor market and have kids of all races and classes attending pre-school, elementary, and secondary school together, we won’t come anywhere near to achieving equality of opportunity. As the work of John Rawls implies, we should not just be trying to achieve equal funding per pupil, but should be devoting more resources and the best teachers to lesser advantaged communities. This, of course, assumes that we can’t overcome the structural inequalities of American federalism that prevent us from integrating schools and housing across urban-suburban lines. You can’t have a truly integrated society until you have housing integration; something we did not win in the 1960s.
But, I’m still talking in overly meritocratic, educational achievement terms. In a truly just society, all adults and children should have a good life regardless of the achievement of their parents in an educational meritocratic rat-race. It may well be the case that there are not enough jobs to go around that necessitate advanced degrees. We have plenty of need for skilled mechanics, artisans, child care and elder care providers, and public school teachers. We can’t have “No Child Left Behind” if we don’t transform public school teaching and infant care-giving from a disrespected profession into honored and well-remunerated professions that attracts our best graduates.
While we’re on the subject of the limits of meritocracy let me express my outrage at some tenured faculty at Temple who devalue and deride the work of their non-tenure track and adjunct colleagues. If we as a faculty (nationally) don’t improve the working conditions of the most vulnerable of our profession, the proliferation of non-tenured jobs will continue. That is, if you don’t raise the cost of sweated labor, more of the labor force will inevitably work in sweatshop conditions.
So to my senior colleagues who “don’t care” about NTTs: if you don’t care there soon won’t be any tenure-track jobs for your grad students! Many academics raise children who go into the academy. I hope these self-defined “elite tenured professors” tell their children, “I climbed the ladder for tenure, but then I took that ladder with me, and there’s no more ladder of tenurable jobs for you to climb.”
Just ask any top ten Ph.D. program grad if their job prospects are not affected by the gradual disappearance of tenure track jobs. And those Ph.D. candidates are probably as smart and better-trained than those tenured faculty who were born on third base (in a better job market) and think they hit a triple!
So fine if you think you “merit” your 2-2 load on the back of those teaching 4-4. But I bet if you put the average dissertation of NTTs under 35 up against the average dissertation of tenured folks at Temple over 60, (and you actually read the work…which we don’t do for ‘merit’ at Temple), I’d put my druthers on the young folk (who are disproportionately NTTS). Hint: the job market in academia tightened radically after 1975 or so!
It’s total “B.S.” to claim, as some tenured faculty do, that the NTTs “choose” “just” to teach! Many NTTs in CLA publish by working their tails off every summer. I’m proud to say that almost all the NTTS I hired when I was chair from 2000-05 have not only published, but have tenure track jobs (and some tenure) at U. of San Francisco, Cal State Chico, U. of Washington, Salisbury State and other colleges. Several of them have published monographs with major university presses.
Finally, a word about the virtue of humility. Truly accomplished people (unless they are neurotic wing-nuts) don’t tell you how famous and important they are. So when colleagues at Temple go on about how much more “meritorious” they are than NTTs, I always think “if you are so ‘meritorious’ why are you not at Michigan, Harvard, Princeton or Berkeley?” I assume they realize that 95 per cent of academics have jobs at institutions less prestigious than the institution at which they received their Ph.D.! Maybe some of our self-defined “legends in their own mind” might down-deep suspect that reputational rankings aren’t all they are cracked up to be. After all, are Penn faculty really all “better” than we are???
Henry Kissinger opined “academic politics are so vicious because the stakes are so small.” I’d add “academic’s egos are so large, because no one outside of the 200 folks in their sub-field knows who they are.” Mark my word; if tenured faculty don’t defend the institution of tenure and raise up the costs of the more oppressed members of the Ph.D. class, someday soon, tenure-track jobs will be as scarce as the buffalos on the plains or auto workers in Detroit.
When I came to Temple in 1988 I was proud that over 80 per cent of our student seats were taught by tenure-track and tenured faculty. Today the figure is well under 60 per cent. As faculty at an urban public research university we are on the front lines in the battle against the proletarianization of university faculty. I value the profession I voluntarily joined and I’m going to fight like hell to make sure my son’s generation will have as many tenure-track jobs to fill as my generation once did. After all, I wouldn’t want my son, if and when he gets a Ph.D., internalizing his inability to land a nearly non-existent tenure-track job as his own “meritocratic” failure.