'Abundance', De-regulation, and the Demolition of Democracy

Centrists laid the groundwork in the US and Europe.

Britain’s social democrats suffered a devastating blow last week with the loss of a parliamentary seat held by ‘old’ Labour for more than 100 years. A government minister speaking anonymously pointed to how Prime Minister Keir Starmer had led Labour down the same destructive path as that forged in 2013 by PASOK, Greece’s social democrat party.

“Its two nails hammered into a rapidly closing coffin,” they said. “On Caerphilly, it’s apocalyptic. We can’t overstate that Keir is bringing about our own ‘pasokification’”.

What has this got to do with de-regulation of the global economy - a ‘world without rules’? The short answer is that both Labour’s Starmer and his Chancellor, Rachel Reeves, remain committed to the ‘light touch regulation’ of his predecessors Tony Blair, Gordon Brown and Ed Balls. As the FT notes: a long-standing occupational hazard of Labour chancellors is:

the siren call of City lobbyists for financial deregulation, dressed up as a handy fix for Britain’s flagging growth rate. Rachel Reeves appears to have fallen for it with her recent rhetoric about regulation being a “boot on the neck” of businesses along with her string of deregulatory tweaks to high and low finance.

Britain’s social democrats under Tony Blair were not alone. Across the pond President Bill Clinton presided over the deregulation of both the banking system with the abolition of the Glass Steagall Act; and in 2000 over global commodity markets - a decision that has come to haunt Democrats during the cost-of-living crisis, as I explain in my new book The Global Casino.

Today the successors of Clinton and Blair - Labour in the UK and Democrats in the US - are paying the political price. But it’s worse than that. Their deregulatory policies laid the groundwork for Trump’s reckless disregard for the law and regulation.

When President Trump fails to deliver plans for a $300 million ballroom to the National Capital Planning Commission. When he proceeds, without approval to destroy a colonnade designed and built by Thomas Jefferson, a bunker built by FDR during World War II and a rose garden laid out by Jacqueline Kennedy - he is showing contempt for regulatory democracy and simply accelerating a process begun by his Democrat predecessors.

The Financial Times’s editorial board, who in my recollection never complained about Clinton’s deregulatory actions, recently deplored the collapse of the international “rules-based order” - because they argued belatedly,

The shift from a rules-based order to one based on transactions and unilateral force produces a kind of anarchy and a proliferation of violence.

The Trump administration’s attacks on international law allows politicians like J D Vance to smirk and joke about shooting innocent Venezuelan fishermen in international waters. The administration’s dismantling in less than a year of the regulatory and regulated institutions of the democratic state - the constitution, judiciary, welfare, the military, the trading system - while leaving Wall Street and the financial system intact - builds on the legacy and barren politics of centrism.

---

Regulation is democracy at work

Regulations, including international rules, are a consequence of open, democratic debate and agreement. When a society purporting to be a democracy settles on the introduction of a new regulation after lengthy debate, experience and evidence - that society is exercising its democratic rights. If a new rule is introduced, say, the obligation to use seat belts when traveling in cars - that regulation is the outcome of society-wide debate and agreement. I know because I grew up in a world where drivers boasted about not tightening their belts, and then lived through endless debates on whether seat belts really could save lives. Later I endured the intolerable, choking smokiness of London’s underground trains while citizens debated at length whether to ban smoking. At first smokers were banned from all but one carriage, but very soon and thankfully for the health of our lungs, even that concession to a deregulated atmosphere was dropped.

Of course not all ‘rules’ end up reflecting society’s democratic will. Petty, and often hostile bureaucrats get in the way and entangle communities in forms of regulation that serve to obstruct, rather than promote the popular will.

International regulation

Under the Bretton Woods system governments were mandated by their voters to prevent the recurrence of the 1929 Crash, the 1930s depression and the catastrophic world war that followed. That is why politicians regulated and enforced “a World of Rules”. Rules over the private finance sector that restricted capital mobility, ‘easy money’ creation, expensive and speculative lending, high real interest rates, volatile exchange rates, unregulated international trade and the lack of standards.

The outcome of such regulation - the Bretton Woods system - led to the period between 1945-71 known by economists of all persuasions as ‘the golden age of economics’ or capitalism.

Regulation is tightly linked to open, uncensored democratic debate and agreement.

De-regulation, in contrast, removes the democratic element and consigns society’s great power to ‘the invisible hand’ of markets.

This issue is fundamental to the failure of today’s US Democrats to mount a fight against the blatant authoritarianism, climate denial and looting of the current American president. Professor Trevor Jackson in a brilliant review of a recent book by Ezra Klein and Derek Thompson highlights Democrat impotence. He is scathing about the failure of Democrats to deal with the Trumpist threat - not once, but twice!

By losing to Donald Trump a second time - after the felony convictions, after the January 6 insurrection, after everything - and losing so comprehensively … (the Democrat party) stands revealed as one of the most incompetent, rudderless, and barren political forces in modern history.

Ditto British and European social democratic parties.

Democratic influencers like the New York Times journalist Ezra Klein, are now doubling down on de-regulation and arguing for re-globalisation: friendliness to corporations, market solutions, and technologically driven growth over redistribution.

Klein’s book Abundance, co-written with Derek Thompson argues - as does every orthodox economist - that increasing supply (i.e. ‘growth’) not demand, and certainly not redistribution, must be a Democrat priority. Klein and Thompson, like Britain’s Labour government are ambivalent about redistribution, which they refer to as “parceling out the present.” Redistribution they claim is “not enough.” Instead of imagining “social insurance programs” they propose “technological advances” as a substitute.

Both British and American centrists are all for expanding the economic pie - ‘growth’ - but not for slicing and redistributing the collectively assembled, cooked and baked concoction that is the economy.

In diagnosing America’s problems, Klein and Thompson decry the 1970s, when many on the left (Ralph Nader is their main example) “acted across many different levels and branches of government to slow the system down so the instances of abuse could be seen and stopped.”

That was certainly true of Ralph Nader who Wikipedia writes:

quickly developed an interest in vehicle designs that were hazardous and contributed to elevated levels of car accidents and fatalities.^[2] Published in 1965, Unsafe at Any Speed became a highly influential critique of the safety record of American automobile manufacturers, focusing on General Motors‘ (GM’s) Corvair automobile in particular.

In other words, Nader advanced a case which then gained popular, democratic support: that instances of abuse should be seen and stopped - by regulation.

Klein and Thompson complain that although each reform may have been individually admirable or desirable, the accumulation of what they call “blockages, regulations and choke points” undercuts the capacity of the state to do much of anything….

To bring about change and to tackle the climate crisis, they argue, requires that instead of a democratic, regulatory revival, the Democrat party needs deep-pocketed donors, think tanks and policy networks… In place of democratic societal debate and regulation, Klein and Thompson see technology and invention as the most powerful forces for social change:

It is not just that the politics we have will affect the technologies we develop. The technologies we develop will shape the politics we come to have.

This assumes the need for more fossil fuel emissions, and the endless extraction of the planet’s finite resources at a time when humanity and nature are at grave risk of obliteration from the burning of fossil fuels. Above all it assumes that advances in tech like AI (defined by Professor Trevor Jackson as a ‘stochastic (random) parrot’) combined with self-driving cars, lab-grown meat and solar power is all that is needed to tackle crises threatening humanity.

Jackson also reviews Andreas Malm and Wim Carton’s: Overshoot: How the World Surrendered to Climate Breakdown. In it the authors explain that deregulatory capitalism empowers wealthy corporations to make billions of dollars building oil pipelines - even while hundreds of Pakistani villages are washed away by floods and Los Angeles burns.

Klein and Thompson are blind to the scale of potential destruction wielded by what Malm and Carton call ‘Fossil Capital’.

The latter argue that despite all the destruction, all the models, and all the conferences, there were at least 119 oil pipelines in development around the world in 2022, plus 447 gas pipelines, 300 gas terminals, 432 new coal mines, and 485 new coal power plants.

Despite the vast quantities of talk and money invested in producing a technological “energy transition”, last year (2024) the world burned more coal and more wood than ever before. That is why the halting and regulation of fossil fuel extraction is now an urgent necessity.

But for this to happen would entail the destruction of upward of $13 trillion in capital assets.

The apocalyptic magnitude of climate breakdown, is mirrored by the apocalyptic magnitude of capitalist collapse, if any constraint is ever put on the former. …. Totally halting fossil fuel use would entail the destruction (or stranding, meaning to render unusable and unsellable) of upward of $13 trillion in capital assets.

In other words, Malm and Carton are calling for the destruction and demise of fossil capitalism.

(Jackson notes “the mood of Abundance is that of a chirpy regional sales manager giving a PowerPoint; Overshoot’s is a wild-eyed buccaneer swinging onto a burning frigate with a cutlass in his teeth”.)

But the truth is Democrat and European social democrat ‘centrists’ do little to clamp down on fossil fuel extraction and echo the right’s defence of fossil capitalism - even while the planet burns relentlessly.

The tragedy of Britain’s Labour government and of American Democrats is their lack of a vision of the future. And yet the future, Jackson argues, has a specific importance for democratic legitimacy:

democracy can survive flaws and failures so long as it seems to be an ongoing process, and people in it can view their hardships as temporary.

The way liberal politicians have either acquiesced to or actively encouraged the rise of an unaccountable tech and finance oligarchy that now threatens the continued existence of democracy itself and that claims a monopoly on the capacity to image and create the future..

even while nothing has depleted the future like climate breakdown.

However, there is hope.

Because, after all is said and done the “future is the one thing the oligarchy do not own”.