"We are no longer sure," wrote the late Giovanni Arrighi in his monumental survey of the long twentieth century, "that the crisis of the 1970s was ever really resolved."1 Almost two decades on, this observation seems truer than ever. Another economic crisis, larger even than that of the seventies, is upon us, and the European left is stranded without an economic program. Over one hundred years after the first of the parties affiliated to the Second International won a plurality in a parliamentary election (Finland, 1907),2 social democracy—that most protean of political traditions—may finally be running out of rope.
Today's stark choices are being posed as the result of a major economic shift within capitalism: the deep disruption of capital accumulation as a consequence of the crisis in global financial markets unleashed in 2008. With the end of the recent long boom—or rather, long bubble—social democrats have been dealt a tremendous double blow. On the one hand, their decade-long strategy of full accommodation to neoliberalism in order to skim off the surplus for ameliorative social spending has collapsed with the end of the growth upon which it depended. On the other, they have fallen victim to a breathtaking act of political jujitsu. Contrary to expectations, the crisis has not thus far unseated neoliberalism as the reigning economic paradigm, and with this "strange non-death"3 financiers and the political right have neatly turned the tables on the center left. The big banks, having caused the crisis in the first place and led governments to borrow vast sums to come to their aid, have successfully redefined the resulting fiscal deficits as a matter of [End Page 44] the need to cut back public spending and slash social protection. Sovereign debt crises are painted as cause rather than effect of the downturn.4 Social democrats have thus been cut off from the exits, unable to escape into the soft neo-Keynesianism that is their more progressive reflex.
Nature, too, has some nasty surprises in store: "The repo girl is at the door."5 As a result of global warming that has already occurred, it is now too late to avoid "a cascade of local and regional 'natural' disasters in the medium term."6 Price shocks, supply disruptions, dislocations, the rising costs of urban coastal infrastructure and remediation efforts: Hurricane Sandy—a direct hit on the world's financial and media capital at an estimated cost of $60 billion and counting—is the shape of things to come: price shocks, supply disruptions, dislocations, the rising costs of urban coastal infrastructure and remediation efforts. At the same time, a $20 trillion bubble of "unburnable carbon" inside the global financial system7 will require—if the planet is to be saved—deliberate capital destruction on a scale roughly twice that of the end of slavery.8
Even when—if—growth resumes, it will not deliver on the promises with which it is being invested. A modeling exercise for the Resolution Foundation by the Institute for Employment Research and the Institute for Fiscal Studies finds that on the basis of annual average UK growth of 2.5 percent from 2015-2020—an optimistic scenario—and no further cuts in public spending, living standards will fall for low and middle income households by as much as 15 percent.9 Only the rich will escape this ravening maw of austerity. We may not quite be facing the "end of growth"10 altogether, but it would be a foolhardy politics that retained any strategy relying upon a return, even in the medium term, to anything approaching the status quo ante.
It is in these circumstances that the political battle lines of the coming era are being drawn. In a thousand voices the figures of the established order—politicians, financiers, economists, media commentators, spokespersons of the 'international community'—all urge the same course: "Given the harsh world that daily confronts us with challenges, we must climb the steep slopes of productivity, budget reduction, technological innovation, the good health of our banks, and job flexibility."11 For all the difficulties, the crisis has at least smashed the false separation of...