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The Government Shutdown: Opening Round in the Fight Over Economic Reform

10/11/2013 02:56 pm ET | Updated Jan 23, 2014

The government shutdown has everyone fighting. George Will compared it to the Fugitive Slave Act; Bill Moyers to secession. All sides from Rush Limbaugh to Jon Stewart are serving up blame in spicy sound bites. Political science, game theory and even astrology are being called in to explain Washington's embarrassing display of political brinksmanship.

On the surface, the impasse is over the Affordable Care Act and the Debt Ceiling. Unfortunately, these partisan fisticuffs are only the opening round in a long, painful fight over the U.S.'s economic transition. The world has cyclically experienced this type of political paroxysm ever since the emergence of capitalism. If history is any guide, the transition is inevitable. However, the outcome is uncertain.

The neoliberal economic regime ushered in by Ronald Reagan and Margaret Thatcher in the 1980s--like dozens of liberal economic periods before it--is entering a painful demise. Liberal economies based on privatization and deregulation typically see spectacular concentrations of wealth and widening economic inequality. Speculative bubbles and devastating financial crashes eventually follow as sellers run out of buyers, unable to resolve the crises of over-production that inevitably result when markets are allowed to run rampant over the economy, the environment and society. If continued indefinitely, these unregulated markets would eventually destroy both the social and the material basis for the existence of capitalism. So, sooner or later, reforms are introduced. The last time this cycle played out was in the Roaring Twenties, followed by the 1929 financial crash, the Great Depression, and the New Deal.

But reforms are not enacted gently of their own logical accord. Historically they are forced upon the government in convulsive periods of financial and social upheaval. Further, reforms can be politically progressive, regressive, totalitarian or democratic (as the differences between reforms of the 1930s in the United States and Nazi Germany illustrate). Both the pace and the political nature of structural economic reform depend on politics, not just the partisan kind, but the politics of social movements with the power to create political will. These movements also come in all political stripes.

The Tea Party, Fox News and the Koch brothers seem to understand this historical calculus pretty well. They consolidated their partisan political power by gerrymandering voting districts and leveraging the Republican Party. They now permeate civil society through mindless media barrages, pseudo-science and community activism. The present government shutdown over the Affordable Care Act is not just clever political theater. The Tea Party represents affluent, educated, provincial elites of what some analysts refer to as the white South's "Newest Right." They know full well that given the current recession, high levels of real unemployment, crushing student debt and the deepening food and health crises, if the U.S. public gets a taste of even flawed health care reform, it may well unleash the political will for the types of progressive federal reforms that will likely undercut the Newest Right's waning demographic power at home. It could also sabotage their drive to attract global capital to an investment-friendly (read: deregulated) South.

Not that the Obama presidency ever posed a challenge to neoliberal globalization. On the contrary, like former President Clinton, he has tirelessly pushed the neoliberal agenda at home and abroad. The Affordable Care Act is but a mild reform that is careful not to address the causes of the nation's growing health crisis, nor challenge the corporate dominance of the insurance companies, Big Pharma or health providers.

Environmentalists grouse that President Obama is fond of paraphrasing reformer Franklin Delano Roosevelt's refrain, "That's a great idea! Now go out and make me do it." Whether the President is being coy or sincere, the fact is that without strong social movements demanding changes from below, even the bravest reformers are powerless to change the status quo. Neither will they be able to protect society from the political sabotage of zealots that in the name of patriotism advance the elitist agendas of a shrinking demographic and a handful of reactionary billionaires.

Far from populists, the Tea Party and Co. actually fear the potential emergence of broad-based social movements. In the face of the country's food, fuel, financial and environmental crises, these movements could well tilt the inevitable economic transition towards a more progressive reform agenda. Though the US social movements (food, labor, environment, etc) are fragmented and lack the Tea Party's billionaire backing, they are growing steadily worldwide as the neoliberal economy increasingly fails society.

There is much to be learned from the government shutdown, however it plays out. We're going to need these lessons to understand and engage constructively with the politics of the coming economic transition.