It's not often you stumble across some professor who says he's going to explain the world, and then watch him actually do it.
I stumbled across Mark Blyth via MetaFilter. Mark Blyth is political science professor at Brown University — Wait! I know, you're thinking Brown University, the tiny, ultra-expensive US liberal arts college which is a hotbed of the most demented form of political correctness? Can any professor there be capable more than soft-focus P.C. pieties?
Well, Mark Blyth can. Perhaps because he's Scottish. Very Scottish, if you listen to him. In 2016, Blyth accomplished a pretty impressive trifecta in 2016: he accurately predicted Brexit, the Italian constitutional referendum, and Trump. His big idea is Global Trumpism, which involves defections both to the right and the left from the globalist neoliberal consensus. Whether it's Podemos in Spain or Trump in the U.S., middle-class voters in the West are reacting to 30 years of tectonic changes in the global political and economic landscape which have seen their quality of life being gradually eroded.
The end result is a sense of seething frustration in the middle and lower classes of Western countries. Unions have been crushed, more and more risk shifted onto the shoulders of individuals, job security is a thing of the past, international competition and automation are destroying millions of jobs which will never come back, the small luxuries of middle-class life are drifting out of reach, and each generation is seeing a decline in its standard of living compared to the last one.
All the while, the rich are getting almost exponentially richer, and mainstream politicians — whether center-right or center-left, there is no meaningful difference — seem at best helpless or disinterested at worst actively corrupt.
Here's some remarks he published in Foreign Policy (previous link), which are a bit heavy on the economics but still get the point across:
Back in 1943, [Michal Kalecki] he argued that once you target and sustain full employment over time, it basically becomes costless for labor to move from job to job. Wages in such a world will have to continually rise to hold onto labor, and the only way business can accommodate that is to push up prices. This mechanism, cost-push inflation, where wages and prices chase each other up, emerged in the 1970s and coincided with the end of the Bretton Woods regime and the subsequent oil shocks to produce high inflation in the rich countries of the West in the 1970s. In short, the system undermined itself, as both Goodhart and Kalecki predicted. As countries tried harder and harder to target full employment, the more inflation shot up while profits fell. The 1970s became a kind of “debtor’s paradise.” As inflation rose, debts fell in real terms, and labor’s share of national income rose to an all-time high, while corporate profits remained low and were pummeled by inflation. Unions were powerful and inequality plummeted….
But if it was a great time to be a debtor, it was a lousy time to be a creditor. Inflation acts as a tax on the returns on investment and lending. Unsurprisingly in response, employers and creditors mobilized and funded a market-friendly revolution where the goal of full employment was jettisoned for a new target—price stability, aka inflation—to restore the value of debt and discipline labor through unemployment. And it worked. The new order was called neoliberalism.
Over the next thirty years the world was transformed from a debtor’s paradise into a creditor’s paradise where capital’s share of national income rose to an all-time high as labor’s share fell as wages stagnated. Productivity rose, but the returns all went to capital. Unions were crushed while labor’s ability to push up wages collapsed due to the twin shocks of restrictive legislation and the globalization of production. Parliaments in turn were reduced to tweet-generating talking shops as central banks and policy technocrats wrested control of the economy away from those elected to govern.
Seen this way, what we see is a reversal of power between creditors and debtors as the anti-inflationary regime of the past 30 years undermines itself—what we might call “Goodhart’s revenge.” In this world, yields compress and creditors fret about their earnings, demanding repayment of debt at all costs. Macro-economically, this makes the situation worse: the debtors can’t pay—but politically, and this is crucial—it empowers debtors since they can’t pay, won’t pay, and still have the right to vote….
The traditional parties of the center-left and center-right, the builders of this anti-inflationary order, get clobbered in such a world, since they are correctly identified by these debtors as the political backers of those demanding repayment in an already unequal system, and all from those with the least assets. This produces anti-creditor, pro-debtor coalitions-in-waiting that are ripe for the picking by insurgents of the left and the right, which is exactly what has happened.
In short, to understand the election of Donald Trump we need to listen to the trumpets blowing everywhere in the highly indebted developed countries and the people who vote for them.
The global revolt against elites is not just driven by revulsion and loss and racism. It’s also driven by the global economy itself. This is a global phenomenon that marks one thing above all. The era of neoliberalism is over. The era of neonationalism has just begun.
Blyth actually shines in videos; he's an outstanding and engaging speaker. I switched this video on to run in the background while I did some housework, but found myself repeatedly rushing to the computer to replay something I didn't quite get. This video is the best exposition of his theory as a whole. You'll have to get used to his Scottish burr:
Although his main critique is aimed at the technocratic managers of national and international economic policy, he also directs withering critiques at center-left politicians, who hurl accusations of politically-incorrect thoughtcrime to appear "left" while simultaneously suckling at the teat of the financial and technological elite and doing nothing to improve the lot of the middle class.
Blyth thinks the U.S. will stumble through, but Blyth believes that the outlook for Europe is much bleaker (this discussion starts at about 41:00). The Euro is a disaster which cannot be fixed, but European technocrats still refused to understand this, and continue to inflict crippling austerity on the European South in a doomed attempt to save it.