OTTAWA—Three years after the global financial crisis of 2008, the anxieties it unleashed had blossomed into a worldwide protest movement.
Thousands marched in Manhattan to occupy a small park off Wall Street, inspiring copycat demonstrations in cities as far flung as Auckland and Zagreb, Kelowna and Kuala Lumpur.
The “99 per cent” was said to be waking up. The avarice of the “1 per cent” had had its day.
Daniel Roth was a young activist back then with Occupy Toronto, the movement that hunkered down in St. James Park for 40 days in the fall of 2011. He recalls with awe the workings of the occupation, how committees were struck to set up kitchens and a library, an infirmary and a space for “spiritual healing,” which in practice meant somewhere to do yoga.
It was a new world — at least, a glimpse of one — and Roth remembers it fondly as the beginning of a politics of inequality that rippled out from the Great Recession and has coloured the public discourse of so many countries over the decade since.
“The economic collapse shone a light on the reality of economic inequality,” says Roth, now 38, over the phone from Jerusalem, where he is co-director of a social justice advocacy group called Solidarity of Nations.
“A lot of people just woke up to a reality that maybe they weren’t living in a just system,” he says.
One way to look at the story of the past decade is to see the Great Recession — that economic shock that ricocheted around the world — as the starting pistol for an era of anxiety and suspicion about the promise of modern capitalism: that, in a phrase associated with the optimism of the postwar 20th century, “a rising tide lifts all boats.”
In the years since, a burst of right-wing populism has shaken much of Europe and the United States. Political economists point to slowing growth in much of the West, accompanied by a new-found strain of protectionism and a nationalist retrenchment tinged — in its ugliest formations — with racism.
Meanwhile, protest movements like Occupy have heralded a new language and concern for economic inequality — both adopted in Canada by a Liberal government that has sought to tamp down anger and resentment by trying to share the wealth of the beleaguered global trading order it is at pains to defend.
Through this lens, the Great Recession at the tail end of the last decade can be seen as a catalyst for the political currents that have helped shape the one now coming to a close — and on into the future.
In March 2011, months before Occupy, Jean Boivin, then deputy governor of the Bank of Canada, gave a speech about the Great Recession to an audience of financial analysts in Montreal.
He surveyed the damage of the downturn, triggered in the fall of 2008 when Lehman Brothers — a major investment bank in the U.S. — filed for bankruptcy protection. Within months, a panic set in and global stock markets plunged to depths not seen in 75 years. Governments in the U.S., Britain, Germany and Belgium spent billions to save banks from going under. Economic activity in the Group of 7 dropped by more than 5 per cent, and 30 million people lost their jobs, according to a 2010 analysis by the International Monetary Fund.
“The spectre of the Great Depression of the 1930s hovered on the horizon,” Boivin said at the time, “reminding us that recessions following financial crises are usually longer and more difficult than others, and leave behind indelible scars.”
This spectre coincided with — or perhaps precipitated — an emerging concern over economic inequality, a chasm between the wealthiest elites and the masses struggling under ballooning household debt and stagnating incomes. These concerns, voiced evocatively by the rhetoric of the Occupy movement, gained some institutional legitimacy with the seminal 2014 book “Capital in the Twenty-First Century,” in which the French economist Thomas Piketty charts the structural inequalities created when the incomes of working people grow slower than the wealth reaped from capital investments like stocks and real estate.
Piketty writes that this could present an “enormous problem” if sustained over long periods, as he predicts it will in much of the developed world, where growth of annual output has flatlined at between one and two per cent. When that happens, he writes, “The past devours the future.”
In a global sense, the biggest consequence of this insecurity has not been the widespread calls for a new economic system, as one might expect, says Greg Albo, a professor of political economy at York University, but a strengthening the political right — particularly the “hard right” — in many countries.
Albo points to the rise of anti-immigrant politics in Europe, as seen with Viktor Orban in Hungary, Matteo Salvini’s Lega party in Italy, and Marine Le Pen’s National Front in France. A new iteration of nationalism also gained prominence, says Albo, with the “America First” populism of Donald Trump in the U.S. and the forces behind Brexit in the United Kingdom.
The reason for this, in Albo’s estimation, is that the political left in much of the Western world had lost credibility as a true alternative to the centrist, pro-business politics it had clearly opposed through most of the 20th century. In the 1980s and 1990s, many left-leaning political parties — such as the Labour Party in the U.K. — swung to the centre and began supporting principles of “neo-liberalism” like free trade and privatization, turning away from traditional positions to protect publicly owned institutions and domestic industries and their workers from foreign competition.
“Social democracy as the main alternative to liberal capitalism … became just another form of neo-liberalism,” Albo said. “They’re kind of very much the same, and became squeezed out as an alternative.”
That’s not to say the left hasn’t changed in the aftermath of the recession. Andrew Jackson, a senior policy adviser with the Broadbent Institute, a social democratic think tank with ties to the New Democratic Party, says much of the post-recession discontent initially fuelled the populist right, but that “belatedly there has been more of a response from the left.”
Bernie Sanders and Elizabeth Warren, for example, have finally taken the concerns of Occupy toward the political mainstream, focusing on income inequality in their respective campaigns for the U.S. presidency. There are calls for new forms of tax on the assets of the rich — a solution to inequality that Piketty proposes in his book — that include the NDP’s platform pledge for a “super wealth tax” during the federal election this fall. And the Labour platform in the recent U.K. vote, with marked increases in taxes and government spending, was “easily the most radical” in decades, Jackson says.
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“You even see that with the federal Liberal government,” he said, pointing to how Justin Trudeau won power in 2015 by vowing to dive into deficits to fund infrastructure projects that would spur economic growth, a position that put the Liberals to the left of the NDP on fiscal policy.
“There’s this obsessive concern with what’s happening with the middle class and the inequality issue,” he said.
Indeed, if there is a philosophical stamp the Trudeau government has brandished, it can be found in its very handling of the forces unleashed by the great recession.
The old orthodoxy died in November 2008. At least that’s how Jeremy Broadhurst sees it.
The veteran Liberal strategist ran the party’s national campaign this fall, and was recently named chief of staff to Deputy Prime Minister Chrystia Freeland. Back in the fall of 2008, in the midst of the financial crisis and the plunge into recession, the Conservative minority government of the day introduced a fall fiscal update that stuck to a balanced budget. This was at a time when U.S. president Barack Obama, the Communist government in China and others across the G20 agreed to open up the spending taps in a bid to spur growth and avoid an even deeper economic contraction that they were currently experiencing.
The way Broadhurst tells it, the opposition parties pressed prime minister Stephen Harper to pursue similar spending policies. The result, ultimately, was federal deficits that freed up billions for infrastructure, a massive bailout of Ontario’s auto manufacturing sector, and more.
“There are some of us within the Liberal party who saw that as the moment when the common economic orthodoxy of the previous 15 years” — rigid adherence to balanced budgets and cost restraint — “starts to crumble,” Broadhurst said.
Famously, this rejection of balanced-budget dogmatism led to the Liberal promise during the 2015 election to run deficits to fund infrastructure projects that would spur economic activity. It also coincided with the party’s stated concerns with economic inequality, highlighted by Freeland as a star candidate — and now second in command in Trudeau’s cabinet — who wrote a book about the world’s super rich, called “Plutocrats” before entering politics.
Once in power, the Liberals instituted policies designed to address inequality and a sense of unfairness, Broadhurst says. They raised taxes on highest income earners, cut income taxes for a broad swath of Canadians, and beefed up monthly federal payouts to parents that they call the Canada Child Benefit.
As foreign minister during the first four years of Trudeau’s government, Freeland touted such measures as a kind of antidote to the political earthquakes seen in countries like the U.K and U.S., where governments have rejected pillars of globalization such as free trade as sources of inequality and economic woe.
In a 2017 speech in the House of Commons that was framed as part of the Liberal government’s foreign policy doctrine, Freeland rejected the protectionism of Trump and Brexit and defended the global trading system as a source of prosperity.
But in a time of anxiety about inequality, Freeland acknowledged the benefits of this trading system aren’t shared fairly. The solution to populism and protectionism, then, is to share the wealth, she said.
This may be an obvious reaction to the decade’s changes in the global arena. Randall Germain, a political scientist at Carleton University, points to how Canada benefits from trade agreements that set clear rules for the flow of goods, as a nation heavily reliant on commodity exports. Those flows are under threat in the age of protectionist populism, Germain says.
“It really is roiling the political and economic relationships that Canada has with the rest of the world,” he says.
For Broadhurst, it’s not clear when — or whether — this era of anxiety will wane into something else. In much of the West, “there will always now be an underlying current of doubt,” he says.
That, more than anything, may be the legacy of this decade in the shadow of that Great Recession.