The new class war - 'A nasty battle lies ahead'

Okay, so talking of class war isn't the cheeriest way to ring in a new year. And I admit I have been spending a lot of ink lately talking of new eras. Still, I do think the 2008 financial crisis marked a turning point for the global political-economic order, the consequences of which will only be understood over time.

Whereas much of the developed world can look forward to decades of rising prosperity, and a return to their historical centrality in world affairs - read, China and India - the prognosis for many developing countries is more grim. Spoils will seem scarcer in the years ahead. You remember what a former prime minister of ours had to say about scarce benefits? A nasty battle lies ahead.

It's now received wisdom that developed countries have lived well beyond their means. The Ponzi schemes that their financial sectors had become allowed them to mask their overextension for a while. But now that the bubble has burst, rich countries are facing up to the fact that they are carrying huge debt loads, which will only grow worse.

Under current projections, debt-to-gross domestic product (GDP) ratios in developed countries will grow to a scale beyond anything seen in the worst days of the Third-World debt crisis. The United States (US) Congressional Budget Office estimates that the federal debt-to-GDP ratio could reach nearly 200 per cent in 2035. Add in state-level, municipal and private debt, and the picture looks worse yet. Figures for countries like Japan and Italy are even scarier.

Positively tight-fisted

Jamaica looks positively tight-fisted compared to this lot. Well, we can teach them a thing or two about debt. If you reach breaking point, you can do one of two things: tighten your belt, or borrow more money. As we know all too well, when you keep borrowing and, consequently, increase the money supply faster than you augment the production of goods and services, you erode the value of the currency. That means inflation rises, and the cost of living outpaces income growth.

Really, someone should write a book on the recent history of Jamaica and sell it in developed markets under the title 'This Is Your Future'. Sooner or later, the bill comes due, and you have to rein in spending. But when you do, you will run into the objections of the stakeholders in state largesse.

This is where the class war comes in. In the 20th century, students and practitioners of politics alike agreed that the major ideological divide ran along the capitalist-worker fault line. But in recent decades, one of the interesting but understudied phenomena has been the growing division of voting behaviour between public-sector and private-sector workers. As it happens, employees tend to vote along the lines of their employers, following the simple logic that what's good for their employer is good for them.

The great divide

Public-sector unions will seek to defend their members' interests in the age of austerity. But private-sector workers, who will suffer the effects of inflation, will tend to take a less favourable view of this approach. Already, average wages in the US are being eroded by inflation, and the prognosis is bleak.

We are already seeing hints of this new cleavage in countries where protests against public-sector cutbacks are gaining only muted support outside public-sector unions. The large crowds that took to the streets of cities like Paris and Lisbon were largely rolled out by public-sector unions. The American Tea Party revolt, which attracted considerable support from relatively poor Americans, may be a hint of the kind of conflict Western societies can expect.

For parties of the left, this will pose deep challenges. The knee-jerk reaction that evolved over the late 20th century, of defending all state expenditure as progressive, will ill-serve their interests. Finding a way to advance a progressive agenda, which organises popular expression and advancement in new venues outside the state, will be required.

If such an outcome materialises, it will represent a return to the roots of the left.

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