The Occupy Movement and the response to the 2008 financial crisis

Originally Published on Nick Kelly’s Blog

As the world currently goes through a post-pandemic and Russian invasion of Ukraine fuelled economic crisis, it is interesting to reflect on the economic crisis of over a decade ago and how the public responded at that time.

After the 2008 financial crisis, despite predictions to the contrary at the time, there was a global shift to the right in the years that followed. Examples of this include the fall of the Brown Government to the Tory/Lib-Dem Coalition in the UK in 2010 or the Clark Labour Government being voted out in 2008. After some initial excitement about Obama’s election in 2008, the Republicans easily won the 2010 mid-terms. There were plenty of other examples across Europe, South Asia and South America of progressive or centre/centre-left governments falling.

Given the financial crisis exposed the failings of the banking sector and free market economics, it would seem strange at first that it was the political right who were the primary beneficiaries of this. In certain countries, incumbency was the issue where rightly or wrongly the party in power were blamed. The late 1990s and early 2000s were the height of the Third Way era, meaning many progressive governments had accepted and made little attempt to reverse the free market reforms of the 1980s. Whilst this position was electorally popular up to this point, by 2008 this position was not tenable. Meanwhile, the right was much quicker to pivot away from Laissez-faire to a more traditionally conservative position, raising concerns about immigration whilst claiming to be prudent economic managers. The politics of austerity were never popular where they were implemented. Yet, the argument that national debt is like household private debt where you just have to tighten your belt to get out of the red was not adequately challenged. That cutting social spending, holding down wages and other earnings and other such measures resulted in less money in the economy thus making the crisis worse became obvious, eventually. Yet in the early 2010s, many European Governments were implementing these sorts of policies.

It was in this context that ‘Occupy Wall Street’, which quickly grew into the international Occupy Movement was born. Anger at banks being bailed out in the US whilst people’s homes were being repossessed and a feeling that the elected politicians had failed to stand up to Wall Street sparked this protest movement. The protests took inspiration from the Arab Spring protests in early 2011 which successfully brought down a handful of corrupt rulers in the region such as Muammar Gaddafi of Libya and Hosni Mubarak of Egypt amongst others.

Although there was some involvement of organised labour and other elements of the traditional left was involved, many more were not. In part, this was due to the reluctance of the main social democratic parties to be involved with such a movement, especially in the US when there was a Democrat in the White House. For many in the movement, there was a level of antipathy towards members of the political establishment, including those on the left.

As a friend of mine said to me a few times during the 2003 Iraq War protests “mass movements shoot up like a rocket, and subsequently fall like a stick.” Within a few months, the initial movement had dissipated. This was very similar to the late 1990s early 2000s anti-globalisation movement, the difference being that Occupy was responding to a serious financial crisis and failure of the global banking system. By contrast, anti-globalisation was reacting to the moral shortcomings of institutions such as the IMF or the World Bank and accused multi-national corporations of undermining democracy and self-determination, especially for those in less well-off nations.

It is interesting to look back now to see how both the anti-globalisation and the Occupy Wall Street movements influenced policy over the coming decade. Both were clear attempts to forge a new left in the post cold war era in response to the new right. On the surface, neither made any direct impact, with the free trade and the IMF agenda still rumbling on after the anti-globalisation protests in Seattle, Genoa and elsewhere. Likewise, the banking sector after 2008, took the government bailouts, the executives paid themselves bonuses and people paid the price, including mortgage foreclosures in the US. This contributed to the backlash against Obama during his presidency, as mentioned in an earlier blog post.

Ironically, the 2008 financial crisis saw the right move away from free market deregulation policies, in no small part as they had just failed on such a spectacular and global scale. The right became much more concerned with reducing debt through reducing government spending and other austerity policies. This is not inconsistent with free market ideology, more radical deregulation policies were not pursued with such vigour. With both the Brexit referendum in the UK and the rise of Trump in the US, the right began moving away from international trading blocks such as the EU or NAFTA. The claim by the anti-globalisation movement in the early 2000s was that the Neo-Liberal agenda wanted the free movement of capital, but not people. Certainly, in the case of Brexit, this was to see greater restrictions on both.

Not for the first time in history, the right took the sentiment of the anti-globalisation campaign and used it to pursue what is now termed a more ‘populist’ agenda. The UK Conservative Party winning “Red Wall”s seats in 2019 or Trump winning in the “rust belt” in 2016 were all in part due to this more ‘anti globalist’ agenda by the right. It also reflected that trying to openly pursue free market policies post-2008 was not going to work. Unlike the left, the right was as always quick to adapt to the changing environment.

The Occupy movement’s influence over politics in the 2010s is less obvious. Whilst the larger protests soon became much smaller, this movement did help shape the narrative of the left in the coming decade. The slogan “we are the 99%” stuck as did accusations of politicians serving the 1%. The surprising levels of support for Jeremy Corbyn’s Labour Party in 2017 and the rise of Bernie Sanders in the 2016 Democratic Primary owed something to this anti-corporate, anti-banking campaign of a few years earlier. More significantly, as the left needed to reinvent and reposition in the 2010s, this movement at least in part helped shift the centre-left parties towards a stronger anti-austerity and pro-public services position. The austerity light ‘moderate’ position some social democrats espoused in response to the financial crisis was never going to gain public support, especially when austerity was soon shown to have deepened rather than halted the economic crisis of the time.

Sudden mass movements may not instantly change the world. My friend’s analogy of the rocket becoming a falling stick may have been a good comparison. But maybe the falling stick in a small way did help change the course of history at least a little bit.