Sound-Money Redux

The doctrine of sound money has a long history dating back to the gold-standard era. It was most famously articulated in the “Treasury view” of interwar Britain, which pioneered the idea that government spending can result in the “crowding out” of private investment. The ostensible effects of deficit-financed government spending has long served as an ideological bludgeon behind austerity measures that are deployed to discipline poor and working-class populations.

More immediately, however, Poilievre’s sound-money politics invokes the ideas of monetarism — the economic concepts that emerged from the era of stagflation during the 1970s. These ideas, which replace Keynesian fiscal policies with a focus on the supply of money, were first experimented with by governing center-left parties in Europe. But they are most infamous for providing the ideological scaffolding for the Margaret Thatcher and Ronald Reagan revolutions in the 1980s.

Doctrinaire monetarism — rigid control over monetary aggregates to suppress inflation — proved impossible in practice and was abandoned by most central banks by the early 1980s. However, the politics of monetarism underwrote the political gains of the New Right for an entire generation.

In the wake of the monetarist turn, which marks the ascension of neoliberalism, right-wing apparatchiks and governing elites sutured together powerful social blocs that tapped into middle-class anxieties related to cost of living concerns. These social blocs encouraged a socially stratifying fortress mentality in the place of postwar conceptions of citizenship, which, for all their imperfections, paid lip service to the values of social obligation and reciprocity.

The social dislocations caused by the deep-seated crisis of capitalism in the 1970s paved the way for these middle-class anxieties to be cast in reactionary directions. These ranged from racialized and gendered tropes of welfare dependency to widespread opposition to taxation. These sentiments were presaged by hostility toward the growing power of labor unions and social movements throughout the 1960s and 1970s.

The political forces of the New Right identified government borrowing and spending — particularly social welfare spending — as a source of moral decay and social disorder. Some of the movement’s chief intellectual progenitors advocated constitutional restrictions on public spending and borrowing. So powerful were these coalitions that a modified version of monetarism was embraced by center-left politicians and intellectuals under the guise of the “Third Way.” These Third Way politicians, epitomized by Tony Blair and Bill Clinton, enacted far-reaching institutional reforms throughout the 1990s, ranging from central bank operational “independence” to fiscal responsibility rules.

Far from giving back money to the people, as Poilievre’s doctrine promises, the political heritage on which he draws are iterations of capitalist governance at its most antidemocratic. Such traditions provide cover for ceding control of economic policy to the prerogative of a small, largely ideologically homogenous class of central bank technocrats and policymakers — the selfsame coterie, elites with deep-seated connections to banking circles and the financial sector, that Poilievre frequently employs as a rhetorical punching bag. This deflationary coalition has been at the forefront of implementing the fiscal austerity and recessionary monetary policies that have disempowered poor and working-class populations throughout the neoliberal era. It is no small irony that Poilievre deploys this Brahman class as whipping boy while lionizing its tenets.

Deflationary Mantras, Ruling Class Politics

The paradox of Poilievre’s brand of sound money populism is that it evinces an unmistakably ruling-class politics. This is revealed most plainly by the policy implications behind his promise to conquer the scourge of inflation: restoring central bank independence.

Central bank “independence” has long been a euphemism for insulating control over monetary policy from the vicissitudes of democratic politics. Far from a radical retooling of macroeconomic governance for the people, Poilievre’s proposal represents an appeal to restore the status quo ante. For all his maverick pretensions, Poilievre would merely confer further control over monetary policy to the “right” sort of central bankers — those who would steer clear of monetizing government debt and demonstrate their fealty to deflationary policies.

The hollowness of Poilievre’s sound-money populism is perhaps most apparent in its omissions. In Poilievre’s telling, vital details in the story about the class dynamics of inflation are conveniently left out. Long before the current bout of inflation, investors, financiers, and asset owners reaped the benefits of wage deflation and asset-price inflation. Indeed, this state of affairs was the precondition to the dominant growth model of financialized capitalism in many countries for the past several decades.

While current inflationary dynamics have undoubtedly hit the poor and working class particularly hard, Poilievre’s campaign offers little in the way of solutions. For all his emphasis on the cost of living crisis and the need to restore the purchasing power of the working class, he rarely mentions the need to raise working-class incomes and wages. And a set of proposals to increase workers’ collective bargaining power is entirely absent from his vocabulary.

Poilievre is quick to condemn the predatory behavior of the “insiders” and “elites” behind the recent inflationary upsurge but he has little to say about the contributions of price-gouging corporations exploiting their oligopolistic market power to increase prices. Similarly, the record-breaking profit margins recently posted by large corporations does not seem to exercise his ire.

Liberal Chaperones

Meanwhile, pearl-clutching liberal pundits have lambasted Poilievre for all the wrong reasons. He is not an object of their scorn because he advocates an economic doctrine that would further shield economic governance from popular contestation and entrench deflationary tendencies and austerity (the historical norm before the pandemic). Rather, he riles the punditocracy because he dares undermine the sanctity of central bank “independence.” Most recently, a chorus of former central bankers and Liberal politicians, including Trudeau himself, decried the “dangerous rhetoric” of Poilievre and his recent proposal to replace the governor of the Bank of Canada.

This grousing reveals a class of pundits and politicians starkly out of touch with the rising tide of political resentment against the technocratic consensus of neoliberal globalization. Furthermore, it serves to reinforce the credence of Poilievre’s imagined battle against insiders and elites.

Poilievre’s pop monetarism may seem innocuous or self-evidently contradictory and his campaign may yet collapse under the weight of its social media–hyped strategy. Poilievre caters to a young conservative demographic and the most reactionary — and niche — leanings of the Conservative base. While he may have a chance to capture the Conservative Party leadership, Poilievre’s ability to put together a majority coalition in a general election looks tenuous at best.

However, Poilievre’s ability to tap into burgeoning resentment with the escalating cost of living crisis should not be underestimated. With wages consistently lagging behind inflation, poor and working-class people disproportionately bear the brunt of escalating housing, food, and gas costs. Against the backdrop of worsening inflation, reactionary politicians are increasingly adept at drawing broad support from unpopular incumbent liberal governments. This was recently exemplified in the French presidential election — Marine Le Pen substantially improved her vote share by focusing predominantly on cost of living issues (and downplaying her neofascist politics).

Recent polls suggest that Poilievre has very little support from non-CPC voters. However, other polling indicates that Poilievre’s economic message may have the potential to draw in nontraditional CPC voters, resonating with broader ranks of Liberal, New Democratic Party, and Green voters.

Revealing the flaws of Poilievre’s message won’t be enough. Pointing out the conspicuous technical flaws of his analysis of the root causes of inflation, for example, isn’t likely to draw broad-based popular support.

What is needed, rather, is a class politics that explicitly addresses the cost of living crisis and its distributive implications head-on. The Left should engage the discontent of poor and working-class people with the actual ruling class. Furthermore, a clear message and set of policies should be on offer. Unfortunately, however, the political forces needed to advance such a message are marginal. In the absence of a robust challenge from the left, the potential for Poilievre’s message to resonate with a critical mass is dangerously plausible.