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CHAPTER 1
WHERE WE ARE
The years since the financial crash in 2008 have not been easy for progressive politics. Parties of the centre left, whether social democratic, green or social liberal, have lost ground and suffered defeats in almost all the major western democracies. In some cases, formerly successful progressive parties, like Pasok in Greece, have all but disappeared. In others, like the Dutch Labour party, they have lost the bulk of their support to new challengers. There have been some exceptions to this rule, particularly among new left parties such as Syriza in Greece, Podemos in Spain, and Jeremy Corbyn's Labour in Britain. But although they have brought a new energy to the left and some fresh ideas, none have yet shown that they have a viable programme for government or vision for society which could start to rebuild the fortunes of the progressive left across Europe and beyond.
Twenty years ago, at the height of the boom that followed the end of the cold war and the quickening pace of globalisation, the picture was very different. Centre-left parties were in office across most of the western democracies, including the US. The third way was in full swing, and its promise to combine economic efficiency with social justice through the policies of the social investment state proved widely popular. A new era of progressive centre left advance seemed to be unfolding. There was even talk of a progressive century. These parties and governments were working within the constraints of the new international order shaped by the doctrines of neoliberalism and the opportunities of globalisation, but they were demonstrating that there were practical alternatives to the kind of policies pursued by the Thatcher government and the Reagan administration in the 1980s.
This was a period of relative optimism and confidence that increasing political and economic cooperation could begin to solve some of the pressing problems with which the world was confronted, particularly on the environment, global poverty and nuclear proliferation. The rules-based international order, which had collapsed amid the economic slumps and military conflicts of the 1930s and 1940s, was rebuilt under US leadership after 1945 and, despite challenges and upheavals, particularly during the cold war and the stagflation of the 1970s, it had survived. With the collapse of the Soviet Union in 1991 and the increasing participation in the global economy of some of the world's most populous and poorest nations, especially China and India, a fresh beginning seemed possible. A new world order bringing all the nations of the world into economic and political cooperation within a single set of institutions and rules seemed to some within reach.
In the years that followed some progress was made towards this goal. The advance of China and India transformed the world economy, lifted millions out of extreme poverty, and changed perceptions of what the future of the world would be like. The old Eurocentric and western assumptions which had ruled for the previous two centuries were weakening. This was an optimistic time, a prosperous time and often an exhilarating time, but there were already dark clouds and a growing awareness that not all was well. There were repeated financial crises; problems in controlling the economic forces which globalisation had unleashed; the emergence of new ethnic conflicts in the former Yugoslavia and Rwanda; the rise of new terrorist organisations, most spectacularly al-Qaida with its attack on the US on 9/11; the intervention of the western powers in Afghanistan and Iraq; and the failure to integrate Russia as a full partner in the western international order. Liberal peace became liberal war.
Before the financial crash of 2008 there were already signs of darkening prospects. Many things were not going well. Populist nationalist movements were loudly pointing to what was wrong and campaigning against the political and economic elites they claimed were running the international system and trampling on the rights and interests of nations. But these movements have been amplified hugely since 2008. Today there is hardly a western democracy which does not have a vigorous challenge from a populist nationalist movement claiming to represent the 'will of the people', pitching the sovereign nation against the global elite. What was surprising was that the major breakthrough for the populist nationalists when it came was not in France, the Netherlands, or Italy but in the US, with the election of Trump in November 2016, and in the UK with the vote in the referendum earlier that year to leave the EU.
The rise of populist nationalism has been a key factor in the fading fortunes of the centre left. Its politicians found it hard to articulate a response to the financial crash and the austerity programmes which followed. Centre-left parties were seen by many voters as governing parties, part of the web of elites who were held responsible for the crash and the recession. Having been so long in government during the boom years centre-left parties found it hard to find a voice as outsiders and critics. That was something taken up with relish by the populists who delivered simple punchy messages about immigration, jobs and services, the iniquities of globalisation, and the loss of control to supranational bodies like the European commission.
The decade after the crash brought to the fore trends which had been building for some time. The traditional support base of centre-left parties in the working-class communities of the industrial heartlands has been in sharp decline. The restructuring of many advanced economies away from manufacturing towards services, which was a marked feature of the 1980s, further accelerated in the 1990s as jobs were outsourced by multinationals to low-cost producers such as China (Figure 1.1). There was a sharp reduction not only in the number of people employed in manufacturing but also in the numbers belonging to trade unions. Many of the institutions which had sustained an independent labour movement no longer appeared relevant in the new age of globalisation, and there was nothing it seemed that centre-left parties could do about it except press for programmes which gave some support to communities and allowed individual workers to retrain. Many workers still ended up in low-skill, temporary or precarious employment, with few rights and a loss of the status and self-respect they had formerly enjoyed. Many of them felt left behind and abandoned. As traditional loyalties gradually melted away many became attracted to the new direct messages of the populists.
At the same time as support among its traditional base was ebbing, the centre left was becoming more attractive to other groups of voters, winning over ever greater numbers of young, university-educated middle-class professionals and public sector workers. To win elections centre-left parties needed to keep both groups within their coalition, but after 2008 few of them managed to do so sufficiently. The centre left has had few answers to the new politics of identity developed so seductively by the populists. Class has not disappeared as a factor in voters' allegiances, but other political divides have become more salient, centred particularly on age and education. Class has become less important in determining how individual citizens define their political identity.
In charting new directions for progressive politics we need to start from a realistic assessment of where we are and the obstacles that lie in the way of achieving progressive goals. Some of these obstacles are economic and political, some cultural. We should not exaggerate the threats we face, but nor should we underestimate them.
THREATS TO INTERNATIONAL ORDER
The multilateral, rule-based western international order has come under increasing attack since the 2008 financial crash. The crash highlighted the shifting balance in the world economy as the US, Europe and Japan all went into recession and struggled to recover while China, India and many other non-western economies continued to grow for a time at the same pace as before. From the beginning, the western international order had reflected US priorities and interests. A US-dominated order was the only liberal order on offer after 1945, and the more radical ideas of John Maynard Keynes and others for institutions which might more directly pursue the global public good were quickly ruled unacceptable by the US. The prize of multilateral and increasingly open trade was won but on US terms. In return for its undisputed primacy over its allies the US made concessions in its governance of the international system to ensure that the countries devastated by the second world war, including the defeated nations, were able to recover, and a remarkable period of prosperity, Les Trente Glorieuses, was the result.
But that phase of development, partly as a result of US policies, ended in the collapse of the international monetary system agreed at Bretton Woods in 1971. The US then moved to reconstruct the international order in ways which more directly reflected its national interests. The stagflation of the 1970s and the restructuring it necessitated was painful but eventually the obstacles were overcome and a new period of advance began, leading eventually to a new boom, not as impressive, at least for the western democracies, as the postwar boom, but still substantial. This period ended with the financial crash of 2008.
A new restructuring is needed today, but the task is greater than in the 1970s. The position of the US has changed, and it is no longer either able or willing to play the role which it once did. Under Trump there has been a revival of the slogan America First. US administrations after 1945 were always concerned to put America first but they identified the US interest with the preservation and extension of the liberal world order they had built. By giving voice to the angry anti-globalisation protests of those US regions which feel excluded and disrespected by the liberal cosmopolitan elites of the corporate, financial and media worlds, Trump is setting the US against the multilateral rule-based economy which has underpinned western prosperity since 1945. Under Trump, the US is turning its back on many of the multilateral institutions it took such trouble to create, and is instead favouring bilateral deals. How far this may go is still uncertain, but there have already been several symbolic gestures – such as the refusal to participate in the Trans-Pacific Partnership, withdrawal from the Paris climate change agreement, and an enthusiasm to embark on trade wars.
This willingness of the US to disengage is a sign of weakness rather than strength. It is because the US is no longer able to remake the world order on its own terms that elements of US opinion, noisily articulated by Trump, are in favour of giving up leadership and retreating to a more isolationist position. The alternative would be for the US to agree a sharing of power and control with some of the rising powers, particularly China and India, leading to a reconstruction of the governance of the international order to make it less centred on the west, but there is very little appetite for that at the moment in Washington. Even the adjustment of voting weights on the board of the International Monetary Fund (IMF) to give China a greater say was held up for several years by the US Senate.
Without the renewal and deepening of the multilateral rules-based order, one of the fundamental building blocks for a progressive politics and progressive movements is missing. This is not only about economic prosperity. It is also about finding ways to deepen cultural exchanges and political cooperation for the many challenges which cross national borders. Climate change and nuclear proliferation are two great existential threats to humankind. If they are to be met successfully then greater multilateral cooperation not less will be needed. Currently such cooperation is weak, and urgently needs to be strengthened. This has to be one of the key aims for an Open Left.
THREATS TO EQUALITY AND INCLUSIVENESS
A second concern is the threat posed to inclusive economies and advanced welfare states, which, although imperfect and often attacked, remain the proudest achievements of generations of progressive politicians in western democracies. This threat arises because of the trends towards growing inequality that was an outcome of the political economy which came to dominate western economies in the two decades before the crash, and because of the effects of the crash itself on living standards. Proponents of globalisation often claimed that it was successful precisely because it helped to weaken many of the protections and institutions in national democracies which had made Les Trente Glorieuses such an important period of progressive advance. Parties of the centre left had to adjust to the new constraints and find new ways to advance progressive aims in the new economic and political landscape. Substantial gains were registered across Europe, but to many critics it seemed that the successes of the different variants of the third way were secured only by abandoning basic principles and accepting the new commonsense about the primacy of markets and the limited role of the state.
A key part of progressive politics has always been how to ensure an expanding and prosperous economy, one which benefits all citizens. Without prosperity, all progressive objectives become much harder to achieve, and it is a melancholy fact that progressive parties have rarely thrived during times of economic adversity. Since the 2008 crash the slowness of the recovery, and the worries about productivity and living standards, have raised anxieties that the western economies may be stuck in a long period of poor economic performance. That performance, it is feared, will make any kind of creative progressive politics more difficult, fuel anti-system populist movements and scapegoat immigrants and other minorities. Many explanations have been put forward as to why the economy is so sluggish. Every upturn has been heralded as the return to normality, but so far each upturn has proved short-lived. The headwinds against economic growth have proved too strong.
At the heart of the dilemma is the productivity puzzle. Despite the ever-quickening pace of technological innovation, productivity has been stuck, and because productivity has failed to rise so have wages for the majority. These trends existed before the financial crash but in its aftermath they have been put into much sharper relief. Many factors seem to be responsible including flexible labour markets and the weakening of trade unions, the ease with which capital flows across borders, and the increasing reluctance of states to impose regulation on successful business sectors.
Another long-term trend has been the rise in inequality in western economies. Inequality across the world has fallen in the last three decades, mainly because of the astonishing rates of growth achieved in China and India, and many other poor countries, and that has been a major progressive change which globalisation has brought about. But in the western world, and particularly but not exclusively in the Anglo-Saxon world, inequality began increasing again, returning to the kind of levels that existed in the 19th century, before the progressive reforms which culminated in the reformed capitalism of the second half of the 20th century. The economist Branko Milanovic has shown that for the world as a whole between 1988 and 2011 the bottom groups in the global income distribution did relatively poorly, but the global middle classes did relatively well particularly in China. Those between the 45th and 65th global percentiles doubled their income. But the middle-income groups in the rich countries had stagnant real incomes, while the global top 1% had real income increases of 40%.
Under New Labour, the growth of income inequality in the UK slowed markedly as a result of policies such as the minimum wage and Sure Start children's centres. The financial crash also meant that for a time income inequality ceased to grow at all and even went into reverse. But because so many of the policies to combat poverty were abandoned in the implementation of austerity, this was not expected to last. Trends to increasing inequality of wealth proved much harder to counter throughout the globalisation era. Once austerity and retrenchment took hold, the gulf between rich and poor, and the cumulative effect of such a long period of stagnant real incomes for middle-income groups, fueled resentment and added to popular rage against elites.
A further challenge is protecting the welfare state, which has increasingly come under attack as unaffordable and inefficient. Periods of austerity generally see retrenchment of public expenditure and swings of opinion against welfare recipients. But support for universal entitlements continues to be strong. The problem faced by progressives is how to combine reforms to how the welfare state is organised to make it more responsive to citizens' needs, while persuading the same citizens to pay higher taxes to fund the quality of services they say they want. Welfare states were signal achievements of progressive parties, which have always been their strongest defenders. But since the 1970s welfare states have been subject to sustained ideological and political attack, questioning why the state has to be involved at all in the provision of welfare. A new assault on the universalism of the welfare state has emerged. At the same time, not all claimants have been treated the same in the politics of austerity. In the UK particular benefits have been cut, not all benefits. The young were particularly targeted with the cutting of benefits for people of working age and families, and the trebling of university student fees, while pensioners' benefits were protected. This generational divide once opened becomes difficult to close.
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Excerpted from "Open Left"
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