The Financial Express


Political centre-left evaporating in the Atlantic zone  

| Updated: October 22, 2017 09:54:51

Political centre-left evaporating in the Atlantic zone   

How do we explain the slow and unprecedented decimation of centre-left parties at the start of the 21st Century? Incompatibility with neo-liberalism pushed centre-left leaders like Bill Clinton and Tony Blair to the right. Insolvency through ever-bloating, industrialised-country welfare costs also corroded centre-left confidence: even a right-shift could not preempt the inevitable long-term crunch from behemoth welfare costs. The simultaneously splurging 1990s consumption spree, open-ended borrowings, and an Internet-triggered technological revolution boosted consumer-spending uncontrollably even as jobs began evaporating.

Ideological attachments and identities were inevitably hit. Exemplifying with the United States, these dramatic changes displaced stable, predictable, and cyclical business-driven lifestyles with anomie.

In the US, interest groups had the choice to attach themselves to the inclusive centre-left or exclusive centre-right parties: free-traders followed the liberal Democrats, protectionists the conservative Republicans, a template set in the 19th Century, when Republicans favoured protecting fledgling industries, while Democrats attracted free-trade-minded farm-exporters.

Reversals began with the 1930s Depression: manufacturing industries had matured, and scrambling to find external markets, they shed their protectionism; while the declining farm proportion of the national economy, that too, against cheaper imports, made farmers more protectionist. As long as the United States was globally competitive, this did not matter electorally. Yet, when this started sputtering from the 1970s, both parties began tossing and turning: Democrats shifted towards protectionism, Republicans free-trade, exemplified by the how a Republican initiative produced the North American Free Trade Agreement (NAFTA), eliciting Democrat opposition (even though NAFTA adoption was on Bill Clinton's watch).

As the earlier free-trade agreement (FTA) movement, from 1984, culminated in neo-liberalism and the Washington Consensus from the late 1980s, the slow right-shift of parties exposed something more: how educated but unemployed Democrat youth began drifting to the Republican camp protesting job-scarcities, while Republican educated unemployed youth embraced populism to reject party politics. Working, educated, and entitlement-dependent groups created the army, in fits and start, winning Donald Trump's election 2016 battle for him. 

Similar arguments explain the centre-left predicament for the Labour Party in Britain, the Socialists in France, and the Social Democrats across West European countries, particularly Germany. Until the 1960s, when expanded international demand boosted domestic production and employment, competition was fairly symmetric: cross-border wage trajectories were streamlined across the Atlantic, permitting market predictability. Yet, as those in the work-force then, the  Baby Boomers, aged and migrants flooded transatlantic job-markets by the 1990s, spiralling welfare demands, pension payments, and other entitlements, not just pushed centre-left supporters to the centre, but also the neo-liberal advent opened a Pandora's box.

Simultaneously, Japan's US trade surpluses shook this calculus from the 1970s, and shifted the Atlantic playground to the Pacific: its formidable protectionist orientation would be followed by China, as too low-waged Mexico with a more liberal trade approach. Even though the dominant post-World War II party in Japan has been the Liberal Democrat, its conservative platform was already being replicated by western centre-left supporters. No wonder a late-June 2017 Economist article indicated how the 'liberal' notion was becoming meaningless with so many denotations and connotations, a predicament unlikely to change in the foreseeable future.

The favourite centre-right argument against the centre-left is of too much governmental involvement throttling the private sector, and particularly entrepreneurial skills and innovation. When the 1970s financial squeeze came (not necessarily triggered by the monumental 1973-4 oil price-hikes, but certainly aggravated by them), James O'Connor and others who spelled out the state's 'fiscal crisis', still traced causal factors (and drew their automatic consequences), to the domestic setting: to tensions between the state's (a) accumulation and legitimacy functions; (b) social investments against consumption expenditures; and (c) welfare versus warfare priorities.

The more the welfare, they argued, the higher the taxes, breaking the hitherto zero-sum relationship from price inflation and unemployment (the Phillips Curve). Amid the resultant stagflation, finger-pointing at corporate greed, rising manufacturer costs, and low-cost foreign producers dominated. Even as migrants performed tasks middle-class developed country citizens refused to do, resentment masked how an internationally uncompetitive United States was displacing fortress-minded US protectionism as an election maker-or-breaker.

Ideological explanations of these political shifts and sways from David R. Cameron (not Britain's erstwhile prime minister) and others, still ignored the international context even as  foreign workers packed the industrialised country's job-force ("Expansion of the public economy," in the American Political Science Review, volume 72): South Asians in Britain from the 1950s, Turks in the Federal Republic of the 1960s, and a far more motley lot from everywhere else to the United States after its 1965 Immigration and Nationality Act. Trade surpluses, meanwhile, became deficits by the 1970s, while cheaper imports began closing domestic factories from the 1980s.

Just as the rise and fall of the centre-left is intimately connected with such sector shifts, the role and relationship of the business-cycle in welfare provisions is equally prominent: during business upswings, entitlement provisions receive benign neglect; during downswings, finger-pointing begins with immigrant workers, turns vigorously against the government, vehemently chastises low-wage foreign producers, breeds populism, and disseminates xenophobia.

From Japan-bashing to China-bashing, the undercurrent US manufacturing narrative of the late-20th Century parallels the perennial Mexico-bashing agricultural discourses (beginning with the 'wetback' derogation in the 1950s and spiralling into Trump's 2016 'rapist' reference), in turn, echoing the anti-Chinese riots of the 1880s, anti-Japanese riots of the early 1900s, then the anti-Filipino/anti-Indian/anti-Italian/anti-Portuguese outbursts of the 1920s. Guttural socio-cultural and racial expressions of the US economic mindset even get hurled at far more affluent Mexicans and other well-to-do migrants today indicating how the journey that began with domestic economic grievances progresses into an open-ended stigma-filled campaign against any person of colour or dissimilar culture for whatever reason.

Since the left-right dichotomy originated as a capital-labour divide, that is, pitting pro-business groups against worker welfare, how it is being redefined in terms of foreign-domestic wages, prices, and productivity levels deserves much more scrutiny than is possible here, but the growth of the educated unemployed amid a neo-liberal drive that constantly floods the market with cheap goods from wherever subverts this paradigm.

Centre-left parties paradoxically outscored their centre-right rivals using centre-right platforms during the neo-liberal 1990s: the highest 20th Century US growth-rate was under Democrat Bill Clinton's presidency, and Great Britain's far sunnier economic face than before or after the 1990s was during Labour Tony Blair's premiership. To a lesser extent, Socialist Francois Mitterand expanded welfare provisions when he entered office in 1981, noted the economic deterioration that followed, and ended the longest Fifth Republic presidential tenure (in 1995), by revamping the socialist agenda, aligning France more irreversibly with the European powerhouse, Germany, and leaving a more vibrant France than the one he inherited. Germany Social Democrat Chancellor Gerhard Schröder (1998-2005), followed a similar pathway: dismal economic performances produced identical Agenda 2010 reforms as Clinton's, Blair's, and Mitterand's had done, and which CDU (Christian Democratic Union) Angela Merkel gladly continues.

The future stability of western democracies depends upon reconciling the inclusive centre-left platform with the expanding market-demand technologies that the exclusivist current centre-right parties favour. Until Brexit and Trump's election exposed it bluntly, this transformation went a-begging. Ideological explanations, business-cycles, as well as faith in (and fury against) foreign countries can only go so far to account for this turn-of-the-21st-century twist, particularly in western democracies. This 5-part series explores that puzzle.

Dr. Imtiaz A. Hussain is Professor & Head of the newly-built Department of Global Studies & Governance at Independent University, Bangladesh.

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