Understanding why right-wing populism succeeds

I have just been rereading “Populism and the People” by Jan-Werner Müller in the London Review of Books (May 2019). It is the most concise and I think perceptive account of the most worrying political development of our time: the rise of the right wing populist. This is Trump and Farage, but also Orbán in Hungary, Erdoğan in Turkey, Kaczyński in Poland,  Modi in India and Bolsonaro in Brazil. What they have in common is a

“populist art of governance ... based on nationalism (often with racist overtones), on hijacking the state for the ends of partisan loyalists and, less obviously, on weaponising the economy to secure political power: a combination of culture war, patronage and mass clientelism.”

But there is one standout paragraph for me, and so I will reproduce it in full.

“But have so many people really been converted to the views of the far right? Contrary to the domino theory propounded by pundits, and by the populists themselves – first Brexit, then Trump, then Le Pen etc – the fact remains that no right-wing populist has yet come to power anywhere in Western Europe or North America without the collaboration of established conservative elites. Farage did not bring Brexit about by himself; he needed Michael Gove, Boris Johnson et al to assure voters that it was a jolly good idea. Trump wasn’t elected as the leader of a spontaneous grassroots movement of – as the cliché has it – angry white working-class males; he was the candidate of the ultimate party of the establishment and needed the support of Chris Christie, Rudy Giuliani, Newt Gingrich – all of whom vouched for him. What happened on 8 November 2016 can in one sense be explained in the most banal terms. Citizens who identify with the Republican Party came out and did what voters do on election day: they cast a ballot for their party. What took place was utterly normal, except that the candidate himself wasn’t quite so normal.”

This process can seem perfectly normal if you take it for granted that the right has to sell out to the far right if it is to survive, and the right has no other choice. But it is not inevitable that the Conservative party sat back and allowed its ranks to be swelled by ex-UKIP members, who promptly started trying to deselect candidates who spoke out against No Deal. It was not inevitable that Cameron pledged to have a referendum on EU membership where he allowed the Leave side not to specify what kind of Brexit they were proposing. And in the late 1990s and early 2000s, the Tory opposition and their backers in the right wing press did not have to start using immigration is a political weapon. It was not inevitable that Osborne chose austerity, which helped create the conditions for Brexit.

As ever, this is about going for short term gains that have the risk of far greater longer term costs. No doubt someone at Conservative party HQ thought that increasing membership had its advantages. The Conservative focus on immigration lead to the rise in UKIP, and in 2010 setting up immigration targets that were never going to be hit strengthened UKIP even further. It was that strength that led Cameron to make his ill-fated pledge. Osborne’s austerity might have embarrassed Labour and shrunk the state but it intensified anti-immigration attitudes.

But I think, in the UK at least, there is something more, and that is the normalisation of the far right by the BBC, coupled with a demonisation of the left by the centre more widely. That the BBC has been pressured by the government and its press into adopting a more favourable stance towards the Conservatives than Labour is well known and beyond dispute, except of course at the BBC. But I think that has also led to the normalisation of the far right, which is equally dangerous. It is made up of a lot of little things: unchallenged coverage of the Brexit party launch, not bothering to highlight links between Bannon and Johnson (here is ITV’s coverage), inviting a far right representative on Newsnight straight after the Christchurch terrorist attack, and so on. It is worse at the BBC, but other broadcasters are not totally innocent. The Brexit party is not a party but an organisation where no one can challenge the leader, a leader who is well versed in 1930s fascist imagery.

Coupled with the centre’s normalisation of the far right is a demonisation of the main opposition to the Conservative party. To quote Gary Young:

“Throughout this time media elites, drawn from the same class as their financial and political counterparts, have mostly been obsessed by the crisis in leadership in an ostensibly “unelectable” Labour party, which has had the same leader for four years – and gained seats and vote share in the last general election. Those media elites have called pretty much every major political event, from Brexit to the last two elections, incorrectly.”

When the democratically elected leader of a party of half a million is considered beyond the pale, you get an environment that inevitably enables the rightward drift of the other main party. Every news organisation worth its salt should be hounding Johnson about his failure to rule out proroguing parliament as a direct attack on democracy. Just as it makes no sense to balance truth with lies, it makes no sense to tolerate attacks on our democracy. Without that kind of defence from our media and politicians, it becomes an easy slide to the populism that Jan-Werner Müller talks so incisively about.

When people warning about incipient fascism are criticised rather than laughed at is the time to worry about incipient fascism

I’m old enough to remember left wing demonstrations in the UK when ‘fascist!’ was a standard chant. On most occasions back then it was a ridiculous accusation, and as such it was rightly laughed away. But times have unfortunately changed. With authoritarian regimes in some East European countries, Trump’s election and subsequent behaviour, and far right parties gaining ground in other countries, fears of a return of something like fascism are no longer a laughing matter.

When Andrew Marr interviewed David Lammy a week ago, he suggested Lammy talking about appeasement of the ERG in the same terms of Hitler or apartheid was “unacceptable”. Not ludicrous but unacceptable, and by implication something Lammy should apologise for. Quite rightly, and so refreshingly for a Labour MP in the glare of TV lights, Lammy was having none of this. He said his comments were not strong enough. When Marr protested that these were elected MPs he was talking about, Lammy reminded him that the National Socialists had elected MPs. In 1932 they were the largest party in the Reichstag.

Nigel Farage is not an MP, but the BBC seem happy not just to give the launch of his new party considerable airtime, but also to do so in an uncritical manner. After the BBC had chosen the soundbite from his speech about putting the fear of god into MPs for what they had done to us, no one was given airtime to warn about how dangerous that kind of speech was, and that one MP had been murdered by the far right, another plot foiled and about many other serious threats to MPs. I think it is fair to say that the launch of the Brexit party was news and had to be covered, but to provide no kind of critical balance whatsoever was a strange decision.

Discussions of incipient fascism go in the wrong direction when direct comparisons are made to fascism in the 1930s. Equally ticking off check lists of signs of fascism just beg the question of how many ticks mean we should be worried. There is no generally accepted definition of fascism. We need to be more analytical, but also to update the analysis to the circumstances of today.

Much of the academic discussion of this issue takes place under the umbrella of studying populism. I think this is a little unfortunate, because the populism umbrella can be spread very wide to include any political party that challenges an existing party political structure. If you are interested in incipient fascism a better conceptualisation of populism is expressed by Jan-Werner Müller. You can tell a populist by whether they claim to represent ‘the people’, which is certainly not all the people, but instead just the ‘real people’. The real people quickly becomes those that support the populist leader. The others, especially immigrants or minority religions or races, just do not count, or worse still are ‘saboteurs’ trying to thwart the ‘will of the people’. Populists of the Müller type will be strong on nationalism, as well as threats from within and without. Intimidation and violence against opponents is never far away. Populists will talk about the elite that has been leading the country astray, and how they as leader has to constantly battle against this elite, even though they themselves are often part of that elite.

I think a critical aspect of Müller’s account is that populists are prepared to overturn the institutions of pluralist democracy if they believe they are frustrating what the populist leader perceives as the will of the people. Authoritarian populist leaders deny the necessity of democratic pluralism, such as an independent judiciary or an independent media. The people, as expressed through the populist leadership, takes precedence over all other elements of pluralist democracy, and these elements must be made to bow before that will or be replaced by those who embody that will.

A clear example of what Müller is talking about is Viktor Orbán’s Hungary. He has pledged to create an illiberal state like Russia or China. Perhaps as a result, European Commission President Jean-Claude Juncker at a 2015 EU summit dispensed with diplomatic protocol to greet Orbán with a "Hello, dictator." To further this aim he has gone about controlling the media and courts either directly or through placement of allies, with complete success. This together with a lethal combination of extreme nationalism, scaremongering about migrants and antagonism against Muslims and Jews keeps him popular. NGOs have been attacked, which has led to legal proceedings by the European Commission. A host of public bodies like its fiscal council, the central bank, and the national elections commission, have been abolished or their independence limited. An international university in Budapest has been forced to close down.

Yet Hungary is still a democracy in the sense of having reasonably genuine elections. When occasionally the opposition does win a local election, Orbán unleashes the full might of his nationalist, enemies at the door, enemies within narrative at them. With almost total control of the media and civil institutions, he can make life very difficult for the opposition. He won his last election with ease.

I would argue that this is the incipient fascism of today. It is possible that Orbán’s nationalism and control of the media and other parts of the state will allow him to maintain total control for many years. If at some point in the future a unified and effective opposition does arise, we will see if Hungary moves back to democracy or to something worse than the elected dictatorship it now is.

It is also easy to see many of the traits of a Müller populist in Donald Trump. He is impatient with the constraints of the judiciary, and is more than happy to fill vacancies with barely qualified or unqualified individuals who will do what he wants. He plays up threats from within and without. He has a penchant for dictators in other countries. He endlessly criticises the ‘fake news’ that comes from an independent press, and instead favours the Republican/Trump propaganda that comes from Fox News. When asked whether he was concerned about death threats that followed his disgraceful attack on one of only two Muslims in Congress he basically said no. His own Republican party provides no check on his actions.

But in what sense can any of this be applied to the single political project called Brexit? The ERG are a disparate group of MPs, whose common cause is to push for the most extreme form of Brexit. There is no single authoritarian leader among them. So can Müller’s concept of populism still apply to this project and some of those who push it?

Let’s begin with what happened shortly after the 2016 vote. That referendum did not specify how we left or under what circumstances Article 50 should be triggered, but May decided that she uniquely understood what the referendum meant and parliament did not need to be involved. The Prime Minister wanted to start the Article 50 process without consulting parliament. The issue went to court, and when three judges decided parliament did have to approve the decision, the Daily Mail described them on its front page as enemies of the people.

The Brexit press and those promoting Brexit frequently talk about the will of the people, thereby excluding the 48% who did not vote for it. Indeed Remainers are often accused of sabotaging Brexit, and being the elite that those carrying out the will of the people have to defeat. EU citizens living here are effectively ignored, and were not even allowed to vote in the referendum. When the costs of Brexit are mentioned, we will often be reminded of how the British stood alone in WWII and came through the hardship of war. This is nationalist imagery at its most potent and dangerous. At one point the Daily Telegraph managed to find common cause with the authoritarian regime in Hungary and the far right in the US by scapegoating the same wealthy Jew for his ‘plot’ to stop Brexit.

To sum up, Brexit and those that push it have displayed almost every element of Müller style populism. I have not even needed to refer to links between various Brexit politicians and the German AfD, Steve Bannon and various far right groups. Or about law breaking in order to win the vote, and the lack of enthusiasm shown by the police in investigating this. Brexit displays the same populist characteristics that you see in Victor Orban or Donald Trump. Add the violence that Brexit has inspired and the pro-Brexit right encourage with their talk of treason and we have every reason to warn about incipient fascism, as Michael Heseltine pointed out.

It is also naive to imagine that all this will stop if we end up leaving the EU. Steve Bannon is creating a network of far right parties that will use immigration and islamophobia to undermine existing parties and then pluralist democracy. Islamophobia has already been employed by the Conservatives in trying to stop Sadiq Khan becoming mayor of London. Brexit of the kind proposed by May will undermine living standards for working people that have hardly grown for a decade. This stagnation, coupled by unfettered and growing inequality, is the kindling that Bannon and his network hope to set alight.

In my view this has become so dangerous partly because the political centre fails to see it. The Brexiters are appeased by May rather than isolated as John Major did. Those termed political moderates fret about the leader of the Labour party as much if not more than incipient fascism. I cannot quite decide whether the BBC is just blind to all this or elements within actively promote it. A lesson of history is that the far right is at its most dangerous when it is appeased by a centre that is more concerned about the threat from the left.

Ian Dunt vs Owen Jones: a comment on a brief debate

When two of my favourite commentators on current political events, Ian Dunt (ID) and Owen Jones (OJ), cross swords, albeit briefly twitter style, the chance is that there maybe something interesting going on. I can see what I suspect annoyed OJ in ID’s piece, but I think OJ’s response was too easily sidetracked in the confusion that is history. I am going to stay on more familiar UK (and US) ground.

The general theme is ID’s piece is totally laudable. It is essentially a warning against populism of the type Jan-Werner Müller describes, and which is embodied in Viktor Orban’s Hungary. I also think he is almost right when he writes:

“Every constituent part of the Orban programme exists here: the anti-semitism, the focus on Soros, the relentless fear-mongering about immigrants, the demonisation of the EU and its institutions, the attacks on Islam, the undermining of an independent judiciary, and, most of all, the widespread conspiracy-squint - the idea, popular on left and right, on almost all matters of political consequence, that shadowy and powerful forces are undermining the people's will.”

I say “almost” because this is an undifferentiated list, and the emphasis is put on what I regard as least important. For Müller populism is a moralised form of antipluralism. The populist politician talks about the “will of the people” even when the people may be just a subset of the population, but the wishes and beliefs of the remainder are of no weight and are not acknowledged. They become instead the enemy within. To overcome that enemy within (be it Jews or Muslims or liberals) and the enemy outside (the EU trying to force Hungarians to accept immigrants), the leader needs total control, which means subjugating an independent judiciary, an independent press and other independent institutions. For Müller, populism is an attack on pluralistic democracy, attempting to replace it with some kind of autocratic or plutocratic democracy. Orban’s Hungary has so far been a very successful (in terms of longevity) example of this form of populism.

Where I started to disagree with ID’s piece is where he tries to do the classic centrist thing, which is to imply that the dangers of populism in the UK come from both left and right. In immediate historical terms this is nonsense. Immigration as an issue was revitalised by the Conservative opposition and the right wing press in the early years of the Labour government. In 2001 William Hague talked about Tony Blair wanting to turn the UK into a ‘foreign land’. The right wing papers started producing negative stories about immigrants, long after the rise in non-EU immigration in the late 1990s and long before the rise in EU immigration from 2004, and popular concern about immigration rose with this increase in press coverage. The best explanatory variables in explaining concern about immigration were readership of the Mail, Express and Sun, in that order. All three were better predictors of concern about immigration than whether people voted Conservative.

When the Conservatives became part of the coalition government in 2010, this emphasis on immigration became official policy. By now the idea that immigration was ‘a problem’ that needed to ‘be controlled’ was firmly entrenched in political discourse. Conservatives found it attractive because it could persuade socially conservative left wing voters not to vote Labour, and because it became a useful scapegoat for the effects of austerity. The right wing tabloids also found it attractive because it became a means of winning the Brexit vote. And it is Brexit where we have seen populism in full force in the UK: talk of the ‘will of the people’ as if the 48% who voted Remain did not exist, attacks on the judiciary, on the civil service, on parliament and on universities. The EU is the enemy without, and Remainers are the enemy within.

To the extent that populism has come to the UK, it has come from the political right, not the political left. Yes Labour in government eventually felt they had to play along with the immigration problem theme, and yes there are Lexiters on the left. But the motive force for attacks on immigration and Brexit comes from the right, not the left. [1]

Much the same point can be made about the US. Trump was voted into office as a Republican, and he remains unchecked in office because of the Republican party. To suggest that Republicans and Democrats bear equal responsibility for Trump is just nonsense.

In this story of how populism came to the UK, and represents an ever present threat in the UK, Labour’s problems over antisemitism do not even deserve a footnote. Antisemitism is a big part of Orban’s campaign and rhetoric, personified in his constant attacks on George Soros, but that theme has been repeated not by Corbyn but by the same right wing press that focused on immigration and gave us Brexit. Antisemtism is a problem within Labour, but the source of that problem is the Israel Palestine situation. It is not, and never will be, a part of a Labour government’s appeal to the electorate. It will not be a Labour government that tells people that have lived here for scores of years that they now have to leave the UK and say goodbye to their friends and family. It is not and never will be the Labour party that runs an Islamophobic campaign for mayor of London.

In Europe and the US, the threat today of an authoritarian, anti-pluralist government comes exclusively from the right. To lose sight of that makes dealing with that threat much more difficult.

[1] There are plenty of centrist Remainers who insist Brexit is as much Corbyn’s fault as it is the government’s. Apparently the fact that Corbyn campaigned for Remain does not count because he didn’t put enough energy and passion into that campaign. When he says he would vote Remain again he must be lying because no one ever changes their mind. Accusing Corbyn of being too ready to accept the referendum result is fine by me, but to put him in the same class as Johnson and Gove is just token centrism.

A road to right wing authoritarian government

This post is inspired by another, by Jan-Werner Müller. I have talked about Müller's ideas on populism before. This particular post is a plea to focus less on the voters who elect populist politicians, and more on the politicians themselves. He writes

“In 2010, Viktor Orbán did not campaign on a promise to draft a new constitution, weaken checks and balances, and radically reduce media pluralism. Instead, he presented himself as a competent mainstream Christian Democrat. In Poland, the Law and Justice (PiS) party went out of its way to stress its character as a reasonable conservative party which simply wanted to provide more benefits to families with children.“

The idea that most voters should see beyond the mask to understand who politicians really are is ridiculous. As the 2016 US general election showed, the information content of the broadcast media can be increasingly small.

Does Trump provide a counterexample of this, because he was an 'outsider' who was elected? I would say no for two reasons. First, the Republican party had played a large part in creating the political environment that allowed his populism to win votes. Second, the Republican party seems quite content to behave in ways which complement Trump's authoritarianism. (By attacking the CBO, for example.)

The message is that if you want to investigate populist regimes (using populist in the Müller sense) you need to look at political elites rather than the electorate. I think he is right. But what makes an elite adopt an authoritarian path? I am sure there are many answers to that question, but what I will try to do below (in no doubt a very 'untutored' way) is to show one route in what had been a pluralistic democracy by which elites from the right can move in a populist, authoritarian direction. I'm an economist, so I use a simple model.

Here is a two dimensional variation on the familiar left-right diagram. The additional dimension is sometimes called 'identity' or 'culture'. Let us assume that voters are evenly distributed inside the circle. (Not necessarily a good assumption: see here.) In a two party system you might expect both parties, if their main concern was to be elected, to adopt positions that put them close to the centre. This is because the party a voter will vote for is governed by the party that is nearest to them.

But suppose that a party wants to take a less centrist position, either because its backers wish this or because its politicians believe is some ideology. To be concrete, suppose the party of the right wants to adopt a very right wing economic policy that involves, for example, distributing income from most people to the very rich. In a one-dimensional left-right space such a party would be doomed. But suppose their opponents, for whatever reason, were fairly liberal. If we assume that the left is fairly moderate on economic issues, then that places the two parties at the position given by P in the diagram above. That leaves them evenly matched. (To see why, see below.).

The party on the right will want to focus on their socially conservative platform, while the party on the left will stress their more 'moderate' economic platform. This looks like a stable situation, which contains no threat to a pluralistic democracy. What could change to upset it? Here is just one possible route.

If the right has more influence on the media than the left, they can campaign on a platform that differs from the platform they intend to implement. If you can pretend that you are a moderate party on economic issues rather than an extreme right party, and this pretense works, then your party wins. So in terms of voter perception, the party on the right moves along the upper arrow from position P to C. The left party might respond in kind by pretending they are less liberal than they are, but because they have less media influence they cannot move so far from their true position. If we look at the campaign positions of the two parties, marked by C, it is intuitively clear that the right wing party wins any election. (The dotted lines show a proof – see [1])

We see this in the US with tax cuts (pushing the idea that lower corporation taxes will mainly raise wages), in the UK with austerity (which was really a policy to shrink the state much further than most wanted, dressed up as some kind of moralistic injunction that governments should be like households) and especially Brexit, where advocates pretended there would be no economic cost to leaving the EU. The counterpart of hiding a right wing position is to emphasise conservative issues. This is most obvious with the culture war in the US, together with the politics of race. In the UK the key social issue was immigration, which the Conservatives started focusing on from the late 1990s. (The great thing about immigration as an issue for the right is that it can be (falsely) given an economic dimension.) Again Brexit is an exemplar, with not just immigration ('protect our borders') but nationalism ('take back control').

While this results in short term gains for the right, as a tactic it is unstable in the longer term because governments once in power implement their real economic policies. We will move back from C to P on the lower arrow. Voters observe tax cuts for the better off at their expense, they observe the impact of austerity and, in the UK, they observe the consequences of Brexit. It may take some time, but right wing leaders know they are vulnerable to reality winning out over spin, so they may wish to take actions to offset the democratic consequences of being found out.

There are lots of directions this authoritarian turn can take. Taking greater control of the media, either directly by shutting down critical media or buying off media owners in exchange for support, is one direction we see taken in Hungary. Gerrymandering is favoured by Republicans in the US. Portraying opposition leaders as traitors is favoured in the UK. Ramping up nationalism and the 'threat' from immigration almost everywhere.

Politics that is exclusively along the social conservative/liberal axis can degenerate into a kind of identity politics where you just vote for your tribe. As Müller writes

“The problem starts when citizens view every issue purely as a matter of partisan identity, so that the credibility of climate science, for example, depends on whether one is a Republican or a Democrat. It gets worse when partisan identity becomes so strong that no arguments from or about the legitimacy of the other side ever get through.”

The path to authoritarianism I set out here is not meant to be the whole story, and is not meant to correspond with any particular country. What I hope it does illustrate is how an authoritarian government can emerge when a party adopts a very right wing economic policy, and pretends it has not. It happens without voters changing their views or preferences in any way. It is authoritarian populism that comes from the behaviour of right wing elites.

[1] To see which party wins (assuming my geometry is correct), draw a line between the two positions, and then draw a line at right angles that bisects it. Every voter on that line is indifferent (equidistant) between the two parties, and therefore every voter either side of the line votes for each party.

The two types of populism within Brexit

When I read this by Hungarian academic Tamas Dezso Ziegler, I could not help thinking he had a point. The point, as I understand it, is that by calling people like Trump or Farage populist, when at the same time we call Syriza or Podemos populist, we are in danger of diminishing or normalising the danger the former pose. He suggests this wide definition of populism

“could be useful because there is not necessarily a moral evaluation behind it: if they would use far right demagoguery, or fascist politics, it would show something dangerous, extreme. It would ring the bell to us all. Populism does not do so.”

We could add that talking about “right populists” and “left populists” allows the academic to show a kind of balance.

There seem to me to be two definitions of populism. Dani Rodrik defines populism here as parties/politicians/movements with

“an anti-establishment orientation, a claim to speak for the people against the elites, opposition to liberal economics and globalisation, and often (but not always) a penchant for authoritarian governance.”

The problem I have with definitions like this is that they seem to be encompassing rather than natural. By this I mean that it includes things that do not obviously go together, but instead are chosen so that they encompass some list of political parties. Virtually every candidate for Congress in the US declares that they will ‘sort out Washington’, so appears anti-establishment and for the people rather than elites. In contrast, authoritarian governance is optional. What seems to be doing the work here is opposition to liberal economics and globalisation.

It seems to me that a quite different conceptualisation of populism is expressed by Jan-Werner Müller. You can tell a populist by whether they claim to represent ‘the people’, which is certainly not all the people, but instead just the ‘real people’. The others, be they immigrants or the 48%, just do not count, or worse still are ‘saboteurs’ trying to thwart the ‘will of the people’. And, critically in my view, populists are prepared to overturn the institutions of democracy if they believe they are frustrating what they perceive as the will of the people. The populist, if you accept Müller’s account, denies pluralism. They are naturally authoritarian, and so are happy to tear down the elements of a pluralist democracy. [1]

Thinking in terms of left or right tends to get in the way here. The more appropriate axis to thinking about this definition of populism is social liberalism and conservatism. A social liberal, almost by definition, is not going to attack democratic pluralism. Once we recognise that, we can see why parties of the right that use socially conservative policies to attract votes are particularly vulnerable to morphing into (or being taken over by) populists in the Müller sense. Indeed this is a point he himself makes, as I quote here.

It seems to me that Brexit can illustrate both types of populism. The definition of populism based on anti-globalisation might describe quite well the average Leave voter. The Leave voter tends to be against immigration, and as a result be prepared to roll back globalisation, and this often goes with a belief that the elite or establishment no longer listens to them. In contrast some of the prominent Brexiters, and certainly the newspapers that swung the referendum vote, are populists in Müller’s sense. They are quite happy to talk about the will of the people, and take away power from judges and parliament to ensure the will of the people as they see it prevails.

This is why I have considerable sympathy with the Hungarian academic who I quoted at the start of this post. Populists in the anti-globalisation sense may be a problem, depending on your view of globalisation and liberal economics, but they are not really dangerous for democracy. Populists of the kind Müller describes are, as our history tells us.

In the US, we are not just talking about Trump, but most of the Republican party: a party that appears to go to any length to preserve its gerrymandering of voting districts. In Hungary and Poland we have seen many attacks on pluralistic democracy justified by nationalism and racism. Both, like Russia or the far right in the US, are happy to scapegoat someone who happens to be a wealthy Jew as an enemy of the people for the crime of standing up for liberalism. That certain UK newspapers find common cause with these authoritarian regimes and the far right in the US by scapegoating the same wealthy Jew on their front pages should be a wake-up call that these newspapers are no longer part of a pluralist democracy but have become instead its enemy.

[1] Tear down rather than reform. Of course when reform becomes destroy has to be judged, but in most cases that is not very difficult.

Was Neoliberal Overreach Inevitable?

In June 2017 a member of the hard left of the Labour party, reviled by the right and centre for his association with left wing leaders and movements around the world and for his anti-nuclear views, in a few short weeks went from one of the most unpopular party leaders ever to achieving the highest vote share for his party since Tony Blair was leader. While this unexpected turn of events was in part the result of mistakes by, and inadequacies of, the Conservative Prime Minister, there is no doubt that many Labour voters were attracted by a programme that unashamedly increased the size of the state.

Contrast this with the United States. A Republican congress seems intent on passing into law a bill that combines taking away health insurance from a large number of citizens with tax cuts for the very rich. Let me quote a series of tweets from Paul Krugman:

“The thing I keep returning to on the Senate bill is the contrast between the intense hardship it imposes and the triviality of the gains. Losing health insurance -- especially if you're older, low-income, and unhealthy, which are precisely the people hit -- is a nightmare. And more than 20 million would face that nightmare. Meanwhile, the top 1% gets a tax cut. That cut is a lot of money, but because the 1% are already rich, it raises their after-tax income only 2 percent -- hardly life-changing. So vast suffering imposed to hand the rich a favor they'll barely even notice. How do we make sense of this, politically or morally?”

Or to put it another way, 200,000 more deaths over the next ten years for a marginal increase in the after tax income of the 1%. This is no anachronism created by a Trump presidency, but an inevitable consequence of Republican control of Congress and the White House.

Although these two events appear to be in complete contrast, I think they are part of (in the US) and a consequence of (in the UK) a common process, which I will call neoliberal overreach. [1] Why neoliberal? Why overreach? Neoliberal is the easy part. Although some people get hung up on the word, I use it simply to refer to the set of ideas associated with Ronald Reagan and Margaret Thatcher in the 1980s. That includes the goal of reducing the role of the state in many areas of society, including its role in either replacing or regulating markets and taxing individuals (see Kansas), particularly reducing taxes for the well off.

Overreach is more contentious. I use the term because I think, in the UK at least, the period from the 1990s until the global financial crisis could be described as a stable neoliberal hegemony. By this I mean that governments largely accepted the transformations that took place in the 1980s, even when Labour or Democrats were in power. Of course changes did occur. In the UK Labour were prepared to involve the state in alleviating poverty in ways that Thatcher never contemplated, but Labour’s concern did not extend to the other end of the income distribution, and the income share of the 1% continued to rise. They were prepared to see an expansion in the size of the state to meet a natural increase in the demand for health, but they also experimented with bringing in market elements into state provision. However none of these changes compared in size to what went before or came afterwards. (As Tom Clark argues, Labour did not change the [essentially neoliberal] political discourse.)

This period was also characterised in the UK and US by macroeconomic stability: inflation had been contained, perhaps through the delegation of monetary policy to central banks, and growth remained strong such that the high levels of unemployment seen in the 1980s gradually disappeared. This was the ‘great moderation’.

It was undone by a major flaw in the neoliberal project: the self-destructive nature of an unregulated financial sector. The reaction to that, if the left had remained in power, might have been greater controls on finance and perhaps some attempt to reduce inequality (as the two are related). But the left lost power, and we got what I call neoliberal overreach.

Neoliberal deceit in the UK

By 2008 the conversion of the right in the UK to neoliberal ideas was largely complete. This meant that they were determined to continue where Thatcher had left off. But they faced what appeared to be an insurmountable problem: voters wanted the NHS (and other public services) and they wanted more of it partly because they were getting older and wealthier. The recession gave the right the opportunity to continue the neoliberal project by deceit, using two mechanisms.

The first was austerity, which I have talked about many times, but alas what I and other macroeconomists say has so far reached only a small minority (a minority which, importantly, includes the Labour party). What I call deficit deceit was the pretence that we needed above all else to cut spending (that would reduce the size of the state) because otherwise the markets would not buy the government’s debt. There was never any real evidence to back this story up, and plenty to suggest it was nonsense. The fevered imagination of some market participants who turned out to be wrong does not count as evidence. But the politics to make deficit deceit possible was all there: a recent financial crisis, consumers cutting back on debt themselves, a Treasury worried as Treasuries do, a central bank head who acted as central bank heads often do, and a Eurozone crisis that mediamacro made no attempt to understand.

The second deceit was immigration. Elements in society are apt to blame immigrants at a time of rising unemployment and falling real wages, and terrorism gave this an extra twist. The right and their supporters in the press had decided before the crisis that they could exploit fears over immigration to their advantage, and after the recession this became a more powerful weapon. They talked about how immigration was responsible for reduced access to public services and falling real wages, and they promised to bring levels of immigration down. It was deceit because those in charge knew full well that immigration benefited the economy in various ways and as a result they had no intention of really controlling it. But, as with austerity, the deceit worked: so much so that an already weak opposition appeared not to know how to respond.

Some may disapprove of the language I use here. Should a normally sober Oxford macroeconomist talk about political parties deliberately deceiving the electorate? It is not a view I have adopted lightly, but when a Chancellor repeatedly argues that public spending must be cut to meet deficit targets at the same time as reducing inheritance or corporation tax, or a Prime Minister continually repeats the lie that immigration reduces access to public services, what other conclusion can you come to? They could get away with this deceit because academic economists (the majority of whom know that austerity would reduce output, and that immigration improves the public finances) are largely ignored by the media.

Austerity and the deceit required to achieve it was neoliberal overreach in the UK. Austerity quickly became a disaster because it was done at just the wrong time, when monetary policy was unable to offset its effects. That hurt the economy a lot. Whether GDP was reduced by a few percentage points temporarily or permanently we may never know for sure. But for the political reasons I have already outlined, combined with feeble opposition, the Conservatives got away with it sufficiently to win a general election in 2015.

Populism and anti-neoliberalism

The deceit over immigration was also key to a second disaster: the vote to leave the EU. Although the case to Remain in the EU was led by the Prime Minister and Chancellor, neither could combat anti-immigration rhetoric with a positive case because of their earlier deception. For this reason alone you could also label Brexit as a consequence of neoliberal overreach. More importantly, factions on the right that actively campaigned for Brexit did so in part because they believed they could only achieve their regulation free neoliberal nirvana by doing so.

As Jan-Werner Müller writes

“The image of an irresistible populist “wave” was always misleading. Farage did not bring about Brexit all by himself. He needed the help of established Conservatives such as Boris Johnson and Michael Gove (both now serve in Prime Minister Theresa May’s post-election cabinet). Likewise Trump was not elected as the candidate of a grassroots protest movement of the white working class; he represented a very established party and received the blessing of Republican heavyweights such as Rudy Giuliani and Newt Gingrich.”

It would be wrong to say that Brexit or Trump represent an evolution of neoliberalism. Both promote strong restrictions to trade, and so it would be more accurate to view Brexit as a split within neoliberalism. [2] What is clearer to me is that populism is a consequence of neoliberalism as reflected in the policies of the political right. In the UK immigration was used as a scapegoat for the impact of austerity, which fuelled the Brexit vote. In the US one of the first acts of Reagan was to repeal the Fairness Doctrine, which led eventually to the precursor and cheerleaders for Trump: talk radio and Fox news. In addition neoliberalism demonises any kind of regional or industrial strategy designed to alleviate the impact of globalisation.

Why was it Corbyn who led the revolt against austerity in 2017 rather than Miliband in 2015? One obvious explanation is that the more ‘moderate’ left in both the UK, much of Europe and the Democratic establishment in the US had become compromised by neoliberal hegemony. Instead it required those who had stayed faithful to socialist ideas together with the young who had not witnessed the defeats of the 1980s to mount an effective opposition to austerity and perhaps neoliberalism more generally. [***]

I am less familiar with the details of US politics, which are clearly different in some ways from the UK. The way the Republican party has co-opted both race and culture to their cause is different and clearly crucial. But there are plenty of similarities as well. Both countries have had austerity combined with tax cuts for the rich. Both countries have a right wing media which politicians can no longer control, leading to Brexit and Trump respectively. Bernie Sanders, like Corbyn, came from nowhere preaching socialism, but unlike the UK the established Democratic party halted his rise to power.

Was Overreach Inevitable

I’m not going to speculate whether and by how much this neoliberal overreach will prove fatal: whether Corbyn’s ‘glorious defeat’ marks the ‘death throes of neoliberalism’ or something more modest. Instead I want to ask whether overreach was inevitable, and if so why. Many in the centre ground of politics would argue that it would have been perfectly feasible, after the financial crisis, to change neoliberalism in some areas but maintain it in others. It is conceivable that this is where we will end up. But when you add up what ‘some areas’ would amount to, it becomes clear that it would be hard to label the subsequent regime neoliberal.

I think it is quite possible to imagine reforming finance in a way that allows neoliberalism to function elsewhere. Whether it is politically possible without additional reforms I will come to. If we think about populism, one key economic force behind its rise has been globalisation (see Dani Rodrik here for example). If we want to retain the benefits of globalisation, then counteracting its negative impact on some groups or communities becomes essential. Whether that involves the state directly, or indirectly through an industrial strategy, neither of those solutions is neoliberal.

Then consider inequality. I would argue that inequality, and more specifically the extreme wealth of a small number of individuals, has played an important role in both neoliberal overreach (in the US, the obsession within the Republican party with tax cuts for the wealthy) and populism (the financing of the Brexit campaign, Trump himself). More generally, extreme wealth disparities fuel political corruption. Yet ‘freeing’ ‘wealth creators’ of the ‘burden’ of taxation is central to neoliberalism: just look at how the loaded language in this sentence has become commonplace.

Indeed it could well be that gross inequality at the very top is an important dynamic created by neoliberalism. Piketty, Saez and Stantcheva have shown (paper) how reductions in top rates of tax - a hallmark of neoliberalism in the 1980s - may itself have encouraged rent seeking by CEOs which makes inequality even worse. Rent extractors naturally seek political defences to preserve their wealth, and the mechanisms that sets in place may not embody any sense of morality, leading to the grotesque spectacle of Republican lawmakers depriving huge numbers of health insurance to be able to cut taxes for those at the top. It may also explain why the controls on finance actually implemented have been so modest, and in the US so fragile.

The other key dynamic in neoliberal overreach has to be the ideology itself. In the UK surveys suggest that fewer than 10% of the population favour cutting taxes and government spending to achieve a smaller state (see my next post). There is equally no appetite to privatise key state functions: indeed renationalisation of some industries is quite popular. Yet the need to reduce the size and scope of the state has become embedded in the political right. Given that, it is not hard to understand the motivation behind the twin deceits of austerity and immigration control by Conservative led governments.

The dynamic consequences of extreme inequality and an unpopular ideology both suggest that neoliberal overreach may not be a bug but a feature.

[1] Reasons why this discussion might focus on the US and UK are discussed here.

[2] Among those who voted for Brexit, the two main groups were social conservatives who had a social rather than economic fear of immigration and the left behind who were deceived into thinking it was the EU and immigration that was behind their plight rather than neoliberalism itself. Liberal leavers may amount to little more than a few MPs and small businesses. Even among Conservative MPs, it is not clear that neoliberalism was the key factor in determining their position on Brexit.

***Postscript 06/07/17  It came out after I had written this post, but this article by William Davies expresses much better what I was trying to say in this paragraph.