The three mistakes of centrism

Paul Krugman quite rightly often complains about people he calls professional centrists, who always suggest there is a middle road between the ‘extreme’ views of Democrats or Republicans. He noted that such centrists always have to blame both sides, and would typically fail to note that although the Democrats have stayed pretty much in the centre of politics, the Republicans have been gradually moving further right.

Centrists of this type were quite rightly attacked during the height of austerity, because milder cuts were not the answer. In the UK the right answer was to have no cuts until the recovery was secure and interest rates were clear of their lower bound. The centrists at the time in the UK were the Labour party (too far, too fast) and that compromise policy not only missed the point but was also unpopular because it satisfied no one. It certainly didn’t satisfy Labour party members, which is why Labour are now led by Corbyn.

But doesn’t Corbyn’s victory mean that the UK today needs centrists, because we have not just got a Conservative government which has morphed into UKIP but also an opposition led by the hard left. Here is Philip Stephens attacking the Labour leadership peddling snake oil populism of the left variety. If you search my blog you will see that I normally think Stephens gets things right, but I think there are three major problems with this diagnosis of where we are.

The first mistake is a variety of the failure I talked about above, which is to fail to see how the political landscape has changed. Here is the first paragraph from Stephens' article.

“John McDonnell has a plan. The Labour party’s would-be chancellor prefers Marx to markets. So he intends to nationalise the energy, water and railway industries, impose big tax rises on businesses and wealthy individuals, shackle the banks, and pump up public spending and borrowing. The organising goal, he told the Financial Times in a revealing interview, is “an irreversible shift in the balance of power and wealth in favour of working people”.”

If you think this is damning stuff, look at the detail. Nationalisation - just returning some industries to public ownership, much as they are in many European countries. Taxes on business - just reversing cuts to corporation tax made by George Osborne since 2011. Higher taxes on the wealthy will only begin to reverse inequality at the top that began growing in the 80s. Shackle the banks? - about time too. Pump up spending and borrowing - in reality just borrowing to invest, with current spending held by a fiscal rule which, outwith a liquidity trap recession, is not very different from the rule of the Coalition government of 2010. The killer line about an irreversible shift in power - from Harold Wilson’s 1974 manifesto (HT George Eaton).

So Stephens is wrong to say this is another 1983 suicide note. McDonnell might prefer Marx to markets, but Labour’s 2017 manifesto gives us a world that if it had been proposed to Harold Wilson he would have thrown it out as involving too much privatisation and too many tax cuts for the rich. Labour’s manifesto is just a modest reversal of some of the things that have happened since Thatcher introduced us to neoliberalism.

But why wasn’t the 2017 manifesto like 1983, given the current Labour leadership? The answer leads us to the second mistake many centrists make: to imagine that any leader from the hard left can impose their will on a soft left parliamentary party. Stephens mentions this, but it is far more central than he suggests. Labour will be extremely lucky to get an overall majority at the next election, and even if they do there are plenty of MPs that will happily vote against their government the moment that Corbyn and McDonnell overstep the centre left mark. Give them 20 years and it is possible to imagine that they might be able to create a PLP more in their image, but they do not have 20 years and those who follow will be from a different generation with different reference points.

There is a third mistake which is in some ways the most important. I cannot beat Anthony Barnett’s way of expressing it: if all you want to do is stop Brexit and Trump and go back to what you regard as normal, you miss that what was normal led to Brexit and Trump. It all goes back to austerity. Even if you like aspects of neoliberalism, as centrists surely do, what happened with austerity and the scapegoating of immigrants is what I describe as neoliberal overreach. It was overreach not just because it was wrong and immensely destructive, but it laid the grounds for Brexit.

None of that happened by accident. Austerity might, just possibly, have started as pure political opportunism, but the fact that it was sustained despite all the harm it was doing suggests a deep malaise on the political right. No one can doubt this following Brexit. A party that can produce Prime Ministers as incompetent as first Cameron and then May, and can pursue without any real revolt a hard Brexit policy, is seriously sick and needs a long period of intensive care. The kind of care that you can only get with many years in opposition.

But that is only half the story of why Brexit happened. The other half is obvious, yet so many centrists seem to wish to ignore it. Brexit was brought to us by a right wing press that has become a propaganda vehicle for a few wealthy press barons. Britain has become a worse country because of this right wing press, which when it is not demonizing the EU and Remainers it is doing the same to immigrants and those it calls scroungers. It should be no surprise that newspapers that can show so little regard for truth and humanity would give us something like Brexit, and they will go on giving unless something changes.

A government of centrists will only take us back to where we were before all this kicked off in 2010. We need to do better than go back to the normal that gave us austerity and Brexit. We need a radical government that can begin the process of reforming our economy so that it works for all working people, that can tackle extreme inequality at the top and reform the press so that it is not a mouthpiece for a wealthy few. A government led from the left are our only real hope of achieving that. Centrists will be an important voice during that government, but they must not stop us ensuring the likes of austerity and Brexit will not happen again.

Did centrism beget populism?

Warning: amateur political science below

Stewart Wood has a well argued piece in the New Statesman, saying that it was the move by left and right towards a common centrism that laid the foundations for populism. Although parts of his argument ring true, I find others less convincing..Labour certainly moved to the centre and beyond in terms of its economic policies. The Conservatives moved to the centre in terms of social policy. But on economic policy, the Conservatives moved strongly to the right with austerity. Senior Labour thinkers still seem to have a blind spot on austerity.

Let me start by looking at the country that now has populism in spades as a result of electing Donald Trump as President. To argue that the Republican party has been moving to the centre over the last 30 years is obvious nonsense. The traditional centre right virtue of fiscal rectitude went out of the door with Ronald Reagan, and was completely ignored under the second Bush. The Republicans only extol the virtue of cutting budget deficits when they are not in power. When they are in power, they want cuts in taxes for the rich, increases in military spending but cuts in other government programmes.

Margaret Thatcher was considered pretty right wing when she was in power. Many of her key achievement in terms of her own agenda, such as a diminished union movement and shrinking the state through privatisation, were not reversed by Blair and Brown. It is difficult to argue that the Cameron/Osborne duo made any attempt to undo the Thatcher legacy. Instead they tried to go beyond it, by shrinking the state to a size relative to GDP not seen since the end of WWII. They did it under the pretense that they were forced to because otherwise the markets would no longer buy government debt. This was a colossal deceit. There no evidence that markets were concerned about government debt, and strong evidence that they were not. [1] This deceit should have become clear when Osborne cut taxes at the same time as continuing to cut spending.

Let me use a diagram to illustrate what I mean. [2] (The vertical axis could also be labelled 'identity' as well as 'culture'.) No doubt we could discuss the detail of the size and direction of the arrows, but I think this is roughly right.

In the US, the Republicans had moved steadily in a downward, socially conservative right wing direction, whereas the broad church that are the Democrats have largely remained in the same place (unless you go as far back as the southern Democrats). One possible argument is that this move by Republican politicians helped create the Tea Party. Republicans have always pretended their policies would help ordinary people, whereas in reality they have helped a rich elite. This has laid the ground for a populist leader who was prepared to move economic policy in certain respects away from the right (in particular advocating protectionism). The growing loss of respect of Republicans for their party elite allowed voters to ignore the views of senior Republican leaders in selecting Trump as their candidate.

In the UK David Cameron moved the Conservatives to become much more liberal, by in particular supporting gay marriage. (When I argued in an earlier post that the Conservatives had moved to the right, I was surprised how many comments I got back telling me this was nonsense, and naming gay marriage as the main reason why.) In the UK this left a large gap in this political space, which UKIP - the first successful mass party in England since the SDP - filled. As Jonathan Wheatley showed, UKIP members are social conservatives, but are much more left wing than the Conservatives in terms of economics.

Labour moved to the right under Blair, while remaining socially liberal. I agree with Stewart Wood that this alone was important in preparing the way for populism. As well as the lack of a major industrial policy, they did nothing to curb a rampant financial sector or reverse the gains of the 1% that were a feature of the Thatcher period, a point emphasised by Jean Pisani-Ferry in respect of both the UK and US. I think New Labour’s position is better described as liberal rather than neoliberal: New Labour substantially increased the amount of resources (as a proportion of GDP) going to the NHS, and they also did a great deal to try and reduce child poverty. Labour moved further right (and more neoliberal) as they became more accommodating towards austerity. It was hardly a surprise that party members tried to pull the party back by electing Corbyn as leader.

As I argued here, Brexit was a perfect storm where the economically left behind united with social conservatives. With Labour no longer seen as representing the working class, this allowed the right wing media (with the support of the Conservatives) to help convince the left behind that their problems were a consequence of immigration. The Leave campaign was populist in the sense I describe here: advocating a superficially attractive policy to some that would leave everyone worse off. Much the same is true for Trump, who won the electoral college by convincing the left behind that he really could bring back their traditional jobs, something he will be unable to do in any kind of general way.

So the idea of growing centrism in the US makes no sense, yet it is they who have just voted for a populist President. In the UK it only makes any kind of sense if you think in one dimensional terms.

[1] This is essentially because the Bank of England was pledged to buy whatever it took in the way of government debt to keep interest rates low.

[2] I think the first time I began thinking in this two dimensional way was this post, but more recently I used it to analyse the forthcoming French election.