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.

The persuasive power of the UK right wing press

“It would not have been possible for us to take power or to use it in the ways we have without the radio” - Joseph Goebbels

The first line of defence for the UK’s partisan right wing press (Mail, Sun, Telegraph) is that they do not matter. The opinions they express and the news stories they follow just reflect the views and interests of their readers. We now have clear evidence that this is simply not true for Fox News in the United States. As I describe here, the output of Fox News, which bears very little relationship to the truth, is designed to maximise its persuasive power. I think Obama summed it up quite clearly when he said even he would not vote for himself if he watched Fox News.

The presumption must be that the same is true in the UK in terms of the potential power of the right wing press. Most voters are not interested in politics, and so depend on limited sources of information to form their views about politicians and political parties. But I thought we had no comparable econometric or statistical studies to show this for the UK. I had noted that Scottish newspapers were much less pro-Brexit than their English counterparts, but maybe that just reflected different attitudes to Brexit north of the border. I did wonder whether Liverpool and the Sun (more specifically its absence because of Hillsborough) might be what economists call a natural experiment. The Leave vote in Liverpool’s districts does seem exceptionally low (my thanks to Ian Gordon here), but of course there are always other stories you can tell.

But then someone (alas I cannot remember who) pointed me to a paper by Jonathan Ladd and Gabriel Lenz in the American Journal of Political Science in 2009. They looked at another natural experiment: the endorsement of Labour by certain newspapers before 1997. To quote

“By comparing readers of newspapers that switched endorsements to similar individuals who did not read these newspapers, we estimate that these papers persuaded a considerable share of their readers to vote for Labour. Depending on the statistical approach, the point estimates vary from about 10% to as high as 25% of readers. These findings provide rare evidence that the news media exert a powerful influence on mass political behavior.”

So we do have evidence, comparable to that for Fox news, of how powerful an influence these papers can have. I suspect the endorsement per se is not doing the work here, but the more favourable editorial line and coverage that went with it. Blair never got the Kinnock or Miliband treatment. 

It is ironic how much we are currently obsessing about the influence of the new social media, when the problems with old media are likely to be quantitatively larger. Once you acknowledge this, explaining important political developments like public attitudes to austerity becomes much easier (see this paper by Timothy Hicks and Lucy Barnes for example). For so many things that political scientists and others spend a great deal of time analysing, like Brexit, the right wing print media is the elephant in the room.

It is in this context that we should view the latest attempt to smear Jeremy Corbyn in the print media, and the shameful attempts by Tory ministers to jump on the bandwagon. (I will leave it to Andrew Neil to explain what nonsense the smear is and who those ministers are, but watch Steve Baker use all the usual tricks (e.g. “questions to answer”) to try and make something out of nothing.) The 2017 election showed us the influence of the Tory press is not total, but May still won: its influence on older voters in particular is still strong. Despite its falling readership, this press still also has considerable influence over the broadcast media's agenda.

So when certain journalists call Corbyn’s response to these smears creepy and disturbing, this is the context in which to view such comments. To say it suggests an attack on our free press is nonsense, because the predominantly right wing press in the UK is not in any meaningful sense free. That these papers are owned by extremely wealthy people who can dictate these paper's political agenda seriously distorts democracy. It also means this press has considerable power over the government. The UK press will not be reformed under a Tory government: Leveson 2 has been shelved.

Those who want to go back to a world without Brexit and Trump have to ask why Brexit and Trump happened. There is no point treating the symptoms and not the disease. A key part of the reason we have Trump and today's Republican party in the US is Fox News, and a key reason we have Brexit in the UK and ministers calling the leader of the opposition a traitor is the right wing press.   

The politicisation of immigration

This is based on the UK experience, but I think some of this will also apply in the US.

Why do right wing politicians push an anti-immigration platform? The obvious answer is that immigration is an important concern to their voters, and that is certainly correct. However I think there is an additional factor, which is illustrated by this interesting graphic from a recent Financial Times piece by Sebastian Payne.

Look at the right hand panel, based I believe on British Election Study data. This is the two dimensional way of representing political views I have discussed before. What we call the vertical axis can vary (culture, identity): I prefer the labels ‘social conservatives’ and ‘social liberals’. *** Conservative voters tend to be right wing and socially conservative. But Labour voters, while clearly left wing, include an important segment that are also socially conservative. As a result, if right wing politicians can make elections about issues that are important to social conservatives (law and order, immigration, race and abortion in the US) they have a chance of picking off Labour voters that would otherwise vote for a left wing candidate.

Immigration is particularly attractive to right wing politicians for a reason I explored in a recent post. There is a common misperception that immigration brings economic bads like lower wages and reduced access to public services. Right wing politicians therefore have a chance of persuading Labour voters to substitute their economic concerns away from supporting a left wing candidate into supporting an anti-immigration candidate on economic grounds.

The standard story perpetuated by the broadcast media in the UK is that heightened concern among voters about immigration over the last decade is a response to high numbers. However it was more than that. The Shifting Ground study has an interesting chart shown below.

The blue line is the importance that voters attach to the issue of immigration. The grey line are the number of migrants coming into the UK. The black line are the number of news stories about immigration in the print media. (See here for the source.) The standard story suggests the blue line (importance) responds, in the first instance with a few years lag, to the grey line (immigration numbers), with the black line (news stories) reflecting people’s concerns with no lag at all. But it is obvious that you can tell a very different story: people’s perceptions about the importance of immigration reflect what they read in the press.

This different story, where the press leads opinion, makers much more sense. Why the long lag between the increase in immigration in the late 90s and public attitudes about the importance of immigration? As is well known, public concern about immigration tends to be greatest in areas where there are least migrants. In a poll commissioned by the Sun newspaper in 2007 only 15% said that migrants are causing problems in their own neighbourhood, while 69% said that migrants were not having a strong local impact, either good or bad. There is a nice story Nick Clegg tells on this:

“Years ago, before I became an MP, I was knocking on doors in Chesterfield, Derbyshire – this was at the height of the controversy about asylum seekers being dispersed around the country when Tony Blair was in power. The tabloid newspapers were going nuts about it every day. I remember speaking to a guy leaning on the fence outside his house and saying: “Any chance you’ll vote for the Liberal Democrats?” And he said: “No way.” And I said: “Why not?” And he said: “Because of all these asylum seekers.” And I knew for a fact that not a single asylum seeker had been dispersed to Chesterfield. So I said to him: “Oh, have you seen these asylum seekers in the supermarket or the GP’s surgery?” And he said something to me that has remained with me ever since. He said: “No, I haven’t seen any of them, but I know they’re everywhere.” You can’t dismiss the fear, but how on earth are you supposed to respond to that?”

Here is a more recent example.

The Shifting Ground report also looked, in 2004, at what best explained whether voters thought high immigration was important as a political issue. The best explanatory variables 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, which reinforces the point that immigration is a way for right wing politicians to gain votes from ‘natural’ Labour voters.

If you think about it, the idea implicit in the standard story that voters were observing greater immigration and as a result expressing concern, which the print media simply expressed, is slightly incredible. It seems unlikely during this period that voters were looking at official data: voters anyway tend to grossly overestimate the number of immigrants. A much more plausible story is that they were reading their papers. It is important to stress that these papers were not ‘brainwashing’ their readers, but instead playing on eternal fears about outsiders, particularly if these outsiders are seen as cheating the system.

Why would the print media start writing more stories about immigration? You could say they are just reflecting the numbers, again with a rather long lag. A more plausible explanation is political. In 2001 William Hague talked about Tony Blair wanting to turn the UK into a ‘foreign land’. In his 2005 General Election campaign, Michael Howard put immigration at the heart of the Conservative Party’s general election campaign. Tim Bale discusses these and later political responses here.

The right wing tabloid press in particular covered immigration in a way designed to generate hostility. As Ian Dunt noted in 2013:

“new research from the Migration Observatory at Oxford University shows just how pervasive and systematic this hate campaign is. After studying 58,000 articles in every national newspaper in Britain – over 43 million words – researchers found the word most closely associated with 'immigrant' was, you guessed it, 'illegal'. … For tabloids, other words closely associated with 'immigrant' were 'coming', 'stop', 'influx', 'wave', 'housing' and 'sham'.”

A recent report from the same source finds ‘mass’ as the most common way of describing immigration. Claims made about immigration in the tabloids are frequently untrue. They are almost always negative, often extremely negative. This is not a coincidence, or as a means of boosting sales: it is a deliberate editorial policy.

In opposition the Conservatives could do little more than ramp up the salience of the issue among their base and among readers of right wing tabloids. Labour on the whole triangulated in public. Gordon Brown’s famous remark after being challenged over the economic impact of immigration in the 2010 election showed both how Labour viewed anti-immigration arguments and also the problems with their triangulation. Once the Conservatives gained power as part of the Coalition in 2010, immigration as a major problem became official.

Furthermore, arguments linking immigration to economic problems that had nothing to do with immigration also became official, as the Conservatives used immigration as a useful scapegoat both for falling real wages and the impact of austerity on access to public services. This in turn fed back into the print media as a whole: whereas in 2006 many articles defending immigration could be found outside the right wing tabloids, these diminished in number by 2013.

If the right wing tabloids created an anti-immigration atmosphere in parts of the UK, after the Conservative’s ‘less than 100,000 target’ for net immigration it became government policy. Yet, as I argued here, it was - like the tabloids - a policy born in deceit. Every time Theresa May tried to suggest significant economic measures to reduce immigration, a combination of George Osborne and Vince Cable knocked it down for the very good reason that it would damage the economy. Her only choice was to create, literally, a hostile environment for immigrants into the UK.

Although formally the policy is only designed for illegal immigrants, it inevitably turns the anti-immigrant rhetoric of the tabloids into official government policy. Landlords are reluctant to let accomodation to EU immigrants in case their papers are not in order. The same applies to healthcare. I wrote about the bureaucratic cruelty shown to foreign students, and most academics will have similar stories from their own experience. Colin Talbot describes the experiences of EU academics after the Brexit vote. The simple cruelty of this policy does not go unnoticed abroad (for example here and here from Heiner Flassbeck and well worth reading), and the contrast with Germany’s policy towards refugees is stark. [1]

Brexit was the apotheosis of this policy towards immigration. Although Remain gained a few liberal Conservatives, they lost more left wing social conservatives, as the left hand side of the first figure shows. The right wing tabloids were of course not innocent bystanders in this, but the key point is that they didn’t need to do anything new except ramp up their anti-immigration stories and make sure they always mentioned the EU. The key point of this post is that what happened in the Brexit vote was simply what right wing politicians and newspapers have been trying to do for nearly 20 years: use immigration as a way of preventing socially conservative left wing voters from going with Labour.

[1] Viewing from abroad you might be forgiven for thinking the British were now an insular, uncaring, rather bigoted nation. Yet when a photograph of the body of a three-year-old refugee washed up on a Turkish beach went viral, the Sun - always quick to see the limits to how far it can distort news - launched an appeal and within two days had raised £350,000 to help other refugees. It was a brief and short-lived moment when natural compassion proved stronger than years of conditioning.

*** Postscript (18/12/17) These are the same terms as John Curtice uses here

Left, Right and Macroeconomic Competence

The title of one of my recent posts was a bit of a cheat. It was meant to surprise, because it contradicted the prevailing view, but the post didn’t actually try to answer the question the title posed. This post does try to assess whether a political party’s place on the left-right spectrum might influence its macroeconomic competence.

It should be obvious that, for any individual country, looking at some macro outcome (like growth) and drawing some conclusion can be meaningless. For example, growth under Republican presidents has been far worse than under Democratic presidents, but that could so easily be down to luck rather than judgement. To make headway we need to think of mechanisms and particular instances when they applied.

In the US, for example, there is a belief on the right that cutting taxes will increase tax revenue, a belief that is also clearly wrong. So you would expect Republican administrations that acted on that belief to run up bigger budget deficits than their Democratic counterparts, and that seems to be what they do. That may not be the whole story, but at least it is a mechanism that seems to fit. However it seems like a story that is rather specific to the US, at least for the moment.

Just now you could argue that parties of the right are more prone to austerity, because they want a smaller state than those of the left, and austerity can be used as a cover to undertake policies that reduce the size of the state. In a situation where interest rates are stuck at zero that has the damaging macroeconomic consequences that we are seeing today. However this is a story that is specific to liquidity traps.

An alternative source could be different views about the relative costs of inflation and unemployment. You might expect governments of the left to have higher inflation and those of the right to have higher unemployment. While that mechanism loses much of its force when you have independent central banks, it can resurface in a liquidity trap.

A final left/right difference that might impact on macroeconomic outcomes is different views on the need for state intervention. Those on the right might favour less intervention, leading them to favour simple rules, and to argue against the use of fiscal policy for macroeconomic stabilisation.

Is any of the above helpful in looking at UK policy since 1979? I use this place and period as a case study because I am most familiar with it. In the past I have talked about three major macroeconomic policy errors over this period, all of which occurred when the Conservatives were in power. However that alone proves nothing: Labour was in power for fewer years and might have been lucky. [1] 

The period starts with Margaret Thatcher and the brief experiment with monetarism. Here you could use the inflation/unemployment contrast - the policy succeeded in getting inflation down very rapidly, but at high costs in terms of unemployment, which persisted because of hysteresis effects. A secondary question is whether, given any particular preferences between inflation and unemployment, the policy was inefficient because it attempted to run monetary policy according to a simple rule which failed. Many at the time argued it was, because it put far too much of the burden of lost output on the traded sector, which in turn was because the policy generated Dornbusch type overshooting effects (i.e. a large appreciation in the exchange rate).

The 1990 recession can also be linked to left/right influences. The rise in inflation that preceded the recession (and to some extent made it necessary) was partly down to Nigel Lawson’s tax cuts. I have been told by one insider that the key wish at the time was to cut the top rate of tax, but it was felt that to do this alone would be politically damaging, so tax cuts were made across the board. That was not the only reason for the late 80s boom - there was also the decline in the aggregate savings ratio that in my view had a great deal to do with financial deregulation - but it was a factor.

The macroeconomic failure that everyone knows about from that period was the forced exit from the ERM in 1992, and that was costly because it made monetary policy too tight beforehand. Although you could say fixing the exchange rate is a simple rule that the right might prefer, that would be stretching things: ERM entry was favoured by Labour as well (although with the notable exception of Bryan Gould). According to my own and colleagues analysis at the National Institute the entry rate was too high, which might follow from a preference for low inflation, although it could just have been a choice based on poor macroeconomic analysis.

Inflation targeting followed the ERM debacle, and it was augmented by central bank independence at the start of the Labour government of 1997. One major decision that, if it had gone the other way, we might be scoring as a major error would have been if the UK had joined the Euro in 2003. I have argued that the decision not to was based on an intelligent and well researched application of current academic knowledge (subsequently vindicated by additional but related problems that academics did not anticipate), rather than any left/right policy preference.

Which brings us to George Osborne. I have just finished the first draft of a paper that appraises the coalition’s macroeconomic policy, and an interesting question that arises from that is why the coalition went for austerity despite the liquidity trap. While the 2010 Eurozone crisis might explain the change of mind of the minority partners in the coalition, it does not explain Conservative policy, which was against fiscal stimulus in 2009. If you look at some of Osborne’s speeches (and I’m not sure there is much else to go on), the rationale for austerity was a belief that monetary policy was sufficient to stabilise the economy, even in a liquidity trap (see the second part of this post). At the time that represented a minority view amongst macroeconomists. It could be explained in left/right terms in various ways: a dislike of additional state intervention, taking a risk that would lead to higher unemployment rather than higher inflation, or a devious way of reducing the size of the state.

So we have three major UK macroeconomic policy errors: the monetarist experiment of Thatcher, ERM entry and exit (and the boom that preceded it), and current austerity. In all three cases it is possible to link these to some extent to right wing political preferences. It may be equally possible to go back further and link the increased inflation of the 1970s to a left wing dislike of unemployment, but I cannot do that from memory alone so it would require some additional work going over the detailed history of that period.

However one additional point strikes me. Two of these three errors can be attributed to following a minority academic view. That monetarism was a minority academic view in the UK in the early 1980s became clear with the famous letter from 364 economists in 1981. In UK right wing mythology that episode represents the triumph of Thatcher over the academics. I have also noted that the Labour/Brown period perhaps represented a high point in the influence of academic economists within government, and the analysis behind the 2003 entry decision was an example of that. A belief that fiscal policy is not required in a liquidity trap is a minority academic view.

It may seem odd to some that those on the right might be more disposed to ignore mainstream academic opinion within economics, but of course academic economics can be described as the analysis of market failure. No one looking at debate in the US would dispute that minority academic views, or a more general anti-intellectualism, finds an easier home on the right than the left at the moment. Of course you can also find anti-intellectualism on the left - see here for a recent UK example - and my distant memories of the UK in the mid 1970s suggest that during this period they might have been at least as prevalent as those on the right. What may have happened over the last few decades is that what is currently called the left has become ideology light, and therefore more receptive to academic expertise and evidence based policy.

[1] If you want to call the gradual liberalisation of financial controls that facilitated the financial crisis a macroeconomic policy error that would make four, but I do not think anyone would seriously argue that this occurred under Labour because they were more predisposed to market liberalisation than the Conservatives.

More asymmetries: Is Keynesian economics left wing?

In the textbooks it is suggested that Keynesian economics is what happens when ‘prices are sticky’. Sticky prices sound like prices failing to equate supply and demand, which in turn sounds like markets not working. Hence whether you believe in Keynesian theory depends on whether you think markets work, so it obviously maps to a left/right political perspective.

Reality is rather different. Suppose we start from a position where firms are selling all they wish. Aggregate demand equals aggregate supply. If then aggregate demand for goods falls, perhaps because consumers or firms are trying to rebuild their balance sheets after a financial crisis, producers of these goods will start to reduce output, and lay off workers. The idea that they would ignore the fall in demand and just carry on producing the same amount is ludicrous. So output appears to be influenced by aggregate demand at least in the short run, which is at the heart of what most economists think of as Keynesian theory.

So where do sticky prices come in? Here we have to go back to the textbooks, and to an imaginary world where the monetary authority fixes the money supply. Firms, in an effort to stimulate demand for their goods, cut prices. Lower prices mean people do not need to hold so much money to buy goods. However if the nominal money supply is fixed, interest rates will fall to encourage people to hold more money. The textbooks encourage us to think of a market for money, with interest rates as the price that equates supply and demand. Lower interest rates provide an incentive to consumers and firms to increase demand, which in turn raises output.

Now suppose that firms carry on cutting prices as long as they are selling less than they would like. The process just described will continue, with interest rates getting lower and aggregate demand rising in response. The process stops when firms stop cutting prices, which means aggregate demand has increased back to its original level. Suppose further that prices adjusted very quickly. This mechanism would work very quickly, so we would only observe aggregate demand being below supply for very short periods. If prices were extremely flexible, we could ignore aggregate demand altogether in thinking about output. Hence aggregate demand matters only if ‘prices are sticky’.

Note that this correction mechanism is quite complex, and some way from the simple microeconomic world of the market for a single good. But we need to move back to the real world again. Monetary authorities do not fix the money supply; they fix short term interest rates. So they are directly in charge of the correction mechanism that is at the heart of this story. If central banks had some way of knowing what aggregate supply was, and also had perfect knowledge of aggregate demand and how interest rates influenced it, they could make sure aggregate demand equalled supply without any need for prices to change at all. Equally, if prices were very flexible but the monetary authority always moved nominal rates in such a way as to fail to stimulate aggregate demand, aggregate demand and therefore output would not return back to equal aggregate supply. Demand would still matter, even with flexible prices.

Once you see things as they are in the real world, rather than as they are portrayed in the textbooks, the importance of aggregate demand (and therefore of Keynesian theory) is all about how good monetary policy is, and not about sticky prices. If monetary policy was perfect, then Keynesian theory would only be used by central banks in order to be perfect, and everyone else could ignore it. Of course for many good reasons monetary policy is not perfect, and so Keynesian theory matters.

We could re-establish the link between Keynesian theory and price flexibility by assuming the monetary authority follows a rule which would make policy perfect if and only if prices moved very fast, but the key point remains. The importance or otherwise of Keynesian theory depends on monetary policy. It is not about market failure. Keynesian economics is not left wing, but it is about how the economy actually works, which is why all monetary policymakers use it.

It is also common sense, which is why I’m often perplexed by those who dispute Keynesian ideas. Now maybe they are confused by the strange world portrayed in textbooks, but even if they think it is all about ‘sticky prices’, the evidence that prices are slow to adjust is overwhelming, so it is hard to dispute Keynesian theory on those grounds. Yet a whole revolution in macroeconomic theory was based around a movement that wanted to overthrow Keynesian ideas, and build models where this correction mechanism I described happened automatically. The people who built these models did not describe them as assuming monetary policy worked perfectly: instead they said it was all about assuming markets worked. As a description this was at best opaque and at worst a deliberate deception.

So why is there this desire to deny the importance of Keynesian theory coming from the political right? Perhaps it is precisely because monetary policy is necessary to ensure aggregate demand is neither excessive nor deficient. Monetary policy is state intervention: by setting a market price, an arm of the state ensures the macroeconomy works. When this particular procedure fails to work, in a liquidity trap for example, state intervention of another kind is required (fiscal policy). While these statements are self-evident to many mainstream economists, to someone of a neoliberal or ordoliberal persuasion they are discomforting. At the macroeconomic level, things only work well because of state intervention. This was so discomforting that New Classical economists attempted to create an alternative theory of business cycles where booms and recessions were nothing to be concerned about, but just the optimal response of agents to exogenous shocks.

So my argument is that Keynesian theory is not left wing, because it is not about market failure - it is just about how the macroeconomy works. On the other hand anti-Keynesian views are often politically motivated, because the pivotal role the state plays in managing the macroeconomy does not fit the ideology. Is this asymmetry odd? I do not think so - just think about the debate over climate change. Now of course it is true that there are a small minority of scientists who do not believe in manmade climate change and who are not politically motivated to do so, and I’m sure the same is true for Keynesian theory. But to claim that the majority of anti-Keynesian views were innocent of ideological preference would be like – well like trying to pretend that monetary policy has no role in stabilising the business cycle.

There are of course many differences between climate change denial and anti-Keynesian positions. One is the extent to which the antagonism has infiltrated the subject itself. Another is the extent to which the mainstream wants to deny this influence. I do wonder if the unreal view of monetary policy that remains in the textbooks does so in part so as to not offend a particular ideological position. I do know that macroeconomics is often taught as if this ideological influence was non-existent, or at least not important to the development of the discipline. I think doing good social science involves recognising ideological influence, rather than pretending it does not exist.