The Dilemma of the Left

Who is going lead the charge into political “battle” against austerity and the general social and economic ills that beset our European nations?

Not so long ago, many of us thought that it would be the Left-wing political parties in Europe. Well that hope has been largely dashed and now I am not so sure in which direction the European “Left” is headed.

For a while now, there has been a widely accepted view that the Eurozone, as a monetary union, is a disaster. Although unlikely, some still hold out some hope that there is an outside chance that the Eurozone can be reformed.

Now a subtle, but important, change has occurred in the EU debate regarding the direction that the whole integration project is headed. The debate/discussion/issue has now shifted to whether there is actually any merit of continuing to be part of the EU itself. This has forced many political parties in EU countries to take a clear stand on this issue, where in the past some of them were able to be a little more vague and slippery regarding the EU project. And this new imperative has thrown the political Left into disarray, since the Left has been predominately pro-EU, believing a bit naively, that the EU project was the way to a better future.

The Feb 2015 elections in Greece that brought Syriza, a left-wing political party, into power marked a turning point in Europe. Initially, most leftists considered that this event would finally kick-start a new shift to the left in European politics. We have now come to realise that this was not the case, although the die-hards are reluctant to admit it. In the end, Syriza have effectively adopted most of the economic policies of the Greek right-wing conservatives, despite their protests to the contrary. A similar pattern has also emerged in Portugal.

And here is a word of warning to all of the Left-wing politicians. This trend is not going to go unnoticed by the voters, despite the use of smoke and mirrors.

In the past, the European political “Left” have had a long and proud history of challenging the “Right” on their policies and principles and providing a credible political alternative. The EU/Euro issue, however, has now caused the gap to narrow to such an extent that a crisis of choice has developed for the electorate. The average person-in-the-street is now struggling to see any difference in the substance of the economic policies of each side.

Another unintended consequence of this development has occurred in countries where coalition governments have been formed. They have ended up with a sort of wishy-washy Centrist-type compromise that has not contributed very much, if at all, to the solution of any of the problems.

Here is an example of the Left’s dilemma from a discussion paper of a left-wing organisation in which they struggle to reconcile the problems that I have been describing:

“However, the fact is that the EU itself has now been called into question. If the idea of Europe’s peaceful integration is to be protected from growing nationalism, then its meaning has to be redefined.

The European Union will either be democratic, social and peaceful, i.e. it is radically changed, or it will perish.

The radical Left must reject the false dichotomy of European integration versus national self-determination. It is indeed so that under conditions of globalised capitalism, national self-determination can only be exercised where space is created for it by democratically institutionalised, transnational cooperation. But it is equally true that the only kind of Europe that can be considered democratic is the Europe that links supranational democracy to the respect of national self-determination. It only makes sense to think of national and transnational democracy as reciprocal conditions.

In the light of the experience of two world wars, and still more that of today’s problems, the radical Left can be nothing less than a protagonist of European integration. However, between today’s EU and a European integration on democratic and social foundations there is a political and institutional chasm. If the demand for a re-founding of the European Union has a meaning, then this meaning is that of discontinuity.

Good luck if you can make any sense of what they are proposing as a practical solution to the problems of the EU.

And look what has happened to the Left in the UK. Samuel Hooper wrote a good article recently on this same subject:

“Tony Benn And The Left Wing Case For Brexit“

(3 March 2016)

“What is the left wing case for Brexit? The same as everyone else’s case: democracy and self-determination

In this response to a student’s question at the Oxford Union, the late Tony Benn makes a calm but passionate argument for Brexit which anybody of any political leaning should be able to embrace:

“When I saw how the European Union was developing, it was very obvious that what they had in mind was not democratic. I mean, in Britain you vote for the government and therefore the government has to listen to you, and if you don’t like it you can change it. But in Europe all the key positions are appointed, not elected – the Commission, for example. All appointed, not one of them elected.

[..] And my view about the European Union has always been not that I am hostile to foreigners, but that I am in favour of democracy. And I think out of this story we have to find an answer, because I certainly don’t want to live in hostility to the European Union but I think they are building an empire there and they want us to be a part of that empire, and I don’t want that.”

Typically, the left-wing argument against the EU and for Brexit consists of lamentations that EU rules prevent the government from renationalising industries, erecting protectionist barriers to trade and entry, or otherwise meddling in the free market. Jeremy Corbyn would be busy making such arguments right now, were it not for his colossal failure of political courage in rolling over to the demands of the die-hard pro-Europeans the moment he became Labour Leader.

Such arguments are all well and good, if you are one of the small minority of the population for whom the British government’s current inability to renationalise the energy sector keeps you awake at night in a cold fury. But such people are few and far between.

When asked his own thoughts about the European Union, Tony Benn did not do what most contemporary Labour Party personalities do, and talk about the virtues of undemocratically imposing more stringent social and employment laws on Britain (an irritatingly less social-democratic country than our continental friends). Because Tony Benn understood that the left-wing case against the European Union was about democracy, democracy and more democracy.

Tony Benn understood that some things are more important than whether Britain might happen to move in a slightly more left or right wing direction as a short and medium term consequence of Brexit. He understood that self-determination and democracy – particularly the ability for the citizenry to remove people from office – is the first and most important consideration in determining the democratic health of a country.

And Benn understood that living in a democracy where his own side would sometimes win and sometimes lose was far preferable to living in a dictatorship where his own preferred policies were implemented through coercion with no public redress.

Jeremy Corbyn also seemed to understand these things, until he most unexpectedly ascended to the leadership of the Labour Party, which loves the European Union with a blinkered fierceness with which there can be no reasoning.

Indeed, there are now so few high profile left-wing eurosceptics that the bulk of the heavy lifting in this EU referendum will inevitably be done by those on the centre-right. Their challenge – our challenge – will be to make a positive case for Brexit as a desirable thing in and of itself, and not as part of a partisan political agenda.”

Unfortunately, at present, we can hardly look to the Left for practical and immediate solutions our problems.

And then look what has recently happened in Poland. The recent parliamentary elections in Poland were historic, although unfortunately for all the wrong reasons. For the first time since 1989 a political party in Poland has won an overall majority in parliament, with the conservative nationalist Law and Justice Party (Prawo i Sprawiedliwość – PiS) winning 37.6% of the total vote [this equated to 51% of the eligible votes due to the highest average method of calculating votes in a proportional voting system]. Also for the first time in history, the left will have no representatives in parliament, meaning that Poland is presently the only country inside the European Union where there are no MPs from leftist parties. Remarkable but, based on the realities, understandable. See here and here for articles describing these issues in greater depth. It could be argued that Poland is, perhaps, a special case but there are lessons to be learned there for both the Left and the Right. Of interest to this analysis is that PiS, although not anti-EU, is definitely Euro-skeptic. Perhaps along the same lines as the stance that Hungary takes towards the EU.

A further troubling development is the resurgence of the extreme right-wing conservative political parties in many EU countries. These parties are, by and large, anti-EU and nationalistic in outlook. They are gaining a lot of their new support from the segments of the population that are being negatively affected by the EU/Eurozone crisis. Failing to address this trend with suitable alternative political choices, will have serious consequences for all.

David Cameron’s call for a referendum on the UK’s EU membership was greeted in continental Europe with a mix of fear and hope. Fear for those who are concerned that the UK leaving the EU would trigger the dissolution of the European Union, and hope for those who wish that that event would indeed be the outcome of a Brexit. Among the latter, in particular, one can find the representatives of the European far right, who have a hatred of control from “Brussels”. Marta Lorimer wrote the following article on the LSE website:

“Europe’s far right parties have also been toying with the idea of quitting the EU“

(3 March 2016)

Enthusiasm on the far right as Cameron announces referendum

Far right parties have been toying with the idea of getting their countries out of the EU or at least substantially reforming the EU, something which they consider a necessary move to regain national sovereignty. Already in 2014, Geert Wilders, the leader of the Dutch Party for Freedom (PVV), presented a study outlining the implications of a ‘Nexit’. Claiming that the Netherlands would in fact benefit from leaving the EU, he advocated for the country to regain ‘independence’. A few days before Cameron announced the referendum, he praised the Conservative leader’s choice, hoping that the UK leaving would be an ‘enormous incentive’ for others to do the same.

The Freedom Party of Austria (FPÖ) also reacted to the British PM’s renegotiation by suggesting that Austria follow in his footsteps. While they did not call for a referendum, the FPÖ’s EU delegation leader, Harald Vlimsky claimed that Austria should  request a better deal for Austria and start renegotiating its relationship with the EU, as to make it more bearable. Should this be impossible, the only route left would be ‘Öxit’.

In Italy, Matteo Salvini, leader of the Northern League (LN) vented the idea of holding a referendum on the country’s EU membership in December. On 20 February, he welcomed Cameron’s deal and stated that Britain was ‘lucky’ to be given the chance to vote. He followed up on this by stating that this was the demonstration that the British were ‘real citizens’ while Italians were expected to be ‘subjects’ – his Facebook post stated: ‘if Europe is famine and immigration, we’re better off ALONE and free. Go Great Britain!’.

No party, however, has been quite as vocal about the referendum as the French Front National (FN). With a presidential election coming up in 2017, the party is already starting to capitalise on the growing scepticism and dissatisfaction towards the European Union. Perhaps unsurprisingly, Cameron’s deal did not impress many of the party’s members. Florian Philippot, vice president of the FN, reacted stating that ‘considering how happy the ‘euro-fools’ are, Cameron’s deal was nothing but smoke and mirrors’.

Similarly, Nicholas Bay, MEP and general secretary of the part, stated that David Cameron obtained ‘nothing’ from Brussels. Echoing these remarks, Marine Le Pen, leader of the party, issued a press release, welcoming the referendum and suggesting that it demonstrated how renegotiating a country’s relationship with the EU was possible. While she was equally unimpressed with the British deal, she blamed it on the EU’s ‘religious’ ideology, which makes real advancements in terms of repatriating sovereignty impossible.

The party also published a leaflet detailing the five step process they would follow to renegotiate France’s relationship with the EU should Marine Le Pen be elected president in 2017. Interestingly, however, there were two possible outcomes of the renegotiation process. The first one, caused by an ‘intransigent EU’ would lead to France quitting the EU under the Article 50 procedure. The alternative would be a successful renegotiation, leading to new treaties and the creation of a ‘Europe of Free Nations’.

Could Frexit, Nexit, Öxit and Itxit be around the corner?

Parties stating they would hold a referendum is not the same thing as having the power to do so. It is unlikely that any of them will be able to declare a referendum in the short term, however, their message could resonate with parts of the electorate. In the Netherlands, for example, Wilders is leading consistently in the election polls, and a recent poll suggested that a small majority of the country would like to hold a vote on their membership of the EU, with ‘yes’ winning by a small margin (44%-43%) and a 13%  undecided voters. The Netherlands are also bracing for a referendum on the EU-Ukraine Association Agreement, whose result, however, could also be interpreted as a proxy for the country’s wider doubts about the EU.

Italy and Austria are not expected to hold elections until 2018. In Austria, the FPÖ is leading in the polls and in 2015 a petition calling for Austria’s exit from the EU gained a surprisingly high level of support gathering over 260,000 signatures.

In Italy, Salvini’s referendum would have to face the hurdle of a pro-European establishment and a broadly euro-enthusiast population, which, however, has seen its trust in the EU decline severely following the poor management of the economic and migration crises. The attempted referendum could find an unexpected ally in the Five Star Movement. The party sits in the same European Parliament group as UKIP, and while its positions on Europe are ambiguous, the majority of its members are staunchly opposed to the euro.

In France, the FN is unlikely to win the next presidential election. While the number of voters has grown consistently throughout the past few years, in a presidential run-off between Marine Le Pen and a mainstream candidate, the ‘republican rally’ would most likely lead mainstream right and left wing parties to coalesce against her.

However, the outcome of the British referendum could have a significant impact on all the member states discussed above. In particular, should the UK come out of an ‘out’ vote relatively unscathed, this could lead far right parties to become even more vocal in calling for national referenda and bringing forward their ideas on how to reform the EU. For the moment, however, it is likely the main threats to European unity will continue coming from the mainstream parties’ inability to collaborate and, above all, from the growing restlessness in European electorates over the shortcomings of the European construction.”

For a variety of reasons to do with the changing social and political scene in Germany, the increasing popularity of “far Right” German euro-skeptic political parties is emulating what has happened with the rise of the “Left” in Greece, Spain and Portugal. One underlying reason is the now significant dissatisfaction among voters that Germany, as the richest EU and Eurozone country, is expected to always be a major financial contributor in respect of the on-going Eurozone economic crisis and now in trying to address the new migrant crisis.

Now it’s official: Germans are just as likely to vote for right-wing parties as anyone else in the EU. To get an idea of what will happen next, just look to France for inspiration, writes DW’s Max Hofmann in Brussels: “Welcome to the club, Germany!“.

The Alternativ für Deutschland (AfD) is a German euro-skeptic political party, which was founded in 2013. Within the period of three years, the AfD has obtained seats in the regional parliaments of a number of German federal states, and it came fifth in Germany’s 2014 European elections, with 7.1% of the national vote, thereby getting seven AfD members elected to the EU parliament. Nationwide, the AfD is estimated to have under five percent of voter support.

The AfD’s central argument is that the euro is a failed currency that threatens the European Union’s future by supporting impoverished countries and uncompetitive economies, which in turn burdens future generations.

In July 2015, Frauke Petry was elected leader of the AfD and her appointment was seen as a shift to the extreme right for the party, especially in respect of a rise of xenophobic sentiment in the AfD. This prompted five MEPs to leave the party, including the AfD’s founder, Bernd Lucke who then formed a new political party, the “Alliance for Progress and Renewal” (ALFA).

Similar to the AfD, ALFA is also euro-skeptic and, in particular, opposes the German government’s agreement to give financial rescues to Greece and other troubled Eurozone countries.

In the greater scheme of things and in terms of real numbers at present, both of these parties still have only small and limited public support and therefore do not wield much clout in German politics. However, as recent voting trends in Europe have proven recently, this fact can alter very quickly.

Our politicians should only ignore these trends at their peril!

Finally, let me leave you with a very thoughtful piece written by Thomas Fazi:

“Capitalism won’t reform itself“

(5 November 2015)

“Let’s not make the same mistake twice. Let’s not fool ourselves that change will come from above, if only we state our case in a sufficiently convincing manner. 

In the wake of the 2008 financial crisis, with the system pulled back from the brink only thanks to massive – and completely orthodoxy-defying – deficit spending by governments, many of us on the Left believed that neoliberalism’s days were counted, so spectacularly it had failed.

As Paul Heideman wrote, ‘the feeling of the day was that the xcera of unfettered marketization was coming to a close. A new period of what was loosely referred to as Keynesianism would be the inevitable result of a crisis caused by markets run amok’. I was among those that, in a perversely naïve way, believed that the system would self-correct itself, giving way to a better, fairer, greener world – not unlike what had happened in the United States after the Great Depression, and in Europe after the Second World War.

As we all know, the exact opposite has happened. Not only has the neoliberal regime gone largely unchallenged all throughout the West – its ideological dogmas broken only insofar as it was necessary to keep the system alive (quantitative easing – i.e., printing money and giving it away to banks and the wealthy – being the most obvious example); in the case of Europe, the political-financial elites successfully exploited (and to some extent ‘engineered’) the crisis to lodge the most violent attack on democracy, labour and the welfare state in recent history, and to impose an even more extreme neoliberal order on the continent.

This has resulted in the greatest transfer of public resources from the public to the private sector, and from the lower and middle classes to the wealthy, in Europe’s modern history, in what can only be described as a classic case of economic shock doctrine. This attack is, of course, still under way – with the Left still struggling to mount a resistance (though a small breach remains open in Greece, and the ground seems to be shifting in other countries as well).

Many explanations have been put forward to explain neoliberalism’s resilience and the Left’s inability to exploit the crisis to its advantage; Philip Mirowski even wrote a 400-page book, Never Let a Serious Crisis Go to Waste: How Neoliberalism Survived the Financial Meltdown, entirely dedicated to this question.

Personally, I think one of the Left’s greatest theoretical and strategic blunders was/is that of believing that there is a causal, mechanical relationship between economic crises and progressive change. If anything, history shows that the opposite is true, with crises usually leading to regressive, right-wing and authoritarian backlashes, especially if the balance of forces is heavily tilted towards capital vis-à-vis labour (as it clearly is today).

Progressive change, on the other hand, is usually the outcome of either systemic destruction – i.e., war, which usually leads to a huge destruction of capital/wealth as well – or struggle. In other words, there is no self-correcting mechanism embedded into capitalism.

Thanks in part to the Greek crisis – where the sharpest drop in GDP ever recorded in peacetime in a developed country has failed to radicalise workers and citizens to the point of breaking away from the eurozone, despite the presence of a strong left-wing party, SYRIZA – this unpalatable truth seems to be finally dawning on the European Left.

In typical leftist fashion, though, as one illusion – namely, that of automatic crisis-induced change – fades away, another one seems to be already in the making. Simply put, the argument is that the swelling ranks of mainstream economists, policy makers and commentators that are openly calling for more expansionary fiscal policies indicate that ‘there is a paradigm shift in the offing’ – away from austerity and towards Keynesianism.

Hearing people like former US Secretary of the Treasury Larry Summers or former Chairman of the UK Financial Services Authority Adair Turner talk of the need for ‘more debt… to finance fiscal expansion’ (the former) and for ‘debt write-downs or increased fiscal deficits financed by permanent monetization’ (the latter) is indeed quite extraordinary. But is it enough to talk of a paradigm shift in the making?

Such a conclusion seems to rest on a fundamental faith in the power of ideas to shape the world. Those who subscribe to this view largely attribute the neoliberal restructuring of society that has occurred from the late 1970s onwards to the increasingly hegemonic theories – variously dubbed ‘neoliberalism’, ‘neoclassical economics’, ‘neoconservatism’, ‘the Washington consensus’, etc. – developed by a group of academics (most notably those at the University of Chicago). If that is true, then it follows that, in order to overcome neoliberalism, all it takes is for enough members of the establishment to be swayed by an alternative – though not necessarily new – set of ideas.

All the Left needs to do is to incessantly keep hammering them out, just like the members of the Chicago school of economics did in the 1970s. As former US Secretary of Labour Robert Reich notes in his brilliant 2007 book Supercapitalism, ‘that these ideas emerged from academics based in universities may suggest why those who give them most credit for altering the world over the last thirty years are usually themselves academics who harbor a generous view of the impact of academic ideas’. But that is not really how the world works, says Reich.

It is true that policy makers occasionally pay attention to those in the academy. ‘Madmen in authority, who hear voices in the air’, wrote the economist John Maynard Keynes, ‘are distilling their frenzy from some academic scribbler of a few years back’. But the particular academic scribblings that began to take hold in the 1970s had been around in much the same form since the eighteenth century, notes Reich.

The most likely reason that they suddenly gained prominence in the last decades of the twentieth century, in the United States and elsewhere, was that they offered a convenient justification for the shift already under way. ‘They did not cause the shift; at most, they legitimized it’, Reich writes. In other words, neoliberalism took hold primarily because it promoted and sustained the interests of the dominant political-economic establishment of the time, not because it proved more convincing than other economic theories.

This implies that for the establishment to spontaneously – i.e., in the absence of a popular struggle or a threat to its existence – adopt a new economic paradigm – one, for example, based on debt write-downs and expansionary fiscal policies –, that new paradigm would have to serve the interests of today’s dominant political-economic elites. Why else would they adopt it? Thus we have to ask ourselves: is that the case today? Some seem to think it is.

The argument is that neoliberal policies (fiscal austerity, wage deflation, etc.) have set advanced nations on a ‘secular stagnation’ trajectory – one characterised by long-term economic stagnation, elevated levels of unemployment and chronically deficient demand – that is bound to cause the profit rate to decline, and that it is thus in the interest of capital as well to boost aggregate demand through fiscal expansion. This is true to a certain extent, but we have to define what we talk about when we talk about ‘capital’ – and which form of capital pulls the strings in today’s economy.

In recent decades we have gone from a blend of capitalism primarily centred around real production processes (the ‘real economy’) and based on real capital accumulation (first in its Fordist-Keynesian version, based on a class compromise with organised labour and the ascendant middle classes; subsequently in its neoliberal version, based on a compromise with the asset-owning middle classes in the context of globalisation and relocating production), to a highly speculative and hyper-financialised blend of predatory, oligarchic capitalism primarily based on money-dealing and interest-bearing speculative capital – the former profiting from short- or medium-term fluctuations in the market value of a tradable good (such as a financial instrument), the latter focused on rent-seeking through the holding of large shares of public and private debt instruments – and for this reason increasingly freed from the class compromises dictated by the requirements of long-term investment, as argued by Kees van der Pijl and others.

The primary activity of speculative capital – the dominant form of capital today – could be defined as that of ‘making money from money’. In other words, it is an industry that has detached itself from the ‘real economy’ – except when it is extracting wealth from it – and mostly trades with itself. For this reason, it is relatively unhindered by the problems posed by secular stagnation – or, more in general, by what goes on in the rest of society – and to a certain extent actually benefits from it, since deflation causes a transfer of wealth from borrowers and debtors to investors and asset holders. Considering the increasingly oligarchic nature of our societies and political systems – the New York Times recently reported that 158 families have contributed almost half of the 2016 US elections funding – it is therefore extremely naïve to expect any challenge to the current system to come above, despite its internal contradictions.

Moreover, when talking about the ‘interests’ of capital – industrial capital as much as financial capital – one has to always keep in mind what Polish economist Michal Kalecky wrote more than 40 years ago about the apparent irrationality of business and political leaders:

Indeed, under a regime of permanent full employment, the ‘sack’ would cease to play its role as a disciplinary measure. The social position of the boss would be undermined, and the self-assurance and class-consciousness of the working class would grow. Strikes for wage increases and improvements in conditions of work would create political tension. It is true that profits would be higher under a regime of full employment than they are on the average under laissez-faire… But ‘discipline in the factories’ and ‘political stability’ are more appreciated than profits by business leaders. Their class instinct tells them that lasting full employment is unsound from their point of view, and that unemployment is an integral part of the ‘normal’ capitalist system.

A variation on the secular stagnation argument is that say that a renewed financial and economic crisis is more or less inevitable – which is indeed very likely – and that this will provide the final push away from neoliberalism. Personally, I find that hard to believe. It is more likely that a new crisis will lead to one of the following two scenarios: a major downturn that creates some significant disruption but doesn’t threaten the overall stability of the system, in which case, in the absence of mass mobilisation, we will see a similar response to the one witnessed post-2008 (short-lived Keynesianism followed by a return to business as usual); or a full-blow implosion of the system, in which case we will have much more to worry about than austerity, and we will probably have to face a fair amount of destruction before returning to a ‘new normal’ – if ever.

Comrades, let’s not make the same mistake twice. Let’s not fool ourselves that change will come from above, if only we state our case in a sufficiently convincing manner. That the system will reform itself for the better in order to survive. Progressive change will only come about as the result of concrete political struggle. The alternative, as always, is barbarism.”