While there has been a degree of political upheaval over the past couple of years on both sides of the Atlantic, 2018 could witness another round of severe tests of liberal democracy. Key to this is a voter move to the right; in some cases, the far right. As goes the political system, so will go the economic. The ongoing global-economic expansion in advanced economies should not be taken for granted; policymakers could be overwhelmed by political crises. Currently, prospects for global-economic growth are positive, but political drama can become a major distraction and sidetrack badly-needed economic policies.
The “revolution” is a movement of nationalists and populists, many of them long on the political fringe, to topple the old order and revert more powers back to the nation-state, close off borders to unwanted immigrants and bring back the “good old” economic days. Central to this has been a sense of grievance that the traditional political parties, often social democrats and socialists, but also more moderate center-right groups, have failed in meeting the demands of the citizens.
The Great Recession (2008–09) and Europe’s ensuing sovereign debt crisis injected considerable angst into advanced economy societies. The market crash in the United States forced attention on widening economic disparities, cultural differences in parts of the country, and Washington’s shortcomings. Europe, Greece, Cyprus, Portugal, Ireland and Spain required help to prevent total crashes and to restart their economies—an effort that was marked by painfully high unemployment, reductions in government services and a loss of buying power for the average consumer. Along these lines, the perceived threat of external forces dominating national political life gave the far right and fellow travelers a boost as they were able tap into societal phobias and offer seemingly simple answers.
There is a certain historical echo in the current nationalist-populist revolution on both sides of the Atlantic reminiscent of the 1930s, which is when liberal democracy came under attack from both the far left (communists) and far right (fascists). Historian Ian Kershaw, in To Hell and Back: Europe 1914-1949, observed that economic turmoil played a nominal role in the political changes that rocked the nation.
Economic turmoil on its own was insufficient to produce major political upheaval. For that, the turmoil needed a crisis in the legitimacy of the state underpinned by an existing ideological schism and deep cultural divides that exposed power-elites to new pressures from mass mobilization. Precisely such conditions were, however, present in many parts of Europe, especially where extreme integral nationalism, drawing on a wide-ranging sense of loss of national prestige and disappointed expectations of great-power status, could foster a strong movement that drew energy from the alleged strength of the diabolical enemies it claimed to face, and was in a position to challenge for power in a state with a weak authority.
American and European political establishments indeed face a crisis in legitimacy. In France, 2016 saw the obliteration of the old political parties, the socialists and the moderate right-wing party, before a completely new centrist political formation under the leadership of now President Emmanuel Macron. However, the runner-up in the reconfiguration of French politics came from the far right in the Front National, whose candidate for president, Marine Le Pen, came in number two for the highest elective position in France, which has one of the world’s largest economies.
Although the center-right was to win elections in the Netherlands (March) and Germany (September), both cases saw a sizable minority of voters turn to the respective far-right parties. In the Netherlands, voters gave the nationalist-populist Party for Freedom 13.1 percent of the vote—enough to gain the second largest number of seats in the Dutch parliament. The ruling center-right party was helped by an improving economy and strong leadership in facing up to the Turkish government over an electoral issue involving Dutch-Turkish citizens.
In Germany, the vast majority of voters opted for the more established parties, giving Angela Merkel enough support to form a new coalition government and have a fourth term as chancellor. However, 2017 marked the first time that the combined vote of the Christian democrats and social democrats went under 60 percent of the total vote. It also marked the first time a far-right political party, the Alternative for Germany (AfD), with 12.6 percent of the vote and ninety-four seats, made it into the Bundestag in the postwar era. The AfD was established in opposition to Germany’s financial support for other Eurozone countries during the sovereign debt crisis and has opposed migration.
Austria’s October 15 election is the latest electoral contest to signal the shift to the right. In what was a close contest, the Austrian People’s Party (OVP), led by thirty-one-year-old Sebastian Kurz, beat out the outgoing social democrats (their former coalition partners). One outcome of the vote is that the right-wing OVP may form a coalition with the third-place party, the far-right Freedom Party (FPO). Kurz is an attractive party leader and gave the OVP a badly needed facelift, unlike the SPO, which gained the least votes since World War II.
What made Kurz and the OVP the winners was a combination of factors—the party latched on to anti-migration sentiment, which took votes from the FPO; he brought in new candidates outside of the old-party regulars; promised tax cuts; and declared war on red tape and vested interests. Also, Kurz pushed to close the migration route through the Balkans (when he was foreign minister) and imposed tough measures such a burqa ban (when he was integration minister).
Probably one of the biggest factors to help the energetic Kurz win was the loss of legitimacy of Austria’s old political system. As The Economist noted on October 14, 2017, “Austria’s corporatist and political model is creaking. Since 1945 the OVP and the Social Democrats (SPO) have been in government for fifty-five and sixty-one years respectively, usually (as now) in coalition with each other. Taxes are high, the state clientelistic and growth relatively sluggish.”
Austria now joins the ranks of those governments in Europe that shifted to the right and has representation of the far-right in the formal political system. Along these lines, Austria joins its neighbors——Hungary, Poland and potentially the Czech Republic—to the East in leaning to the right. The last goes to the polls October 20–21 and the “anti-establishment” ANO party, led by outspoken billionaire Andrej Babis, is expected to do well. Why is ANO doing well in the opinion polls? As The Telegraph has reported: the Czech Republic has “an electorate hugely disappointed that their standard of living still trails their German neighbors thirteen years after accession to the EU, and spooked by the migrant crisis—even if only a dozen refugees have taken up residence in the country.”
These conditions that marked Austria and the Czech Republic exist elsewhere in Europe. A major election looms in 2018 with Italy and the center-left government of the Democratic Party faces a tough challenge from the populist Five Star Movement and other euroskeptic parties. Among a significant portion of the Italian voting population there is a sentiment that Italy’s membership in the eurozone is being done largely at the advantage of Germany, not Italy. Moreover, the tight austerity the country has endured for a number of years has also left many Italians discontented with years of slow or no growth and outward migration of younger people who have given up on finding jobs in their homeland. The Five Star Movement promises to have a referendum to pull Italy out of the Eurozone, wants to increase social spending and expel all undocumented immigrants from the country.
The United States is hardly immune to the challenge from the far right as mirrored by Steve Bannon’s launching of a war against the Republican establishment. The victory of anti-establishment populist Judge Roy Moore in the Republican Alabama Senate primary indicates that at least some parts of the United States can be pulled further to the right and can threaten more traditional GOP candidates. The more populists that are elected, the more Washington will be shaken up, and, most likely, incapable of passing meaningful legislation. Some analysts credit the Moore victory as helping Trump pursue a tougher line on health care, immigration and the Iran deal. If that is the case, the Republican primary season for the 2018 midterm elections should be eventful.
In his masterful Reflections on the Revolution in France, Edmund Burke wrote, “A state without the means of some change, is without the means of its own conservation.” The shift to the right (and far right in some cases) carries four messages that were evident over the past year and will be repeated in elections over the next year. First, if the vote returns the same old parties with the same old messages, then the legitimacy of the democratic system will further erode. Second, traditional parties need to be overhauled and new blood brought into leadership positions. Third, new more pragmatic parties on the center-right or center-left need to be formed to offer alternatives to far-right and far-left groupings. Lastly, attention must be given to economic policy and focus on enhancing productivity in the regions that lag and to promoting more equitable outcomes between rich and poor and between regions (large voting blocs cannot simply vote to take more money from more efficient and better run parts of the country without some type of conditionalities). Good economic policies make good politics.