Politics in the post-war period was characterised by clear-cut differences in the party politics between the parties. Yet since the end of the Cold War in 1989 such differences have mellowed and parties appeared less ideologically orientated. Following the 2008 crash and Great Recession, social democracy has been in decline, new movements have emerged and the traditional “left vs right”, Conservative vs Labour or Social Democratic difference has been disrupted. Some have speculated about the potential for a political re-alignment.
To understand the basis of this reorientation, we need to look at the shifts in political, social and economic thinking since 1945.
The Post-War welfare state consensus
The Second World War produced a major realignment in social and economic thinking, although preceded to some extent by the US New Deal (1933). In the UK, the economic basis for the Welfare State was supplied by the ideas of John Maynard Keynes and the administrative basis in the Beveridge Report (1942). Thus the National Health Service, expansion of state-financed housing, a package of welfare support, policies to create and sustain full employment, and nationalisation of strategic industries by the 1945-51 Labour government became the benchmark for post-war policies and a general improvement in living standards.
All this though was threatened by the Oil Crisis of 1973-4, hyper-inflation, large-scale trade union unrest and political instability. This opened the door for a shift away from tax and debt-financed state intervention towards free market economics.
Neoliberalism challenged the Welfare State status quo, seeking to resurrect a version of 19th Century liberalism. To people like Hayek (“The Constitution of Liberty“, 1960), liberty was obtained through the absence of coercion. State intervention, tax policies, trade unions, and state provision of services like the UK’s NHS inhibited entrepreneurial activity. The free market and competition would ensure greater efficiency and prosperity. “Wealth creators” would be empowered to be successful and society would be better off in time. Inequality was to be lauded since wealth creators needed an incentive to generate wealth; they would be free to do the undo-able. The post-war economics of JM Keynes was now dead.
Neo-liberalism provided a philosophical basis through which a whole raft of right-of-centre think-tanks, journalists, advisors and politicians could argue for a fundamental shift in policy, as then occurred under Reagan in the US and Thatcher in the UK. Tax cuts, a shift from income to indirect taxation, curbs on trade union power, de-regulation, privatisation of state-owned assets and businesses, sale of state-owned housing to expand home ownership, reduction in welfare state services, the Big Bang of stock market liberalisation, all served to “roll back the frontiers of the state”. Thatcher went on to win three general election in a row.
So successful was this policy that opposition parties adopted it to some degree, as with Bill Clinton in the US and Tony Blair’s Labour in the UK. Other countries have to some degree followed suit. Tony Blair presented New Labour as a “third way” between Socialism and Conservatism, as against the approach of the electorally unpopular hard left represented by the policies of Tony Benn. The approach seemed vindicated with the end of the Cold War in 1989, what Francis Fukuyama called “the end of history”, since liberal democracy had triumphed.
Yet many observers have argued that the period dominated by the neoliberal agenda has seen a radical increase in inequality and the accumulation of massive wealth in the hands of a tiny and often globally-based minority, as demonstrated in Thomas Picketty’s book Capital in the 21st Century (2013). Some say that we have returned to levels of inequality last seen in 1913, before the First World War, the Russian Revolution (1917) and the rise of Communism.
Neoliberalism has been accompanied by the globalisation of trade, the growth of large multi-national corporations, and a major contraction in traditional industry, replaced by depressed “rust belt” regions, decayed housing, insecure employment and the stagnation and fall in median income of the populations of Western countries. The “safety net” of the welfare state has also been contracting. Furthermore the tax base of governments has in turn been shrinking, making it harder to provide services and thus forced into further cuts, a vicious circle.
Into the underlying insecurities of the new century came the biggest slump since the 1930’s Depression, political disillusionment, and the rise of new radical political movements.
Austerity politics – the impact of the Great Recession
Arguably the greatest post-war crisis of capitalism has been the 2008 slump and enduring recession, or in effect a depression, that has ensued. Economic activity has only barely recovered, productivity is poor, employment has picked up but only in insecure work, the “gig economy”, manufacturing has continued to decline, and dependence on the financial sector in London and the South-East has grown while elsewhere the economy has stagnated. The economy is now flirting with deflation. Inequality has increased, with potentially dangerous consequences: the Social Mobility Commission has found that only 3 of the 65 areas of the UK with the worst educational and employment prospects voted to remain in the EU in the 2016 Referendum.
Initial responses by politicians has been to prioritise tackling the massive structural deficit and debt that resulted from the Slump by “austerity”, reducing public expenditure through a series of cuts to all departments except health and education. For a time under Osborne the plan was to balance the budget by 2020, but this was abandoned by 2016. However cuts to departmental budgets continue, such as universal benefit, child benefit and local authority services. Despite promises after the Referendum to pay more attention to “just about managing” people seen to support Brexit, both the OBR and the IFS forecasting bodies say that things will get worse.
Free market policies are now being balanced by signs of a more interventionist approach, as seen in expenditure rising for areas like infrastructure projects and research and development, in order to attempt to tackle the chronic productivity problem.
The political consequences
Historians looking back at this period will very likely be unsurprised at the growth of unrest that has followed the recession. That it was delayed has probably been due to the very quick efforts made under the Brown government to intervene to support the economy in 2008 by a major rescue of the banks. However enduring austerity is now having an effect.
Most more impartial commentators agree that the forces behind Brexit and authoritarian populism have been the fact that large areas of the east coast, the Midlands and the North have been the ones who have defied traditional party lines, refused to follow the lead of pro-EU Labour and voted for Brexit.
However the effect is more widespread and profound. In terms of electoral voting and the party-political balance at Westminster, political fragmentation has become more pronounced. Neither of the major parties have recently been able to get above about 36% of the vote in elections, a trend evident before the slump and now arguably more problematic. The rising force on the right of UKIP produced a 12.7% share of the vote in the 2015 general election, and they are now regarded as a particular threat to Labour in the North.
Since the slump public attitudes to politics and politicians has gone significantly downhill. The MPs’ expenses scandal (2009) has played a major part, creating the impression of politicians’ venality, but it should be said that an increasing alienation from “Westminster” and “the political class” is much bigger than that. Factors could include the sense that politics no longer spoke to wide areas of the country, that London and the more affluent had hardly been impacted by the Recession, that the top 10% of the population were getting more of the benefits while for the mass of the population incomes were stagnating, that the social liberalism of Cameron and the Coalition seen in measures like gay marriage and tolerating large-scale migration, did not reflect where most people were at.
Authoritarian populism and nationalism
A rise in authoritarian nationalism in Europe was a consequence of the Great Depression and it has also been on the increase since the 2008 slump. Hence in the UK, Brexit speaks to those who not only feel left behind by globalisation but also not effectively represented by the “political class”. Thus we see a rise in hate crimes since the Referendum, hostility to immigration, a lack of interest in human rights issues, a view that “things in Britain were better in the past“, and a desire to “regain control”. There is a prevailing sense of Britain in decline. A recent YouGov survey has shown that “authoritarian” views are held by around 50% of the voting population. This is also seen in other EU countries.
Crisis on the Left
Despite what one might expect, there has been no real sign of polarisation yet on the left. In the 1930’s, the liberal centre collapsed, and voting support on the extreme right and left surged. Yet today, with the trends observed here, the Left in British politics is struggling for an effective response that captures voters’ imagination.
Right across Europe Socialism is in retreat. Hollande’s government in France is deeply unpopular and the Right is making all the running in the lead-up to the spring 2017 elections. In Germany, the SPD has also been in decline.
In the UK, the Labour Party has been in crisis. Under Tony Blair “New Labour” accepted much free market thinking of the previous Tory regimes and placed its focus on measures to raise the standard of public services and be more re-distributive through fiscal devices such as tax credits devices. After the Slump it lost 2 elections and has been plunged into an internal conflict between the Far Left who seized control of the leadership with Jeremy Corbyn and the moderate majority of the Parliamentary party.
Corbynism reflects a grass-roots movement, led by the organisation set up to support Corbyn, Momentum, strong in metropolitan and university centres and in the Left-leaning trade unions but weak in provincial and northern areas. This movement now effectively controls the organs of the party through a small majority on the national executive committee. However the party looks very divided and lacks impact in terms of policy presentation and challenging the Government. Thus in opinion polls it lags behind the Conservatives and has opened up a crucial 30% deficit in its perceived economic competence.
Looking at other parties, the Green Party snapped at Labour’s heels in a few areas in 2015 and nationally polled 3.8%, and since 2010 is returning one MP. (One must take these results with a pinch of salt given the UK electoral system exaggerates the position of the major parties). Liberalism in the UK has also recently been in crisis, its representation having dropped to 6 MPs in the 2015 election. The function of the LDP as a protest party has recently been taken over by UKIP, although there is speculation that it might recover to some extent. The weakness of the centre has also been noted in other European countries.
The crucial shift has been the rise of the Scottish National Party, which made an almost clean sweep of Scotland and strengthened its position in dealing with the UK government and threatening a second referendum over Brexit. This was mainly at the expense of Labour, which, with the electoral boundaries in the UK to change on the Conservatives’ favour in 2020 make it much harder now to win an election outright.
On the far left, outside Labour there has been no serious electoral shift to them and they remain a small and divided force, as does for that matter the extreme right. In traditional terms this can be said to fit with the British political culture which eschews extremism. There is as yet no sign of the mass left-wing movements achieved in countries like Spain with Podemos or Greece with Syriza, or the hybrid Five Star movement in Italy.
The Slump has produced major realignments, most particularly as regards Brexit, which has left Britain facing arguably its greatest post-war political crisis. Moderation appears to be giving way to a swing to the right. However, Britain tends to dislike extremism. As ever, the past does not predict the future and serious unrest could follow if a crisis in the political class is paralleled by unrest outside the Metropolis. At present this could come from support in former traditional Labour provincial areas for a more right-wing movement. As yet there seems no sign of it. The way is still open for a more coherent response to a changing Britain from the left.