Gregor Gall: Why the left still isn’t right

Published on 13/06/2012 03:28

NONE of Europe’s burgeoning left-wing parties has grasped that economic growth alone is never going to be enough, writes Gregor Gall

In all the recent key elections throughout Europe, the singular fault line running through their political debates has been that of “growth” versus “austerity”.

Since the beginning of the economic crisis in 2008, mainstream political parties of the right, centre and left have debated how much to cut state expenditure by, where the cuts should fall and how fast they should fall.

And, in the powerhouse economy of Europe, German chancellor and Christian Democrat leader Angela Merkel built her reputation since winning re-election in 2009 as the “iron lady” of Europe. On the back of a growing economy while others floundered, Merkel was able to authoritatively argue for austerity programmes in order to set in train, again, economic growth.

Indeed, her basis for doing so has been enhanced by the belief that a German austerity programme in the early 2000s (under Gerhard Schröder of the Social Democrats) established the foundations for this growth.

For a while, it seemed that the Conservative-Liberal Democrat coalition in Britain could ride upon the coat-tails of this example by promising to cut its way back to growth.

However, as the economic crisis continued and then deepened, the arguments for growth have started to be made by mainstream centre-left parties, and to be made ever more loudly. Political debate is now corralled within the confines of “growth” versus “austerity”.

This has become ever clearer since the French presidential election in early May. Françoise Hollande of the social democratic Socialist Party unseated the incumbent, Nicolas Sarkozy of the centre right Union for a Popular Movement.

Hollande made the political dividing line creating economic growth versus more austerity. It struck a chord with 18 million voters, taking him to the Élysée Palace and a major role in European politics.

In Greece, the popular, anti-cuts rebellion that propelled the radical left, Syriza, to become the second biggest party in the May general election again reflected the growing clamour for ending austerity and stimulating growth. In contrast to both Pasok (the Greek social democratic party) and the conservative New Democracy, Syriza is well placed to become the major party in the general election in Greece this Sunday.

In Britain, and almost despite itself, Labour has now gained a new found electoral credibility for not being a government that is becoming increasingly unpopular. Even though Labour still stands by making cuts, albeit less quickly and less extensively, it seems that many voters think that it has adopted a growth agenda like that of Hollande in France and Syriza in Greece.

Hollande won the presidency with his pledges of higher personal taxes for the wealthy, higher corporation tax, 65,000 new teachers and police officers, building 500,000 new homes per year and restoring the retirement age for the state pension back to 60. So the political left is now in the ascendancy again after a number of lean years. For many, this will provide hope of political parties not just advocating growth strategies but implementing them when in government.

But, unfortunately, the “growth” versus “austerity” debate is based upon historical amnesia. This amnesia comprises forgetting the reasons why the current economic crisis happened in the first place, and then being prepared to repeat those very mistakes again in the dash for growth.

This is because the extremely simplistic terms of the debate, resulting from the very dichotomy of growth versus austerity, militate against asking critical questions of the growth agenda.

The two fundamental questions are: how will the fruits of the economic growth be distributed, and under what economic regime will the growth take place?

The answers are that if the fruits of growth are not distributed much more evenly than the last time around, and if the economy continues to be based upon deregulation and neo-liberalism, the economies of Europe will be heading right back to where they were – or are now.

This is because no political party on the mainstream left, whether Labour in Britain, the social democrats in France and Germany or even its seems Syriza in Greece, has grasped that simply reflating the economy through increased government expenditure will not fundamentally change society, and for the better.

No matter how well- intentioned, the Keynesian-inspired growth agenda is one of seeking to return to a situation of before the economic crisis. This necessarily means continuing to let the deregulated market continue to have its way.

Nowhere has this mainstream left understood that to ensure stability and longevity of future economic growth requires re-balancing the economy so that it is no longer beholden to the banks and private capital.

And given that taxpayers’ money will be used to fund this reflation, it would seem rather remiss not to think about whether taxpayers will get a fair return on their investment.

After the virtual blank cheques given to bail out banks and without much obvious benefit to citizens, it is hard to believe that these mainstream left political parties are not prepared to contemplate ensuring that all citizens benefit from growth in a fair, even-handed way.

This historical amnesia results from the mainstream left still being colonised by a variant of neo-liberalism. The belief is that markets are still, despite everything, the solution. Consequently, the growth agenda is not premised on redistribution of wealth or fundamentally stemming rising social inequality.

The growth agenda is, in fact, a form of trickledown economics. The idea is that to get the economy growing again, the conditions have to be made right for investors. Once they start investing – because they can see profits are to be made through increased demand – this will create jobs and benefit the rest of society.

But there are, under trickledown economics, no controls or conditions to this growth or on how employers operate, so that capital disproportionately and unfairly benefits from the labour of those it employs to make profits. This can take the form, for example, of paying the minimum wage rather than a living wage, or using zero-hour or temporary employment contracts rather than full-time, permanent contracts.

The main reason why the mainstream left has continued its subservience to its version of neo-liberalism is because of the radical left’s failure to make hay at a time of crisis for neo-liberalism in particular and capitalism in general.

The once-in-a-lifetime opportunity for arguments for socialising and democratising the economy came and went as the debate about what went wrong and who was to blame turned into one of how to fix the situation and who should pay for fixing it.

In Germany, the growth of the radical Left party did for a time push the social democrats (SPD) to the left. In order to shore up its support, the SPD began to adopt some of the Left party’s policies. But as the Left party’s star began to wane due to internal problems, the pressure on the SPD to continue its move to the left abated.

The same process of Labour and the SNP moving leftwards to prevent being outflanked might have happened if the Scottish Socialist Party, then led by Tommy Sheridan, and Respect, led by George Galloway, had not self-combusted of their own volition. Both the SSP and Respect were for a time the progenitors of sizable and credible radical left parties.

But there is still some hope. In the run-up to the independence referendum in 2014, Labour and the SNP might realise that in order to win widespread support for their visions of a future Scotland, these very visions must be based on social justice and socialising the free market.

They both might say it is not enough to have equality of opportunity when the playing field the opportunity exists upon is so manifestly uneven. They might, instead, say equality of outcome is necessary. That would set Scotland on a path to being a socially just society, no matter the outcome of the referendum.

• Gregor Gall is professor of industrial relations at the University of Hertfordshire ([e-mail])