Twenty years ago, in 1998, social-democratic governments were in power in some three quarters of the European Union’s member states. ‘New’ Labour, epitomised by Tony Blair in the UK and Gerhard Schroder in Germany, was ascendant. Not only was conservatism in its various forms being eclipsed, but traditional Labour policies of state ownership and comprehensive state welfare had been discarded for programmes of marketisation and de-statisation which had previously been championed by right wing reformers, notably Margaret Thatcher. The European Union’s free market in a globalised world was the essence of a new social liberalism led by a revitalised social-democracy.
Elections in Europe in 2017/2018 have witnessed almost a complete rout of the established social-democratic parties. In Europe’s largest countries (France, Germany, Poland and Italy) they have been eclipsed, they remain insignificant in Austria, Czech Republic and Slovakia; and in the Scandinavian countries, once a mainstay of social-democracy, they only remain in power in Sweden. Moreover, in the face of this collapse, neither traditional conservatives nor a revitalised socialism has triumphed. What has captured the public imagination is ‘populism’.
The Populist Challenge
Populist movements are essentially anti-systemic and anti-elitist claiming legitimacy from ‘the people’. In the current phase in Europe they share a common hostility to the European Union and to the parties and groups which have traditionally supported and benefitted from it. As the EU is widely seen as the embodiment of democratic values, these rising populist movements have been widely condemned. Tony Blair in December 2017, declared that ‘The rise of the populists…. has already changed the social and economic policies pursued by many countries; created new tensions between nation-states within Europe; and begun to put pressure on democratic institutions in a variety of countries that had once been seen as consolidated democracies".
A common theme advanced by the populists is that power has been taken away from the people by elites drawn from the established parliamentary political parties – whether in power or not. And they, in turn, have relinquished power to what some have called a transnational ruling class who promote globalisation as a vehicle for progress. They claim that unelected notables, such as Rupert Murdoch (media), Christine Lagarde (international finance) and Jean-Claude Juncker (EU), make international decisions with national consequences. Populists seek to reverse these processes by returning political power to nation states. They are not parties drawn from social classes, but social movements composed of politically disenfranchised individuals often led by disaffected politicians. What the current populist movements have in common is a demand for political sovereignty of their countries and the preservation of their borders. Other more fundamental causes, such as unemployment, lack of opportunity, a perception of threat from foreigners and decline in living standards may underlie their discontent.
A ‘Populist’ Labour Party?
One remarkable exception to the collapse of European social-social democracy is the British Labour Party under the leadership of Jeremy Corbyn. Unlike the populists, Corbyn has campaigned on the effects of austerity programs and the promotion of traditional socialist remedies. Elected as leader of the Labour Party in 2015, Corbyn had taken a critical view of previous Labour leaderships. An advocate of traditional socialist views on state ownership, free public access to social provision, a Eurosceptic and long-time opponent of nuclear weapons and NATO, he was elected leader against all the odds. He had (and has) only minority support among Labour party members of parliament and only narrowly received sufficient nominations to stand for leadership. He was widely regarded as being ‘unelectable’.
His support lies in the party’s rank and file members and supporters. He has succeeded in making the Labour Party a dynamic force with a large and growing membership. Under his leadership, the increased Labour vote in the 2017 election (Labour taking 40 per cent of votes cast) led to an increase in Labour Party seats in parliament. Unlike the European social-democratic parties, Corbyn has managed to appeal to alienated groups in the electorate – precisely those who support populist parties in continental Europe – as well as to traditional Labour supporters. His surge in electoral support came from young people and those who previously had not voted. His rise to power parallels the populist social movements which have grown exponentially in Europe since the time of the global economic crisis. Moreover, as leader he has shifted power in the party away from the centre to the localities, and he places more faith in the rank and file members and party supporters – another element of populism. The significance of Corbyn is that he has revived the Labour party with a traditional socialist policy which promises greater welfare, more jobs and an end to ‘austerity’. By providing this political alternative, the renewed British Labour Party has absorbed the feelings of disenchantment fuelling populism in continental Europe. While his policy has appealed to the electorate, he is still deprecated by the political classes.
To maintain a realistic possibility of power he has to present a united Labour Party to the electorate. The challenge is to do so without undermining his political position. He has inherited a parliamentary Labour party, shaped by Tony Blair, which has strongly opposed his leadership and many are currently vehemently in favour of remaining in the European Union. To preserve party unity he has already accepted membership of NATO and the renewal of the British nuclear Trident submarines.
Corbyn’s claim is that the reforms he seeks to introduce will move away from austerity politics through more government spending, secure regional regeneration, protect the welfare state (reinstating student grants and greater expenditure on the health services), promote state ownership of public utilities and restrict EU immigration. The rules of the European Union, he contends, will preclude these policies, and in this he is correct. His policies are echoed to various degrees by the European populist parties. But will he be able to deliver? Crucial to his success is strategy on Brexit.
Corbyn’s Leadership and Brexit
In order to lead the Labour Party in parliament he has accepted many of the claims of the ‘remain’ (in the European Union) camp. Their arguments are that the effects of leaving will disrupt trade and exports so much that Britain’s economic well-being will be undermined. While not accepting membership of the single market (involving the unrestricted movement of labour and capital) he has advocated negotiations for ‘a’ customs’ union. As Corbyn put it at a policy speech delivered in Coventry on 24 February 2018. ‘Labour would seek a final deal that gives full access to European markets and maintains the benefits of the single market and the customs union’.
The intention is to retain existing trade relationships but to eliminate some neo-liberal EU policies. In Corbyn’s words: ‘…[T]he option of a new UK customs’ union with the EU would need to ensure the UK has a say in future trade deals…[W]e would also seek to negotiate protections, clarifications or exemptions where necessary in relation to privatisation and public service competition directives, state aid and procurement rules and the posted workers’ directive’. These proposals have been welcomed by the ‘Remain’ camp.
What is ignored is that under EU rules the UK (as well as many other EU countries) lost its manufacturing base as a consequence of free competition and the movement of labour, goods, services, capital and establishment. Reliance on the principles of free trade led to British companies either moving production abroad or going out of business. Consequently, while the UK benefitted from cheap imports, swathes of the country became populated by derelict factories and a mass of unemployed. The UK has suffered a long term decline in its growth of goods’ exports (between 1980 and 2016, the volume of its goods exports decreased by 50 per cent). Critics dispute whether the European Union did provide the United Kingdom with a net benefit.
Moving Away From Brexit
The single market has indeed reduced transaction costs between European countries in the EU. Jeremy Corbyn, in his Coventry speech, justifies retaining aspects of the single market with the following example of current motor manufacture. ‘A mini [motor car] will cross the Channel three times in a 2,000-mile journey before the finished car rolls off the production line. Starting in Oxford it will be shipped to France to be fitted for key components before being brought back to BMW’s Hams Hall plant in Warwickshire where it is drilled and milled into shape. Once this process is complete the mini will be sent to Munich to be fitted with its engine, before ending its journey back at the mini plant in Oxford for final assembly’.
Here Corbyn lapses into the way of thinking of liberal economists. What is missing is any mention of the fact that the mini is manufactured by a German company, BMW. The transport transaction costs are incurred because the UK can no longer produce ‘key components’ caused by the destruction of the century-old small tools manufacturing industry in the West Midlands. What Corbyn’s traditional Labour support wants is more local manufacturing industry and well paying jobs. It is precisely this kind of de-industrialisation which is lauded by the political classes as promoting efficiency. The effects lead to unemployment causing impoverishment and this has propelled the European populist movement.
Corbyn shares many of the populists’ arguments. They reject the logic of free trade and free mobility of movement of people and capital. Jeremy Corbyn is the only social-democratic party leader to have grasped that the European Union’s four fundamental freedoms have to be overridden by policies of nation states. It remains to be seen whether, if he takes political power, he will be able to deliver. If so, we will see a revival of European social-democracy. If not, there will be more populism.
David Lane is a Fellow of the Academy of Social Sciences and Emeritus Fellow of Emmanuel College, Cambridge University, UK.