The Changing World Order in 2017: The Rise of Populism

Unlike 1917, which was a year of socialist rebellions, the general verdict on the hundredth anniversary of the October Revolution is that a repeat of a seizure of power led by a socialist party has been completed discarded.  The shock waves experienced over the ten years from the global financial crisis of 2007 have had no significant revolutionary effects. Instead, 2017 signifies two major developments: the intensification of ‘populist’ discontent in the core countries of capitalism and a shift in the balance of political and economic power to the rising countries in the east led by China.

The Rise of Populism

In the developed Western countries cleavages have opened up between the established globalised political and economic elites and those who have been left behind as manufacturing industries have moved to the east leaving in their path devastated previously affluent working class areas.  Concurrently, many linked to the economic wealth generated by the globalisation process have immensely profited. The free mobility of capital has led investment to areas of cheaper labour and concurrently led to the migration of people from declining regions, exacerbated by displaced persons fleeing from internal civil wars. 

The settled but displaced (mainly white) working class has reacted against the established political leadership in the form of populist electoral victory of Donald Trump in the USA, the rise of populist parties in Germany, Austria, Greece, France, Italy, and Holland, as well as the significant rise in electoral support for left wing challengers such as Bernie Saunders and Jeremy Corbyn in the UK.

The social protest movements have been described by the English commentator, David Goodhart in his book, The Road to Somewhere. He describes the emerging Western populist movements as ‘subterranean value blocs’ composed of ‘loose, cross-class and cross-party world views’.  The question to be addressed is whether these protest movements have sufficient political ballast to move away from an economic paradigm of neo-liberalism which has guided governments (in both the advanced and emerging economies) since the Thatcher/Reagan administrations.  While economic liberalism is not dead, it is certainly failing, but what kind of populist movement and policy might replace it?

In 2017, the rising social movements universally dubbed as ‘populist’, offer an electoral choice. Unlike the early twentieth century socialist opposition movements, notably led by revolutionary socialists, such as Vladimir Lenin, the current movements do not seek power by non-constitutional means. But we remain puzzled as to what policies they are likely to bring about. 

While contemporary counter political movements differ in many respects, they all agree on a number of significant political and economic issues. 

First, a condemnation of the economic polices shared until now by the major electoral parties. Second, a criticism that the global economic mechanisms and formal national political process have led to social polarisation.  Third, a contention that electoral democracy has delivered an oligarchic bloc of irresponsible elites who have utilised global market capitalism to further their own interests. 

Such deficiencies lead to two political challenges: the assertion of national interests coupled to scepticism about the benefits of a global order, and a demand that the economic mechanism shifts from global market coordination to management at the state level.

Donald Trump’s Economic Nationalism

Donald Trump is the only economic nationalist to have taken power.  The form of economy promised by the Trump administration is a hybrid one containing elements of neo-liberalism within a casing of economic nationalism. The major objective of the Trump administration is to strengthen the national shell with more robust geographical, economic and social borders. Within this shell neo-liberal processes may continue and even grow. The slogan ‘Putting America first’ is not a theory of how the economy can or should operate. It promises to exclude external competition by strengthening the economic, political and geographical borders of the USA.  American populism will weaken globalising tendencies and concurrently seeks to re-establish greater independence to economic markets in the USA.  But will it succeed?

The Limits of Economic Nationalism

The decline of employment for the working and middle class is not to be explained and remedied solely in terms of limiting globalisation and curbing migration. The underlying reasons are also to be found in technological change which has eliminated many manual and non-manual jobs. Bringing manufacturing industry back to the USA will also bring back robots in production and computer-assisted design.  To increase employment will require significant changes in the management of the work force which could be addressed by economic nationalism but only in the context of national planning which is not currently anticipated. Within its borders neo-liberal practices, based on the psychological principles of self-interest, will continue and could even be strengthened. An economic nationalism shields the USA from foreign competition and also from the undermining effects of cosmopolitan cultures.

Regional Divisions

Divisions within nation states have become pronounced with firm regional and separatist oppositions against the central powers in Scotland, Spain and Ukraine. All these developments reflect the lack of cohesion within nation states. However, unlike in 1917, the divisions now are between what are popularly called ‘elites’ and masses. And all these movements share in common a preference for economic nationalism – the concern to assert (or reassert) the sovereignty of the nation state (or sub-state) over global and regional interests.

Not only are divisions apparent within nation states but also within the regional blocs which had appeared as permanent fixtures of the international architecture until the advent of Donald Trump. The USA has withdrawn from the Trans-Pacific Partnership (TPP) and is scheduled to weaken NAFTA.  The UK’s progress to exit from the European Union signalled another defeat for regionalism and greater reliance on the power of the nation state. 

Views expressed are of individual Members and Contributors, rather than the Club's, unless explicitly stated otherwise.