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The Liberal Response to Trump and Brexit

Updated on November 24, 2016

2016 has been a brutal year for the established orders in Western democracies. Economic shifts that started in the 1980’s and have accelerated following the end of the Cold War, have contributed to a deterioration of the social contract that binds governments to their populations. Many in the Western world believe they have been betrayed by an urbane, cosmopolitan and duplicitous elite that has a stranglehold on power in an increasingly globalized society. The same anti-establishment forces unleashed by the British electorate’s vote to leave the European Union and Donald Trump’s success in the recent US presidential election now threaten the political orders in France and Germany, both of whom hold elections in 2017.

In September, German Chancellor Angela Merkel’s Christian Democrat Union (CDU) was beaten into 3rd place in a state election, finishing below the Alternative for Germany (AfD), an anti-immigration, anti-Islam and anti-EU party. Merkel is under increasing pressure as a result of her pro-immigration policies, although she is currently projected to be successful in her bid for a fourth term as Chancellor in next year’s general election. She will likely be more concerned by political events in France, where opinion polls point towards Marine Le Pen, the far-right leader of the National Front (FN), contesting a presidential run-off vote with a candidate from a mainstream center-right party. If Le Pen were to win, she has pledged to withdraw France from the EU, surely dealing a deathblow to one of the great projects of the post-war era.

The populist, ethno-nationalist political tides that have swept through the Western world have managed to tap into working and middle-class anger with political, economic and media elites who they blame for the weakening of the social contract and revealed deep and bitter divisions. However, the most seismic consequence of these events might be the unraveling of the post-war liberal world order that was constructed as a response to the events of the first half of the 20th century.

The framework for this international liberal consensus was established off the Canadian coast in Newfoundland on 14th of August 1941. On board the USS Augusta and HMS Prince of Wales, Franklin Roosevelt and Winston Churchill met to discuss and sign the Atlantic Charter, a joint policy statement that would outline their vision for the post-war world following the defeat of fascism in Europe and Asia.

Roosevelt and Churchill sign the Atlantic Charter off the coast of Canada, 1941.
Roosevelt and Churchill sign the Atlantic Charter off the coast of Canada, 1941.

During the 1930’s, both leaders had warned their countries about the threat to democracy that the rise of right-wing extremism in Nazi Germany, Fascist Italy and Imperial Japan posed. They were also aware of the appeal of the totalitarian communism of the Soviet Union under Lenin and Stalin. They understood that the socio-economic conditions that were especially prevalent in Europe during the inter-war period were ripe to be exploited by authoritarian demagogues who offered simplistic solutions to desperate populations suffering from complex problems.

Domestically, both politicians had demonstrated that they understood the need to pass legislation that alleviated working-class suffering and therefore eliminated threats to democracy from both the extreme left and right. Roosevelt signed many bills into law as a part of his New Deal program that were seen as radically progressive at the time and while it would be Clement Atlee’s post-war Labour government that would create the modern welfare state in Britain, Churchill had been an influential figure in passing the Labour Exchanges Act of 1909 and the National Insurance Act of 1911, two pieces of legislation that aimed to tackle problems associated with unemployment.

While communists argue that the events of the first half of the 20th century represented a crisis of capitalism, a more nuanced conclusion would be that, while rival governments indeed valued economic growth through the acquisition of resources (such as land), the structures of international trade (and therefore economic inter-dependency) were underdeveloped. For example, prior to 1914, high levels of trade between Britain, France and Germany prevented the outbreak of war on more than one occasion. World War I eventually broke out due to the recklessness belligerence of German government’s decision to tie their foreign policy to Austria-Hungary, an empire whose economy was not particularly dependent on trade with other European countries. Moreover, Austria-Hungary was increasingly becoming ensnared in the Balkans, arguably the least economically inter-dependent region of Europe in the early 20th century and where there were frequent local wars. Emboldened by Germany’s ‘blank check’ in the aftermath of the assassination of Archduke Franz Ferdinand, Austria-Hungary’s ultimatum to Serbia was designed to spark conflict. German strategic miscalculation in August and September of 1914 then transformed a regional war to one that would engulf Europe for the next four years. Additionally, World War II might have been prevented if the Treaty of Versailles had demonstrated more consideration to the development of European inter-continental trade flows.

Roosevelt and Churchill understood how American isolationism and an Anglo-French willingness to use the weak League of Nations to maintain their empires had neglected European trade in the 1920’s and 1930’s. Moreover the lack of foresight in aiding would-be trade partners created economic and political voids which gave European fascism the space in which to grow. By signing the Atlantic Charter, they signaled to the world that they were determined to not repeat these mistakes and shaped the foreign policies of the Western leaders that followed them. Ultimately, both men understood the fundamental importance of taking such a pragmatic approach to preserving democracy and international order.

Points 4, 5 and 6 of the Atlantic Charter were especially significant in outlining their economic vision for the post-war period and would form the basis of a successful period of international diplomacy that has seen a massive reduction in both the frequency and intensity of wars. These points called for trade barriers to be lowered, for greater economic co-operation and advancement of social welfare, and freedom from want and fear. The Atlantic Charter greatly influenced the formation of the United Nations and inspired many international agreements that were signed after 1945, including the General Agreement on Trade and Tariffs (GATT), which was later replaced by the World Trade Organization (WTO), and the EU.

A copy of the UN Charter, created in 1945.
A copy of the UN Charter, created in 1945.

The development of free trade agreements and international economic cooperation was designed to tackle a key factor in creating the conditions that led to both world wars and were complimented by domestic reforms in the post-war period that strengthened the social contract, such as the creation of the National Health Service in the UK and the Great Society program in the US. The result has been increased global democratization and a reduction in the propensity for conflict between countries.

For 70 years, this international consensus was the dominant driving force behind foreign and domestic policy making. While predominantly prevalent in the West, by the end of the first decade of the 21st century its influence was felt in places that had long resisted liberalism, such as Moscow and Beijing. In spite of these regimes’ belligerent stances in the former Soviet Republics and the Pacific, their expansionist tendencies have largely been curtailed by a willingness to recognize economic realities and conform to the international order. However, as with the industrial (and increasingly democratic) nation-states of the early 20th century, the current international order faces existential threats just as it appeared it had reached its zenith.

Why has this happened? Why are populations in the West seemingly so content to tear up agreements that have done so much to bring their societies peace and prosperity since 1945? While Karl Marx failed to identify liberal capitalism’s potential to reform itself, he did recognize that it creates the seeds of its own destruction. Since the 1980’s, as in the 1920’s and early 1930’s, there has been a general collective failure by the political class in Western societies to realize that their economic policies have excluded large sections of their populations.

The success of generation of leaders that dominated the political landscape during and after World War Two lay in their largely left-of-center policies that possessed a pragmatic approach to social reform. In doing so, Roosevelt and Atlee helped realign American and British politics, creating a consensus that resulted in policies that focused on helping the poor and the working classes. When the right regained power in the 1950’s, they did not challenge the concept of the modern welfare state. The 1960’s saw the advent of true progressivism, as more ambitious socially-inclusive reforms were pursued by Lyndon Johnson (whose Great Society program included the 1964 Civil Rights Act) and Harold Wilson (whose government decriminalized homosexuality and abolished the death penalty in the UK). While these leaders’ achievements were lauded by the left, they paved the way for the culture wars of the late 20th century. Of more consequence was the perceived collapse of leftist economic policies in the 1970’s and the rise of the neo-liberalism of Ronald Reagan and Margaret Thatcher. These two events realigned American and British politics once more and shifted the center rightwards, particularly on economic issues.

Margaret Thatcher and Ronald Reagan ushered in an age of neo-liberal economic policies in the 1980's. These policies enabled the crash of 2008 but were not denounced by Western governments.
Margaret Thatcher and Ronald Reagan ushered in an age of neo-liberal economic policies in the 1980's. These policies enabled the crash of 2008 but were not denounced by Western governments.

When comparing the political realignments of the 1940’s and 1980’s, what is especially significant is the reaction of opposing political parties. In the post war period and with the left ascendant, the right largely conceded the argument on social issues. Since the 1980’s, the left has done the same on economics. The fiscal policies of the Clinton and Blair eras on both sides of the Atlantics were driven by a need to demonstrate to their respective electorates that their parties could be trusted with the economy again. Even today, no left-wing leader has successfully challenged the assumption that government is, to paraphrase Reagan, part of the problem and not part of the solution. The economic consensus that has been in place since the 1980’s should have been widely discredited following the crash of 2008 but almost a decade later, is still dominant.

The spirit of this economic consensus has now suffused and corrupted many of the international agreements of trade and economic cooperation. The idealism of the post-war period has been replaced by a rampant capitalist model that favors multinational corporations at the expense of governments and the people they are supposed to represent. Therefore, the flaw that has evolved and metastasized in the global system- that the economic benefits of international trade agreements are not shared equally- is painfully obvious to many citizens in Western countries. Many political leaders have been slow to recognize this, unable to adequately explain the other benefits of these agreements, or too willing to exploit popular discontent for electoral gain.

An intellectual criticism of conservatism in the 21st century is that is too nostalgic and bereft of fresh ideas. In that context, it makes sense that modern conservatism would attempt to use the energy unleashed by the new populists to gain more political power. While it appears that the right are at least the short-term beneficiaries of the anti-establishment forces sweeping the West, it would be a mistake for them to assume that they can claim a popular mandate to govern accordingly. Many of the new populist proposals are strikingly unmoored in any distinctive and coherent political ideology and are also decidedly regressive in nature. They may yet moderate themselves once they acquire the responsibility of governance but if not, they will assuredly eventually collapse under the weight of their own policies.

One of the features of this new brand of populism is the desire to strengthen the social contract through reinforcement of the structures of the welfare states created after World War II by shielding them from globalization. Chief among the perceived threats is the one posed by new immigrants, of whom it is feared that they will unfairly benefit from these social protections. It is not hard to see how groups on the far right, who have long disdained a multicultural society and minority rights, have been energized by these movements.

The anti-immigration sentiments that have been embraced by the new populists betray their lack of political vision, as well as leave them open to charges of racism. Apart from attempting to restore a nostalgic vision of their countries which may never have quite existed, the new populists have failed to appreciate that immigrants have filled an increasingly important void in Western societies since the decline of birth rates in the 1970’s. New immigrants have not only reinvigorated an ageing and declining workforce but, crucially with regard to the social contract, kept welfare states afloat with more taxable incomes.

Conservatives have traditionally understood the need for immigration but the willingness of the right to accommodate new populism, especially on this issue, could still cause them untold damage politically in the future. Additionally, attempts to pursue a small government agenda or other traditional right-wing policies would likely be viewed as a betrayal by many of the voters that backed the anti-establishment forces.

The new populism’s stance on immigration is just part of the misdiagnosis of the problems that ail the working and middle-classes. A failure to identify and therefore adequately adapt to the increasingly significant role that technology plays in the workplace, eliminating jobs from the economy that were traditionally filled by blue collar workers, will be costly. Moreover, there is seemingly no place in their policy prescriptions for meaningful action on climate change, which apart from representing an existential threat to humanity itself, will increasingly become a major factor in creating conflicts between countries and causing refugee crises.

At this point, it is incredibly difficult to predict what will happen before the new populism fails, or after it fails. It appears a stretch to frame Brexiteers and Trumpists as truly radical threats to the economic policies of the status quo. For all their promises of change, their policy proposals so far appear to be a retreat to further neo-liberal policies, but with possibly futile attempts to renegotiate trade deals in their favor. So far the greatest impact of their electoral victories appears to be in the damage done to notion of an inclusive and diverse society.

The political vandalism they have caused has damaged the traditions of a civil society and emboldened autocrats elsewhere. In that sense, there are parallels to be found with the 1930’s: global inequality, absence of capital in the world economy, rise of political extremism (often fueled by white ethno-nationalism) and a willingness to disengage significantly from foreign affairs. However, many of the early statements and actions of the new populists seem to still be guided by the existing international consensus in a way that the populists of the 1930’s were not; they lack the ideological certainty to tear it all up altogether, but their electoral success (built upon their vociferous but vague promises to challenge the global order) has already weakened it.

If the new populists are eventually exposed as political conmen and women who fueled and then exploited popular dissatisfaction with international trade agreements to gain political power, there must be considerable concern for the future of Western democracy. With their views of conventional politicians already low, what will those voters conclude when they realize that they placed their trust in politicians who promised them much without a coherent political vision? Will their impression of a democratic system be irreparably harmed once they recognize that they have been betrayed by demagogues who either were always part of the establishment they campaigned against or were just unable to deliver the change they promised?

This is now surely the moment for the left and center to reorganize and itself to deliver the change that so many desire when the new populists eventually fail. The first step must be to finally renounce the neo-liberal policies of Reagan and Thatcher eras that should have been disowned in 2008. The new economic vision must be based on shared prosperity where government plays a benevolent role in ensuring a true level playing field, not one that disproportionately rewards corporations and big business at the expense of the working and middle-classes. While fiscally responsible policies must be pursued to protect future generations, government spending (especially on infrastructure and programs that strengthen the social contract) should be viewed as an investment, not an extravagance, and should be paid for by tax increases on the wealthiest in society so that they bear a more equal burden. Moreover, action needs to be taken to support and find meaningful jobs for those who have been displaced by technology in the workplace. These policies must be supplemented by international agreements which restore the original spirit of the Atlantic Charter, where free trade and economic cooperation were meant to spread democracy, share prosperity and promote social reform.

The potential for Western democracy to reform itself, as it did after World War II, still exists. Having defeated fascism, liberalism still faced the existential threat of authoritarianism in the form of the USSR. In 1959, U.S. Vice-President Richard Nixon travelled to Moscow to attend the American National Exhibition, part of a cultural exchange to promote understanding between the USA and USSR. At the exhibition (which was designed to promote American capitalism and consumerism), Nixon engaged in a series of discussions with Soviet Premier Nikita Khrushchev concerning the competition between the capitalist and communist systems- the so-called “Kitchen Debate”.

Khrushchev famously declared that “in another 7 years, we’ll be at the level of America, and after that we’ll go farther. As we pass you by, we’ll wave "hi" to you, and then if you want, we’ll stop and say, "please come along behind us." ...If you want to live under capitalism, go ahead, that’s your question, an internal matter, it doesn’t concern us.” As far as Khrushchev was concerned, history had proved that communism was the future and in 1959, many people across the globe would have agreed with him. Capitalism had given the 20th century world both world wars and the Great Depression, while communism was ascendant in Asia and Eastern Europe, with many rulers casting admiring glances in the Middle East and Latin America. However, within 30 years, the communist regimes of the Soviet Union and its satellite states were collapsing while China began to pursue capitalist economic policies.

In order to repeat the scale of reform required to extinguish the threat to liberalism posed by populism, modern politicians in the West need to rediscover the bravery, idealism and pragmatism rooted in liberal ideologies espoused by Roosevelt and Churchill when they laid the foundations for the post-war era with the Atlantic Charter in 1941.


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