David Cameron has joined eleven other centre right heads of government around Europe in calling on the European Union to put growth before austerity. Yes, honestly, although this isn’t a road-to-Damascus conversion to Plan B for the British economy, but the emergence of a split on the European right about how to handle the crisis. It marks a division between liberals and neo-liberals. But is this just about political positioning and fine words for voters, or something deeper?
The liberals (who appear to be led by the French-German political hybrid Merkozy) value sound money, balanced budgets whatever the economic weather, stringent austerity and cuts in workers’ rights and wages. They believe growth will follow, presumably after we touch rock bottom and the only way left is up. The neo-liberals, on the other hand, at least recognise that this is an unpalatable path to tread. They believe that growth and public sector austerity can go hand in hand, and want to unleash the animal spirits of the markets by deregulating, liberalising and cuts in workers’ rights and wages (they’re not that divided, you’ll notice, about what to do with us!)
For Cameron, this is partly another example of this week’s positioning exercise (David Laws’ intervention on Newsnight yesterday, far from indicating splits in the coalition over austerity and growth, was exactly on message), and part of what is leading groups like the G20 to adopt the right words on jobs being the top priority, growth being vital and so on. But the recipe for action is still cuts in public services and reduced unit labour costs (at every level except the boardroom, of course!), with added emphasis on deregulation, liberalisation and privatisation.
Around Europe, the question has been posed: why doesn’t a crisis of capitalism (the Financial Times’ description, rather than the TUC’s!) lead to electoral resurgence for the left? Comparisons with the welfare states which were fashioned by electorates who voted left after the depression of the 1930s are a bit wide of the mark as they ignore the decade or more of right-wing victories that preceded the leftward shift (and the war, of course). But what does seem to be happening is that, as austerity has produced its inevitable result in a return to recession, electorates are, having rejected social democratic leaderships in office at the time of the latest financial crisis (eg Portugal, Spain and the UK) are now returning either to a slightly more leftwing version of social democracy (the Danish election result, the French socialist platform for the Presidency) or indeed parties much further to the left (currently outpacing traditional social democrats in Greece and the Netherlands for instance).
The question for the left is whether the apparent conversion to growth instead of austerity on the part of some centre-right politicians (even if it is in reality austerity in growth’s clothing) squeezes alternative approaches out of the political discourse altogether, or whether we can use the language that centre-right politicians have been forced to adopt by electoral concerns about the economy and the future to push for a real change fo direction that would actually create growth, such as higher wages, fairer distribution of income and public investment to stimulate (green) growth?