From the TUC

The ‘Grillo’ effect and the future of democracy

26 Feb 2013, by in Economics, Politics

What should we make of the Italian General Election? Friends of mine reading this post know that I have family in Italy and I spend most of my holiday time there, so I’ve been taking a close interest in the election campaign since the turn of the year. Lots of people are having their two-pennyworth this morning and I’ve been reflecting on what yesterday’s results mean for democracy.

 First, the result itself. Reading this morning’s news, it seems to me that the two main players, the Centre Left’s Pier Luigi Bersani and the Centre Right’s Silvio Berlusconi, did mostly what was expected of them. Bersani scored a little worse and Berlusconi a little better than many (and the polls) had predicted, but not by a great deal. I read in this morning’s Guardian newspaper that Bersani has taken the Chamber of Deputies, the lower house, and is three seats ahead in the Senate. According to the Italian electoral system, this would give him a working majority in the Chamber, where the top party gets a boost in terms of seats, but there is no such arrangement for the Senate, which has equal powers and can therefore block legislation coming from the Chamber. Even if Bersani has the highest number of seats, he doesn’t have a majority in the Senate, so the only way he could govern would be to form a coalition.

 But who with? What was not expected yesterday was the performance of either the maverick Beppe Grillo or the outgoing Prime Minister, Mario Monti. Pundits had not expected Monti to win, but they had expected him to garner enough votes to become a junior coalition partner. Grillo was that eccentric, rabble-rousing anti-politician, expected to garner a few,  perhaps even a significant number, of protest votes, but not enough to upset the balance. Grillo told a crowd that he intended to rip open Italian politics “like a can of tuna” and, for once, a politician lived up to his rhetoric, the former comedian getting a poll share of 25 per cent.

This leaves Italy in a state of impasse. The only electoral outcomes are a grand coalition between Bersani and Berlusconi, although the space between them, politically, is so wide that this seems unlikely, or Grillo going into coalition with somebody, although that is the very thing he is most opposed to, and his agenda is so maverick that it is hard to see how that would work. The Italian President, Giorgio Napolitano, now has an important role to play in trying to find a way to take Italy forward. It’s a tough ask, even for a wise old head like that of Napolitano.

 There’s little point in speculating further on possible outcomes. But its worth thinking for a moment about how this happened. To use a football commentator’s term, Mario Monti had a shocker. I still remember the day after he became Prime Minister. A sunny Sunday morning, he went to Mass. Perhaps he always goes to Mass, I wouldn’t know, but it seemed a stark contrast to the public image of his predecessor, Berlusconi, for so many years. His biggest political mistake was probably a hated property tax in Italy, but more generally he was resented for being thought of as Angela Merkel’s choice of Italian PM. As his campaign floundered and he became increasingly desperate, he seemed to lose his composure.

 Grillo, meanwhile, didn’t have much composure to lose. But why did 25 per cent of voters – one in every four Italians who cast their ballot – vote for him? He clearly garnered the anti-politician vote, but does that make up 25 per cent?  I wonder if there is something else going on here.

 The UK’s biggest political story of the last week has been the downgrade by Moody’s of our economy’s triple A status. I’ve never had much time for Moody’s, or any other ratings agency, and I’m not sure if this would have been as big a story had George Osborne not given them so much respect in the first place. Who are these unelected characters to exert so much influence over economic policy? Vince Cable described them as “tipsters” on the Andrew Marr show at the weekend, which feels about right. Yet as so many families and businesses suffer under the weight of years of austerity, we are told that politicians cannot pursue certain courses of action, even if those are the most sensible economic policy choices before us, because the markets wouldn’t approve, or our economy may be downgraded.

 I suspect this explains much of the Grillo effect. As markets and ratings agencies tell us we can’t do all kinds of things, even if we wish to elect politicians to do exactly those things, the people have responded, “We can, you know!”

 Reforming capitalism is becoming one of the big themes of political discussion, certainly on the centre left. Intellectual  heavyweights like Al Gore are addressing this issue and Ed Miliband has put it at the centre of his leadership of the Labour Party. It should have been the first thing we thought about as soon as we had stabilised economies after the crisis, but with so many of the same people calling the shots as did before 2007, many feel that the opportunity for change is being missed. No wonder they feel angry. No wonder they vote for Beppe Grillo.

 The TUC has a role to play in all of this. In a recent blogpost, our new General Secretary, Frances O’Grady, said she wanted to start a public debate about economic democracy. That means all stakeholders, including trade unions, having a voice in shaping what a healthy economy looks like, not just bankers, ratings agencies, and “markets”, whoever they are.

 There is a rich vein of literature around economic democracy. We have seen the phenomenon of falling wage share, for low and middle earners, while the salaries of those at the top have become out of control, and we can expect economic democracy to deliver more fairness. But this idea should not simply be altruistic: economic democracy, as the name suggests, is about balancing different voices, from all those who have an interest in a company, or a national economy. It is not for others to give us fairness, it is for us to take part in deciding what is and is not fair. The German Social Market Economy, where workers are given a say in company decisions, is a good place to start this conversation. It is a conversation whose time has come and I look forward to joining in.

One Response to The ‘Grillo’ effect and the future of democracy

  1. Please, George, not a boring Budget! | ToUChstone blog: A public policy blog from the TUC
    Mar 12th 2013, 1:52 pm

    […] for growth”. The goodwill of the financial markets is a secondary issue, in my view. I have blogged before about the dangers to democracy of elected politicians not being prepared to do what is […]