Only a few naïve supporters of left politics, throughout the world, could muster up the enthusiasm to cheer the Greek left coalition Syriza’s resounding re-victory after a tumultuous seven-month first stint at power. Probably a streak of defeat after defeat of leftist parties to regain or hold on to power, has made some of its supporters desperate enough to clutch on to straws, even imaginary ones. But most of the more astute followers of left-of-centre politics, recognised that Syriza’s win actually puts another seal on the apparent indomitability of the free-market orthodoxy.
A senior EU official said that Syriza’s victory is good for the bailout program because it is better that the party carry out the bitter reforms itself than rouse the rabble in the streets. Empires know that nobody can pacify a rebellious province better than a rebel general who has defected to the side of the empire. A Spanish politician from the anti-austerity Podemos Party who campaigned in Greece opposing PM elect Tsipras, and for the anti-bailout ex-Syriza rebels, despaired after the election saying: “What Tsipras did was consolidate the dominant discourse of bi-partisanship that there is no alternative, no possibility of change.”
Tina (there is no alternative) is an acronym that is again haunting the politics of the left -- in particular the European left. First coined during former British PM Margaret Thatcher’s regime during the early 1980s, to drill home the message that there is no alternative to economic liberalism in the form of opening up the economy to internal and external competition, if a developed country wants to maintain its status as a rich and growing economy in the rapidly globalising world.
Although the actual record of Thatcher’s revolution in British economy and society is decidedly mixed, there is no doubt that her unwavering zeal transformed economics in the West by moving the centre of orthodoxy significantly further away from statist policies to the right. The global milieu has changed in these three decades, and the Western economic canon too has changed a lot, but the seemingly inexorable power of the orthodoxy has made the relentless message of Tina more pertinent than ever.
Until the late 1970s, mainstream left parties had a robust and often-used economic strategy profile in their arsenal. It consisted of government intervention in monetary policy, expansion of the social welfare state, and statist control of vital economic sectors and public expenditure to stimulate the economy. But the failure of expansionary policies during the 70s, declining productivity and return on capital investment, and the seemingly immovable state of stagnant growth with inflation produced a wide-spread crisis throughout the West.
After Paul Volcker’s successful central bank policies tamed inflation and Reagan and Thatcher’s revolutionary make-over of the government’s role in state, economic orthodoxy significantly shifted to the centre-right. The new canon of economic policy consisted of deregulation of labour and enterprise, privatisation of services and industries, international free-trade agreements, central bank independence, etc. Although the strategy also called for fiscal tightening, countries always seem to find excuses to increase spending with borrowing, against the future generations.
Many of the centre-left parties spent the 80s and early 90s in exile from power. As the Soviet Union crumbled and communism turned into yet another failed challenger to capitalism, the mainstream left gradually shifted their policy platform to the right. While the Labour Party in the UK enthusiastically followed Thatcher’s policy, the Social Democrats in Germany went even further. They enacted far-reaching deregulation and reforms that changed welfare state fundamentally. Economic competitiveness, rather than welfare of the community, became the new mantra for the centre-left. While the mainstream left once looked for socialism with a human face, they now became avid fans of neo-liberalism with a caring face.
Neo-liberal economics faced its biggest crisis following the financial crisis of 2008. It showed the world that financial deregulation and banking wizardry do not turbo-charge a country’s economic efficiency, but set it up for big bubbles and bigger crashes. But at this biggest crisis of capitalism since the Great Depression of 1930s, the centre-left found that it has no solutions to offer, rather than meekly follow the right’s prescription of austerity, wage deflation, and adherence to fiscal rules.
Some in the far left talked about the nationalisation of banks, but the voices did not break into the mainstream. The US, because of its unique position as the issuer of the global currency, the dollar, and “risk free” bonds, could indulge in Keynesian spending to some extent. Moreover, the massive and deregulated US economy could easily shade millions of jobs and less efficient assets to gain productivity and regain competitiveness for economic growth. But the smaller and more regulated economies of Europe did not have the policy freedom of the US, they had to follow the more painful path.
Countries in Europe that were hardest hit by the crisis had to face more pain in their struggle to climb out of the economic abyss. The sheer amount of distress faced by the common people in peripheral economies like Greece, Spain, Portugal, Ireland, etc generated the wide-spread leftist movement to ease austerity and restore growth through spending. But Germany and the northern countries in the European Monetary Union have stood rigid on the prescription of austerity and wage-deflation. And despite all the opprobrium that celebrity economists have hurled on North European rigidity, their stance has strong support too.
The core EMU countries point out that, in absence of a central authority, the monetary union is a rule-based group of countries. If the rules are not adhered to, then simple incentive incompatibility will bring the whole house down rapidly. If a country wants to abandon austerity and make fiscal expansion, it can only do so by borrowing against the future. Also, Keynesian spending is only a short-term solution anyway, but the problem in developed Europe is much too systemic for a quick solution.
The rapid globalisation of the world economy since the 90s has brought several billion producers in the world market who can do many of the things that people in the West used to do, at a fraction of the previous cost. In this free-trade world, unless blessed with unfathomable riches from natural resources, a country’s worth is measured in productivity and competitiveness. If a country wants to enjoy a $30,000 per-capita lifestyle, its economy must also produce $30,000 per-capita worth of values in a very competitive world market.
While the non-mainstream left cry to the heavens about the pains of austerity and demand spending to alleviate said suffering, they do not have anything to say about productivity and competitiveness. One gets the feeling that conservatives are not widely off-the-mark when they say that the left believe in magic money trees.
There is no doubt that neo-liberalism, in its European, American, or Asian versions, has caused tremendous problems in economies and societies -- extreme inequality may be the worst of them. While the non-mainstream left shows brilliance in diagnosing the ills of capitalism, it offers very little in realistic solutions. Its policies reek like snake oil; even in democracies, people lose faith on snake-oil merchants after some time, and grudgingly undergo painful surgery.
Sections of the left may cheer election of Labour leader Jeremy Corbyn in Britain as yet another kick in the face on neo-liberal orthodoxy, but there is little sign he will offer a genuine alternative to the neo-liberal paradigm. Unless the left talk equally of pain along with the visions of gain, they cannot dislodge Tina from its all-pervasive dominance.