UKIP-leader-Nigel-Farage-speaks-in-the-debate-following-Commission-President-Barrosos-State-of-the-Union-Address-on-September-28-2011-Photo-credit-©European-Union-2011-PE-EP_Pietro-Naj-Oleari-creative-commons-628x356The European election results were another shockwave rolling out from the 2008 financial crisis. They suggest the crisis has some way to go.

“The most annoying thing about most of the commentary on the European elections is that it is dominated (as usual) by people who are only interested in elections, and entirely uninterested in what is actually going on”, John Naughton observed in an excellent post this week. Actually, that splits into two, reinforcing problems. Politicians are too interested in people who vote, and not those who don’t, and the media is too interested in events, and not sufficiently interested in causes. As a result, you get lots of heat and precious little light.

And it’s pretty clear that what we saw last week was one of the continuing shock waves rolling out from the financial crisis, a crisis that almost certainly has another decade or so to go.

Getting hit by a train

As in the 1930s, there’s a large gap between the story that the elites tell themselves about the crisis, and the way it’s experienced by those outside of the elite bubble. At one level, I suspect, voters across Europe have internalised the sense that the banks caused the crisis, through recklessness and greed, and have passed the buck, via their governments, to the people, who are paying for it through austerity programmes. But as in the 1930s, the politicians are so lost in the story that financiers tell them about the need for stability, they’ve forgotten who they represent, or why.

Naughton again:

The people who voted for UKIP and the other populist parties across Europe last week don’t buy into the elite narrative about the debt crisis for the very good reason that it’s bullshit. We keep hearing soothing government and media baloney about how austerity is finally beginning to pay off, how our economies are finally beginning to “turn the corner”, etc. etc.

But, as one Irish voter put it, “I keep on turning corners and every time I get hit by a fucking train”. Irish voters were told that unemployment is finally beginning to come down, but when politicians tried that story on the doorsteps they found themselves facing people who know that those optimistic figures are bogus.


In the UK we can also count the ways in which they are bogus. Apart from the zero-hours contracts type jobs, there is the rise of “self-employment,” hailed by the Coalition as a triumph for entrepreneurialism, but much more likely – since the wages of those self-employed have mostly fallen – to be a strategy for evading the cynical rules designed by the DWP to humiliate and impoverish the jobless. And then there is the private sector jobs “boom”, which on closer inspection turns out to be the result of out-sourcing public sector jobs to providers who impose lower wages and worse working conditions. It’s possible that UK GDP will sometime this year finally claw its way back to the level it last saw in 2008, but per-household income and per-household income will still be lower. Indeed, the whole UK ’’productivity paradox” that so vexed economists a couple of years ago comes down to the slide of the UK economy towards a lower-paid service economy with less capital investment.

Gripped by insecurity

Owen Jones captured succinctly the view of the UK from the perspective those who aren’t part of the elite and don’t happen to live inside the M25:

For years the political elite has pursued policies that have left large swaths of Britain gripped by insecurity: 5 million people trapped on social housing waiting lists; middle-income skilled jobs stripped from the economy; the longest fall in living standards since the Victorian era, in a country where most people in poverty are also in work.

And the Guardian’s economics editor, Larry Elliott has a similar take. Parties that have locked themselves into the globalisation story are tinkering around the edges while abandoning much of the social protection that was part of the post-war settlement.

Despite the Conservatives subsidising mortgages through Help to Buy and Labour promising to tackle zero-hours contracts, the message many voters have been getting is that any problems they might be having are their own fault. Unsurprisingly, they reject the idea that they are too lazy or too stupid to cut it in the new modern economy and have come up with their own reasons for why life is a struggle – too much meddling from Brussels and too many immigrants.

Changing the mood requires politicians once again to come up with policies to make capitalism meet the needs of the people, rather than policies to make the people meet the needs of capitalism.

The politics of an economic crisis

So this is a political crisis, but it has its roots deep in the economic crisis caused by globalisation. Naughton quotes the Economist, which managed for once to put its neo-liberal-tinted glasses to one side:

A substantial segment of the old centre-left base—the older, white, post-industrial blue collar voters who feel economically and culturally marginalised—went to the Eurosceptic right … These socio-economic forces explain why such parties are almost universally hostile to globalisation and immigration, why they lean towards protectionism and why they engage in the sort of cultural politics that until recently was more common in America than in Europe. …

Britain shares all of these traits with other EU states. Consider, for example, the gulf between the declining former fishing and shipbuilding towns where UKIP did best (places like Grimsby, Great Yarmouth and Ramsgate) and booming, youthful, diverse London … The pattern was almost precisely mirrored in France and Denmark—in fact, in all three countries the main Eurosceptic party obtained 16 or 17% in the capital city but about ten points more nationally.

‘They call it democracy’

The wider problem is that although, across the EU, societies have the forms of democracy (actually a considerable achievement given where we were 80 years ago), they don’t have the substance of it, as Mary Kaldor argued in Open Democracy:

Formal democracy is about the rules and procedures of democracy; they include a full adult suffrage, regular elections, freedom of association and media and so on. Substantive democracy is about political equality. It is about being able to influence the decisions which affect your life. And it is about democratic culture –‘the habits of the heart’ as De Tocqueville put it. Despite the dramatic spread of democratic procedures in recent decades, there is a profound and growing deficit in substantive democracy everywhere. ‘They call it democracy but it isn’t’ was one of the slogans of the Spanish indignados.

In practice, argues Kaldor, the combination of globalisation built on top of the national structures that emerged after the Second World War creates toxic outcomes in which “a culture of selfish individualism” has “greatly strengthened the power of money and its hold on the political class. It is the hold of finance over party financing and media that largely explains the persistence of neo-liberalism in the post-crash world.”

Navigating dilemmas

Kaldor argues, in effect, that we have to find our way through a dilemma here. In framing it in this way, I’m drawing on Charles Hampden-Turner’s work on dilemma theory(pdf), which says that we only get effective innovation when we reconcile dilemmas rather than just trading them off.

The dilemma here is “more and substantive democracy” vs “globalised world.” At the moment the howl of pain represented by the votes for populist parties are a call for some national limits to be imposed on globalised economies – starting with the movement of people. Larry Elliott reminds us that in the ’50s and ’60s that used to go hand in hand with limits on the movement of capital.

One problem is that some of the sources of our social protections – human rights, for example – have also tended to come from a strengthening of international ties. Another is that more inward-looking national territories are just as likely to become victims to rapacious footloose capital, whatever their rhetoric. What we actually need to do – in tems of innovation – is find ways to beef up the processes and substance of transnational democracy, while putting limits on the freedom of transnational capital.

While that’s not straightforward, it also represents the best way of protecting blue collar workers from the ravages of globalisation. But while our elites seem so indifferent to the virtues of democracy or the vices of global capital, they deserve what they get at the ballot box.

The image of Nigel Farage speaking in the European Parliam is via the EU: ©European Union 2011 PE-EP/Pietro Naj-Oleari (creative commons).