ACROSS the world, left-wing governments are struggling in the wake of the GFC. (Global financial crisis)
IT wasn’t meant to be this way. When the global financial crisis hit, politicians and activists on the Left thought they were poised for a resurgence of social democracy. After all, this was, in their words, a crisis of capitalism that only the restoration of government at the centre of the economy could fix.
Two years on, the results could not be any more disappointing or unexpected for social democrats. Across the globe, electorates have delivered stunning rebukes to left-of-centre governments.
In countries that have not had elections, or where left-wing governments have survived, the financial crisis and economic downturn have forced them to do things none would have imagined at the beginning of their political careers: cut spending, reduce welfare entitlements and pay back debt.
In some ways, the crisis of capitalism has turned out to be a crisis of social democracy.
In February last year The Monthly magazine published an article from then prime minister Kevin Rudd. In it, he laid the blame for the GFC at the feet of neo-liberals, “extreme capitalism” and “excessive greed”. He declared it was now the task of social democrats such as US President Barack Obama, and presumably himself, “to save capitalism from itself”.
Despite being elected President amid a Democratic landslide, and alongside predictions of 40 years of domination for US Democrats, Obama’s party recently has experienced the worst mid-term congressional losses since 1938.
The losses were all the more significant when considered against the backdrop of Obama’s policy agenda, as perhaps the first Democratic president for decades with a genuinely social-democratic outlook. In his first two years he passed the sort of financial regulation Rudd called for, landmark healthcare reform and one of the largest stimulus programs in US history. Yet Americans did not reward him. If anything, it was the perception of a large government that led many to vote Republican.
The US is not the only place where social democracy has been found wanting. Across Europe, free-market parties have been successful in elections and parties of the Left in government are enacting policies that would make Ronald Reagan blush.
In Britain, David Cameron’s Tories turfed out the Labour Party after 13 years in office. They, along with their notionally left-of-centre coalition partners, the Liberal Democrats, have embarked on a Thatcherite agenda: tax relief, cuts to welfare and privatisation.
In Greece, the incumbent socialist government led by George Papandreou has introduced a severe austerity program in response to debt problems worsened by the financial crisis. Its savage cuts to welfare spending, freeze of state pensions and reductions in salaries for the public service have been met by rioting.
France, a haven for social democrats with its generous welfare entitlements and regulated workplace, has even taken the drastic step – by French standards – of increasing the retirement age from 60 to 62, again sparking frenzied protests.
Elections in Germany late last year saw a huge swing against the largest left-wing party, the Social Democratic Party, its worst result in a federal election. The pro-market liberals, the Free Democratic Party, received their highest vote and played a key role in the return of Chancellor Angela Merkel’s centre-right coalition.
This year’s elections in Sweden marked the first time in 100 years that an incumbent centre-right government was re-elected. Indeed, the broad left opposition led by the Social Democrats – historically Sweden’s dominant party – suffered its worst result since 1921. The centre-right coalition government used its first term to cut income taxes and abolish Sweden’s wealth tax. Prime Minister Fredrik Reinfeldt has promised further reductions in welfare.
And in Australia, an election fought against a backdrop of wasteful spending and debt fears almost gave us the first one-term government in post-war history.
These are cautionary tales for social democrats. Many, including Obama and Rudd, have misjudged the electorate’s enthusiasm for bigger government and have set back their cause immeasurably.