Europe’s Politics of Dystopia
TOKYO
– The recent victory of the conservative Law and Justice (PiS) party in
Poland confirms a recent trend in Europe: the rise of illiberal state
capitalism, led by populist right-wing authoritarians. Call it Putinomics in Russia, Órbanomics in Hungary, Erdoğanomics in Turkey, or a decade of Berlusconomics from which Italy is still recovering. Soon we will no doubt be seeing Kaczyńskinomics in Poland.
All are variations on
the same discordant theme: a nationalist leader comes to power when
economic malaise gives way to chronic and secular stagnation. This
elected authoritarian then starts to reduce political freedoms through
tight-fisted control of the media, especially television. Then, he (so
far, it has always been a man, though France’s Marine Le Pen would fit
the pattern should she ever come to power) pursues an agenda opposing
the European Union (when the country is a member) or other institutions
of supra-national governance.
He will also oppose free trade,
globalization, immigration, and foreign direct investment, while
favoring domestic workers and firms, particularly state-owned
enterprises and private business and financial groups with ties to those
in power. In some cases, outright nativist, racist parties support such
government or provide an even deeper authoritarian and anti-democratic
streak.
To
be sure, such forces are not yet in power in most of Europe. But they
are becoming more popular nearly everywhere: Le Pen’s National Front in
France, Matteo Salvini’s Lega Nord in Italy, and Nigel Farage’s United
Kingdom Independence Party (UKIP) all view Russia’s illiberal state
capitalism as a model and its president, Vladimir Putin, as a leader
deserving of admiration and emulation. In Germany, the Netherlands,
Finland, Denmark, Austria, and Sweden, too, the popularity of populist,
anti-EU, anti-migrant right-wing parties is on the rise.
Most of these parties
tend to be socially conservative. But their economic policies –
anti-market and fearful that liberal capitalism and globalization will
erode national identity and sovereignty – have many elements in common
with populist parties of the left, such as Syriza in Greece (before its
capitulation to its creditors), Podemos in Spain, and Italy’s Five Star
Movement. Indeed, just as many supporters of radical leftist parties in
the 1930s made a U-turn and ended up supporting authoritarian parties of
the right, the economic ideologies of today’s populist parties seem to
converge in many ways.
In
the 1930s, economic stagnation and depression led to the rise of Hitler
in Germany, Mussolini in Italy, and Franco in Spain (among other
authoritarians). Today’s brand of illiberal leaders may not yet be as
politically virulent as their 1930s predecessors. But their economic
corporatism and autocratic style are similar.
The reemergence of
nationalist, nativist populism is not surprising: economic stagnation,
high unemployment, rising inequality and poverty, lack of opportunity,
and fears about migrants and minorities “stealing” jobs and incomes have
given such forces a big boost. The backlash against globalization – and
the freer movement of goods, services, capital, labor, and technology
that comes with it – that has now emerged in many countries is also a
boon to illiberal demagogues.
If economic malaise
becomes chronic, and employment and wages do not rise soon, populist
parties may come closer to power in more European countries. Worse, the
eurozone may again be at risk, with a Greek exit eventually causing a
domino effect that eventually leads to the eurozone’s breakup. Or a
British exit from the EU may trigger European dis-integration, with the
additional risks posed by the fact that some countries (the UK, Spain,
and Belgium) are at risk of breaking up themselves.
In the 1930’s, the
Great Depression brought to power authoritarian regimes in Europe and
even Asia, eventually leading to World War II. Today’s resurgence of
illiberal state capitalist regimes and leaders is nowhere close to
inciting a war, because center-right and center-left governments still
committed to liberal democracy, enlightened economic policies, and solid
welfare systems still rule most of Europe. But the toxic brew of
populism now gaining strength may yet open a Pandora’s box, unleashing
unpredictable consequences.
This rising tide of
illiberalism makes avoiding a break-up of the eurozone or the EU ever
more vital. But, to ensure this, macro and structural economic policies
that boost aggregate demand, job creation and growth, reduce income and
wealth inequality, provide economic opportunity to the young, and
integrate rather than reject refugees and economic migrants will be
needed. Only bold policies can halt Europe’s slide toward secular
stagnation and nationalist populism. Timidity of the type witnessed in
the past five years will only increase the risks.
Failure to act
decisively now will lead to the eventual failure of the peaceful,
integrated, globalized, supra-national state that is the EU, and the
rise of dystopian nationalist regimes. The contours of such places have
been reflected in literary work such as George Orwell’s 1984, Aldous Huxley’s Brave New World, and Michel Houellebecq’s latest novel Submission. Let us hope that they remain confined to the printed page.
Nouriel Roubini, a professor at NYU’s Stern School of Business and Chairman of Roubini Global Economics,
was Senior Economist for International Affairs in the White House's
Council of Economic Advisers during the Clinton Administration.
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