From GPS on CNN website, November 9, 2011
Europe's next nightmare: Right-wing extremism
By Dani Rodrik, Project Syndicate
Editor's Note: Dani Rodrik is a Professor of International Political Economy at Harvard University and he is the author of The Globalization Paradox: Democracy and the Future of the World Economy. For more from Rodrik, visit Project Syndicate or follow it on Facebook and Twitter. The views expressed in this article are solely those of Dani Rodrik.
By Dani Rodrik, Project Syndicate
As if the economic ramifications of a full-blown Greek default were not terrifying enough, the political consequences could be far worse. A chaotic eurozone breakup would cause irreparable damage to the European integration project, the central pillar of Europe’s political stability since World War II. It would destabilize not only the highly-indebted European periphery, but also core countries like France and Germany, which have been the architects of that project.
The nightmare scenario would also be a 1930’s-style victory for political extremism. Fascism, Nazism, and communism were children of a backlash against globalization that had been building since the end of the nineteenth century, feeding on the anxieties of groups that felt disenfranchised and threatened by expanding market forces and cosmopolitan elites.
Free trade and the gold standard had required downplaying domestic priorities such as social reform, nation-building, and cultural reassertion. Economic crisis and the failure of international cooperation undermined not only globalization, but also the elites that upheld the existing order.
As my Harvard colleague Jeff Frieden has written, this paved the path for two distinct forms of extremism. Faced with the choice between equity and economic integration, communists chose radical social reform and economic self-sufficiency. Faced with the choice between national assertion and globalism, fascists, Nazis, and nationalists chose nation-building.
Fortunately, fascism, communism, and other forms of dictatorships are passé today. But similar tensions between economic integration and local politics have long been simmering. Europe’s single market has taken shape much faster than Europe’s political community has; economic integration has leaped ahead of political integration.
Read: The instability of inequality.
The result is that mounting concerns about the erosion of economic security, social stability, and cultural identity could not be handled through mainstream political channels. National political structures became too constrained to offer effective remedies, while European institutions still remain too weak to command allegiance.
It is the extreme right that has benefited most from the centrists’ failure. In Finland, the heretofore unknown True Finn party capitalized on the resentment around eurozone bailouts to finish a close third in April’s general election. In the Netherlands, Geert Wilders’ Party for Freedom wields enough power to play kingmaker; without its support, the minority liberal government would collapse. In France, the National Front, which finished second in the 2002 presidential election, has been revitalized under Marine Le Pen.
Nor is the backlash confined to eurozone members. Elsewhere in Scandinavia, the Sweden Democrats, a party with neo-Nazi roots, entered parliament last year with nearly 6% of the popular vote. In Britain, one recent poll indicated that as many as two-thirds of Conservatives want Britain to leave the European Union.
Political movements of the extreme right have traditionally fed on anti-immigration sentiment. But the Greek, Irish, Portuguese, and other bailouts, together with the euro’s troubles, have given them fresh ammunition. Their Euro-skepticism certainly appears to be vindicated by events. When Marine Le Pen was recently asked if she would unilaterally withdraw from the euro, she replied confidently: “When I am president, in a few months’ time, the eurozone probably won't exist.”
Read: Europe's darkness at noon.
As in the 1930’s, the failure of international cooperation has compounded centrist politicians’ inability to respond adequately to their domestic constituents’ economic, social, and cultural demands. The European project and the eurozone have set the terms of debate to such an extent that, with the eurozone in tatters, these elites’ legitimacy will receive an even more serious blow.
Europe’s centrist politicians have committed themselves to a strategy of “more Europe” that is too rapid to ease local anxieties, yet not rapid enough to create a real Europe-wide political community. They have stuck for far too long to an intermediate path that is unstable and beset by tensions. By holding on to a vision of Europe that has proven unviable, Europe’s centrist elites are endangering the idea of a unified Europe itself.
Economically, the least bad option is to ensure that the inevitable defaults and departures from the eurozone are carried out in as orderly and coordinated a fashion as possible. Politically, too, a similar reality check is needed. What the current crisis demands is an explicit reorientation away from external financial obligations and austerity to domestic preoccupations and aspirations. Just as healthy domestic economies are the best guarantor of an open world economy, healthy domestic polities are the best guarantor of a stable international order.
Read: A gravity test for the Euro.
The challenge is to develop a new political narrative emphasizing national interests and values without overtones of nativism and xenophobia. If centrist elites do not prove themselves up to the task, those of the far right will gladly fill the vacuum, minus the moderation.
That is why outgoing Greek Prime Minister George Papandreou had the right idea with his aborted call for a referendum. That move was a belated attempt to recognize the primacy of domestic politics, even if investors viewed it, in the words of a Financial Times editor, as “playing with fire.” Scrapping the referendum simply postpones the day of reckoning and raises the ultimate costs to be paid by Greece’s new leadership.
Today, the question is no longer whether politics will become more populist and less internationalist; it is whether the consequences of that shift can be managed without turning ugly. In Europe’s politics, as in its economics, it seems there are no good options – only less bad ones.
The views expressed in this article are solely those of Dani Rodrik. Copyright: Project Syndicate, 2011.
It is not only in Europe that the rising tension between globalization and domestic policy is generating tensions. In North America, too, the political conversations have been so skewed toward commodity prices of food, for example, and the "need" to abandon such agencies as the Canadian Wheat Board, the single marketing agent for western grain farmers for decades. Individual farmers' voices are allegedly being drowned out by the "dictates of the freedom of the market" as the political talking points from the Harper acolytes put it, and globalization, that sacred cow of the political class, and at which altar the political class genuflects reverentially, while millions of jobs are cast off, in search of cheaper labour, without the "costs" of health care for workers, nor pensions for workers, nor safety protections for workers, nor environmental protections for people and countries where the jobs have moved to....these are all impacts of the globalization movement.
And while these historic shifts in demographics take place, (not to mention the tragic implications on both job security and family security where the losses are felt most severely), the political discourse is dominated by voices from the extremes, especially from the right.
If Europe faces right-wing extremism, as an over-reaction to the dangers of globalization, a similar drama is already rehearsing in both the U.S. and Canada in the political theatre of both countries.
No government long-term policy is even being considered to address the severe scarcities in income, food, health care access, education and environmental protection, and worker protections so long as the spotlight shines brightly on the world economic crisis.
Questions like, "How does this crisis impact your "investment portfolio" and your saving accounts?" dominate the CBC business reporter's airtime, when little if any thought, or coverage of the realpolitik that fewer and fewer ordinary people in both the U.S. and Canada even have savings accounts, let alone investment portfolios. The "news" as it is currently practiced is focused on the top 1% while the bottom 99% wonders to whom these reports must matter.
And, Occupy movements, although suffering from public impatience and shut-downs through some inappropriate invasive tactics by undesirable elements, and even the death of a young woman in Vancouver, have given some whimpering whispers of protest, there is as yet no clear political movement that has captured the full depth of the disillusionment.
If Papandreou was right to assert the primacy of domestic politics by calling for a referendum to approve the bail-out terms and consequences, ( and look how far that assertion got him and his country, Greece!) then who is going to assert the primacy of domestic politics in Canada and the U.S.?
The unions have been almost completely emasculated. The churches have already died, or are on life-support while still gagging on "abortion issues;" the teachers and faculty members in the colleges and universities have undergone a laryngotomy, and from a political perspective, are silent, knowing that any expression of political incorrectness will reap reprisals; in Canada, returning veterans from military campaigns, find their confidential health records have been opened thousands of times by bureaucrats, especially those veterans who are speaking out against the government's failure to support veterans' health and injury needs. In both Canada and the U.S. the media has lost its spine, in a sycophantic drive for co-dependence with the agents of political and economic power, and have thereby abdicated its responsibility to provide opposition voice and options for the populous. The evidence of a political motivated right-wing suppression of dissent is clear on both sides of the 49th parallel.
Could the Rodrik piece be another of those proverbial "canaries in the coal mine" for North American political watchdogs and their respective citizens too?