The Centre Ground Is Collapsing Because Popular Support for Neoliberalism Is Dead

part 1 of 3

This article was originally published on the System Change website. 

The stars we see in the night sky are an unfathomably long way away. Their light takes a very long time to reach planet earth. Because of this, a few of the stars we can observe with the naked eye — and many stars we can see through powerful telescopes — are already dead by the time their light reaches us.

In 2024, centrist politicians attempting to uphold the status quo are like the light of stars which have already been extinguished. Support for their system is already dead. They just don’t know it yet.

Centrists like to claim that their position is the responsible one. Unlike the silly, childish ‘extremes’ on the radical left and the far-right, those who stand in the centre ground are the ‘adults in the room.’ But it is these same people who are gambling away our future to protect their dead system.

In France last month, President Emmanuel Macron called a snap election to the National Assembly in which he knew the fascist party Rassemblement National (RN) were virtually guaranteed to gain a record number of seats. Many predicted RN to either win a majority or come close to doing so, meaning France would be ruled by its first fascist government since 1944. Macron’s gamble appeared to many to be a cynical attempt to weaken left-wing parties while they were divided in order to strengthen his own centrist coalition, even if it meant handing power to the far-right. Instead, Macron’s party was humiliated, and the left-wing New Popular Front alliance stepped up to beat the RN.

In the US, Joe Biden is desperately clinging to power despite being unable to string a coherent sentence together, fighting an electoral rematch against Donald Trump which the latter seems destined to win. Four years after Biden’s victory in the 2020 Democratic Primary, party insiders are finally admitting that he was not chosen because he was the strongest candidate or because he had the best chance of beating Trump, but because he was the only centrist who was able to beat the left-wing Bernie Sanders.

This has left the Democrats heading into the 2024 presidential race with an unpopular 81-year-old nominee in an election of historic importance. Biden claims that “democracy is on the ballot,” yet refuses to bow out in favour of someone more capable of beating Trump, in the context of a far-right movement which has been enraged more than ever by last weekend’s failed attempt to assassinate the Republican nominee.

Even if Biden’s attempt to cling on fails and he is forced to drop out — which by the time you read this may have already happened — his Vice President and likely replacement Kamala Harris shares his centrist politics. Neither Harris nor the overwhelmingly centrist-dominated Democratic Party will deliver the policies which are so desperately necessary to address the hardship faced by working people in America.

Meanwhile, the UK Labour Party under the leadership of centrist Keir Starmer won a landslide majority of seats in the election at the beginning of this month. But Starmer enters office in a precarious position. He is unpopular and widely seen as untrustworthy even before taking power, having won on a record low vote share of 33.7% in an election with historically low voter turnout. The scale of his victory is entirely a quirk of the first-past-the-post electoral system — in the election on 4th July, two right-wing parties split the vote amongst themselves, thereby gifting majorities to Labour in seat after seat where a united right-wing party would have triumphed.

Starmer has purged Jeremy Corbyn and many supporters of the left-wing former leader from his party and ditched the transformative policies he campaigned on in the 2020 Labour leadership election. His commitment to staying in the ‘centre ground’ means he has no answers to the economic malaise faced by the British working class, and is already under threat from both his left and his right.

Centrist and centre-left politicians across the western world are failing the working class on all counts. They are refusing to take the urgent action necessary to prevent catastrophic climate change when the planet has precious little time left. Biden, Macron, Starmer and their ilk are enabling Israel’s genocidal war against the people of Gaza, despite huge public opposition. They have abandoned workers by failing to implement policies to alleviate the hardship faced by the majority of people, and allowing a tiny minority of billionaires to make obscene profits.

Right-wing populists, including but not limited to Trump in the US, Nigel Farage in the UK and Marine Le Pen in France, are poised to take advantage of dying support for the centre ground. Unless a real alternative to the current system is presented, the rise of the populist and extreme right seems unstoppable. Yet the proponents of the centre seem determined to preserve the system and stop a real alternative emerging at all costs.

There is nothing responsible about failing to take action on climate change. Nothing responsible about allowing working class living standards to fall, then wondering why so many people are turning to fascism for answers. Nothing responsible about attempting to hold on to power with a white-knuckle grip.

By trying to uphold the dying economic system of neoliberal capitalism, despite the morbid symptoms arising from its decay, social democrats and liberals are paving the way for a future of rising sea levels, droughts, famines, and disastrous weather events. This bleak future may well be governed by increasingly authoritarian leaders who maintain power by scapegoating migrants and minorities for the ever-mounting problems caused by the system itself. The so-called adults in the room would be the most irresponsible people on the planet — if their far-right adversaries weren’t even worse.

Aotearoa New Zealand is facing the same crisis of the centre, and in particular the centre-left. The 2023 election saw a record number of MPs elected both to the right of National and to the left of Labour. The two-term Labour Government went down in flames, suffering the second-worst defeat in its history, with a record-shattering collapse in its vote share. We now have the most right-wing government that our country has seen in decades, with the National-ACT-NZ First coalition ushering in a new era of austerity, racist pandering and ‘law and order’ populism. Chris Hipkins and his party, which inexplicably kept him on as leader after he led it to such a dismal defeat, have no answers — no solutions to the crises we face, and no willingness to turn towards the ‘transformational’ politics Jacinda Ardern promised in 2017 but failed utterly to deliver.

With western politics over recent decades moving inexorably to the right, bringing austerity, right-wing populism and ecological breakdown, it can be hard sometimes for those of us on the left to have hope. The feeling that extreme inequality, climate catastrophe and the rise of fascism are inevitable can be difficult to escape. But this is not true. A continuation of centrist politics-as-usual makes this disastrous future inevitable; but an alternative based on solidarity, justice and equality is possible if we organise and fight for it.

The legislative elections in France demonstrated a way forward for those of us determined to fight for a better future. When the left unites on a transformative programme, and when an anti-fascist, anti-racist, anti-austerity movement of the working class mobilises across society to fight for it, we can beat both the failing centrists and the nightmarish far-right demagogues who would replace them. For this to happen, the socialist left must take the lead — and we must not compromise on our vision of a better world.

Neoliberalism: the Failing System

Neoliberalism is the economic paradigm which has dominated world politics since it was imposed upon country after country between the late 1970s and early 1990s. In the wake of the Second World War, a class compromise existed between labour and capital across the western world known as the post-war consensus. Trade unions were strong, the welfare state was generous, many industries were publicly owned, banks and corporations were well-regulated, wages were high, and taxes were relatively high for those with the ability to pay. The strength of the working class movement, along with high economic growth, the ideological competition between the west and the Soviet Union to deliver better living standards, and the still-recent memory of the horrors of fascism, meant this status quo was able to continue for decades — until crisis broke out.

Neoliberalism, commonly known as ‘free market economics’ or derided as ‘trickle-down economics,’ represented a radical break from the post-war consensus. During the ‘stagflation’ crisis of the 1970s — in which inflation combined with low growth to create huge economic and political turmoil — support for the post-war consensus was declining. Neoliberal economists led by Milton Friedman urged governments to exploit the atmosphere of crisis to push through radical reforms which would in normal times have been politically impossible. Right-wing politicians such as British Prime Minister Margaret Thatcher and US President Ronald Reagan were more than happy to oblige.

The ideas championed by these economists and politicians were backed by a growing section of the capitalist class. The owners of big business were sick of paying high wages to their workers and high taxes to the government, sick of regulation, and sick of militant unions being able to prevent job losses and cuts to wages and conditions. Together, the neoliberal economists, politicians and business leaders waged a ruthless class war, and won.

Central banks hiked interest rates in order to dramatically increase unemployment and therefore weaken the bargaining power of unions, reducing “upward pressure” on wages. Once millions of sacked workers were desperate for jobs, some major unions tried to fight back. In the UK, the National Union of Miners went on strike for a year, but was ultimately defeated by Thatcher’s government in a pitched battle deliberately engineered to demoralise the entire British labour movement.

Laws were subsequently passed restricting the ability of workers to organise, collectively bargain and strike. Wages were cut, regulations on finance and big business were rewritten, publicly owned industries — including many vital utilities — were privatised, and welfare systems were slashed, with punitive sanctioning regimes introduced to punish beneficiaries for the slightest misstep. Taxes on high earners were cut substantially, and new consumption taxes (GST is one example) were created which affected low income earners disproportionately, shifting the tax burden from the rich to the poor.

The impacts were devastating for working class communities across the world, and linger to this day. Inequality soared, social solidarity broke down and was replaced with atomisation and alienation, and the world became a meaner, greedier place.

In Aotearoa, the neoliberal revolution was initiated by the Fourth Labour Government thanks to Finance Minister Roger Douglas, and continued under the next National Government and Finance Minister Ruth Richardson. Low wages, weak unions, a starved public sector, and high levels of inequality, poverty and homelessness, are the result — here as in every other country where neoliberal policies have been implemented.

The ideology underpinning neoliberal politics preaches the virtues of individualism, and denies the power of the collective. Thatcher outlined her view of the world by declaring that “there is no such thing as society. There are individual men and women, and there are families.” It is an ideology which believes that everyone must maximise their individual self-interest — greed is good.

But neoliberalism was always a collective project. The introduction of neoliberalism was a simple exercise in which the capitalist class broke the power of the organised working class in order to bolster capitalist power and extract ever-more extortionate levels of profit. The neoliberals then told workers that the only way to succeed in this rigged game is to compete as an individual — compete against other workers, or to try and compete against multinational corporations if you dare. Meanwhile, the wealthiest people in society continue to band together to protect their own interests as they always have.

Critics have long pointed out that wealth does not trickle down to everyone in a free market economy. It bubbles up. The entire system is designed to funnel wealth and power upwards.

Where Did Popular Support for Neoliberalism Come From?

Neoliberalism in its heyday was always devastating for workers. But consent for the system had to come from somewhere. Ending the era of high wages and decimating the welfare state, neoliberalism instead offered the prospect of a ‘property-owning democracy.’ State housing was sold off on the cheap to inflate the share of the population who owned their own home. The deregulated finance sector began to lend ever-larger amounts of money to households, who could now afford to buy cheap consumer goods imported from factories which had been relocated to the Global South. It was an era of low wages, but also low prices, low inflation, and low interest rates.

This created economies based on rising asset prices. Over time the distribution of home ownership became narrower as younger generations were locked out of the housing market. This is why we have such an acute housing crisis to this day — especially in Aotearoa, where real estate prices and rents remain sky-high, and our levels of homelessness are appalling.

Make no mistake: this was never a popular economic system across the entire working class. The victory of neoliberalism came alongside a decline in voter turnout across western democracies, as many workers increasingly gave up on politics. Young and low income people in particular stopped voting in their droves, believing — rightly — that those at the top were all in it together, and that the mainstream political parties had nothing to offer them. But homeowners benefiting from rising asset prices, low consumer prices and low interest rates provided a base of support for the system; and the workers’ movement, still reeling from a generational defeat the world over, was unable to fight back.

Centre-left social democratic and liberal parties across the world turned away from the post-war consensus they had played a central role in building, and instead embraced neoliberalism, seeking merely to soften its harshest edges. These parties were often rewarded with unprecedented electoral success. In Britain, Labour governed for 13 years, having never before won more than 6 consecutive years in office; and in Aotearoa, Helen Clark became the first Labour Prime Minister to win a third term since the 1940s. These victories occurred even as falling turnout meant many traditional supporters of the centre-left were quietly disengaging from politics.

The form of social democracy championed by Clark, Tony Blair, Bill Clinton and others, known as the ‘Third Way,’ meant increasing spending on public services and giving tax credits to low income workers in order to paper over the cracks of low-wage economies and public sectors which had been greatly diminished. Third Way social democrats left the fundamentals of neoliberalism intact: anti-union laws were kept in place, taxes remained low, regulations and trade deals continued to be rewritten to favour the wealthy, and the vast majority of the economy remained privatised. Outsourcing and private financing was often used to prop up the public sector, meaning slow partial privatisation and mounting debts for providers of essential services such as healthcare.

The dividends of finance-led growth paid for the increased public spending that came with these policies, rather than higher taxes on the wealthy. Peter Mandelson, one of the architects of the Third Way, summed up the politics of centre-left parties in this period when he admitted to being “intensely relaxed about people getting filthy rich.” Thatcher claimed that Blair being elected Labour leader was her greatest achievement — and she was right. Even her adversaries had adopted her neoliberal vision of the world.

2008 and Onwards: the Long, Slow Death of the System

The period after the fall of the Berlin Wall in 1989 saw an era of neoliberal triumphalism. American political scientist Francis Fukuyama infamously proclaimed that The End of History had arrived, arguing that humanity had reached the end point of its ideological evolution, and that the western system of capitalism and liberal democracy would universally spread across the world for the rest of time. With Soviet-style communism defeated and social democratic parties embracing neoliberalism, Thatcher’s maxim that ‘There Is No Alternative’ appeared to be widely accepted. The hubris of the neoliberals was absolute.

But the Global Financial Crisis (GFC) of 2007-2008 changed everything. The already tenuous myth that neoliberalism could deliver better lives for working people through the ‘trickle down’ rewards of growth was shattered overnight. Suddenly, this system which barely catered in the good times for the majority of the population turned outright unbearable. The capitalist class had already grown wealthier and more powerful in preceding decades; they were not about to stop further enriching themselves. They instead made the working class pay for the crisis.

Unemployment rose, many mortgage-holders faced bankruptcy and foreclosure, and an age of austerity began. Governments bailed out the banks which had caused the crisis, then to pay for these bailouts began to implement savage cuts to public spending, and further increases to regressive taxes on the poor. Under the John Key government in Aotearoa this austerity was milder than average, but in Spain, Portugal, Ireland and most notably Greece, the cuts were brutal, and began to tear apart the social fabric of these countries. Even wealthier European countries such as Britain and France experienced harsh austerity.

The entire model of Third Way politics was broken. Social democratic parties were suddenly in big trouble; they could no longer rely on finance-led growth to fund increases in public spending, and no longer had any way of smoothing over the harshest edges of neoliberalism. Capitalists and major global economic institutions such as the European Central Bank and the International Monetary Fund insisted that governments must cut spending and increase taxes on workers in order to reduce deficits and debt.

The only way for governments to deliver better lives for working class people was to break with neoliberal policies altogether, and to redistribute wealth from the wealthy back to the people. Yet the leaders of social democratic and liberal parties proved utterly unwilling to deviate from the neoliberal consensus — at a huge cost.

A trend emerged known as ‘Pasokification,’ named after the Greek social democratic party Pasok, which implemented savage austerity and saw its voter base collapse. Pasok’s vote share fell from 43.9% in 2009 to just 4.7% in 2015. Many social democratic parties across Europe followed suit — PSOE in Spain fell from 43.9% in 2008 to 22.0% in 2015; the Scottish Labour Party faced an historic wipeout, falling from 42.0% in 2010 to 24.3% in 2015 and losing almost all of its seats; and in France, the Parti Socialiste slid from 28.6% in the first round of the 2012 presidential election, with François Hollande winning the presidency in the second round run-off, to fifth place in the first round in 2017 with 6.4%, to a galling twelfth place out of fourteen candidates in 2022, winning a pitiful 1.8%.

The centre-left no longer had any credible vision to offer their voters. Those who won elections offering vague hope and change, such as Barack Obama in 2008, or transformational, empathetic politics as Jacinda Ardern promised in 2017, soon saw the shine come off as they failed to undertake any major policies to turn the tide on neoliberalism and improve the lives of the workers who put them into office. For many, hope began to give way to despair.

Post-war politics across most western democracies had been dominated by two party systems, with a social democratic or liberal party on the centre-left, and a conservative party on the centre-right. The sudden collapse of centre-left parties in many countries, and an often less pronounced decline in support for centre-right parties, whose older and more well-off voters were more loyal, created a vacuum. Politics abhors a vacuum.

The left, opposing austerity and neoliberalism, tried to fill this void. The 2010s saw many parties and politicians from the radical left suddenly emerge from obscurity into the mainstream. But the harsh and terrifying reality of our time is that right-wing populists, and in some cases outright fascists, have thus far been far more successful in filling the void left by the collapse of the centre. Many working class areas, former heartlands of social democracy which have been ravaged by deindustrialisation and the decline of the union movement, have turned to the likes of Trump, Le Pen and Farage for answers. The populist and extreme right have been far more successful in capturing state power than the radical left.

As the centre erodes in Aotearoa, with austerity beginning under the Luxon government, and elements of the coalition adopting right-wing populist rhetoric and arguing for racist policies against Māori in particular, we must ask ourselves: is this country heading in the same direction as Europe and America? And what can the left do to turn back the tide?

Part 2 of this essay will examine how the 2010s saw right-wing populism fill the vacuum created by the collapse of the centre more successfully than the radical left, and will address the growing populism of the right in Aotearoa. Part 3 will look at how the success of the New Popular Front in France in beating back the far-right is a tentative case for hope, and what the essential ingredients are for the radical left to defeat fascism.

Elliot Crossan is a writer and activist from Auckland. He is the Chair of ecosocialist campaign group System Change Aotearoa.

System Change is hosting Max Harris next week to discuss UK politics and lessons for the left in Aotearoa. The event is at 7pm on Thursday 25th July at Unite Union (486 New North Rd, Kingsland, Auckland). RSVP here if you are interested in attending.