Some years have a way of giving countries, even continents, a shove in a new direction. In 1945 Europeans decided that the state had to take the lead in establishing a modern economy, a broader welfare state and a more peaceful continent. In 1979 a doubling of oil prices, which followed a decade of stagflation, brought about a swing away from cosy co-operation between the state and business towards a bigger role for markets and private enterprise. Might 2023 be another such year? It comes as a decade of low interest rates is ending, as high energy prices and inflation return to the world economy, and as war stalks Europe. It also comes in the wake of one of the deadliest pandemics in history and as China retreats from closer global integration.
If these trends were to presage broad political shifts in rich countries, you might expect politics to move left, if only in reaction to the mainly centre-right governments that dominated rich democracies during the previous decade. That already appears to be happening. In 2022 in the Bavarian Alps, at a meeting of the G7, a group of rich countries, Joe Biden could look around the table (see picture) and count five other leaders from the centre-left: those of Canada, France, Germany, Italy and, stretching a point, Japan—Kishida Fumio describes himself as a dove on foreign policy. (An election later moved Italy to the right.) In contrast, when Mr Biden’s Democratic predecessor, Barack Obama, met his counterparts in 2010, all of them came from the right or centre-right.
This might, of course, be just an unusually synchronised swing of the pendulum, rather than the start of a broader shift. The right-wing success in the Italian general election of late 2022 is a reminder of the importance of national exceptions. Still, there are reasons for thinking that something more profound may be going on than just bashing whoever happens to be in power. It is something that cuts across national borders.
Public opinion appears to be shifting to the left in rich democracies. In the United States, the share of respondents to surveys by the Pew Research Centre who said that banks had a positive impact on the economy fell from 49% in 2019 to 40% three years later (see chart 1). The decline for tech companies was comparable and for large companies greater; only a quarter of Americans thought they were a net plus. This seems a far cry from the 1980s’ belief that private enterprise would solve many of the world’s problems.
Anti-corporate sentiment is only a start. Half or more of respondents in America, Britain, France and Germany told Pew that their economies needed major change or a complete overhaul. The majority of those demanding greater reform described themselves as on the left. The public’s desire for sweeping changes may be underpinned by climate-change worries and a belief that not enough is being done about them. In another Pew poll in 19 countries, three-quarters of respondents described climate change as a major threat, making it a bigger concern than even the world economy and pandemics (see chart 2). On the face of it, people want more than business as usual.
The possibility that 2023 might prove to be some sort of turning-point is supported by the sort of tectonic shifts that lead to broad change, even if they rarely make headlines. For decades, the working-age share of the world’s population grew, producing more workers relative to children and retirees, and proing a so-called “demographic diend” to the global economy. That exerted downward pressure on interest rates and wages, and pushed in the direction of greater income inequality, faster economic growth and high valuations of large companies. But as Charles Goodhart and Manoj Pradhan, both economists, point out, these trends can change—and sometimes quickly. The working-age share of the world’s population has been falling for ten years, interest rates have started to rise and the value of companies has sunk, at least as measured by the adjusted price-earnings ratio of S&P 500 companies, which dropped from 39 at the end of 2021 to 27 in December 2022.
Whether all this translates into a significant change of direction for democratic politics, however, is a different matter. For that to happen, public opinion or economic shifts are not enough. The turning points of the past were made possible not just because political parties espoused new beliefs but also because they were able to make the compromises needed to put ideas into practice. It is far from clear that political parties have the mandates, power or will to do that now.
Margaret Thatcher and Ronald Reagan won landslide victories in the 1980s, but such decisive outcomes have become rarer. Between 1980 and 1996 the winner of the American presidency took the popular vote by a margin of almost ten points. From 2000 to 2020 the margin was less than 2.6 points. Joe Biden has the additional problem of managing a died government. In Britain, the governing party won an average of 48% of the vote in elections from 1945 to 1960; since 2010, the winners’ share has been less than 40%. Voter turnouts have fallen sharply in most rich democracies. Parties cannot count on big popular mandates. And even if they get one, they may not last. In the French presidential election of April 2022 Emmanuel Macron beat Marine Le Pen convincingly by 59% to 41%. In legislative elections two months later, his party lost its majority and Ms Le Pen’s National Rally won more new seats than any other party. Like Mr Biden, Mr Macron is weakened by died government.
In Europe in the 1960s parties were mass movements, with millions of members. No longer. Take Britain. The six parties in Parliament (excluding those from Northern Ireland) now have a combined membership of 846,000, below that of the Royal Society for the Protection of Birds. Voters are also more fickle, while fewer people see parties as vehicles for advancing political goals. “Our partisan allegiances”, Robert Talisse of Vanderbilt University in Nashville, Tennessee, told the BBC “have become lifestyles, rather than principled views about what the government should be doing”. Parties have become expressions of narrow interest groups—or in some cases, megalomaniac egotists—rather than of broadly based social movements.
In the absence of mass membership and with elections turning on ever-finer margins, the incentives in most democratic countries are for parties to keep as many of their supporters as possible happy and not to take risks. That is not good news for anyone expecting a new direction in politics. There may be an appetite for broader change, but governments and hopeful oppositions will be cautious of taking advantage of it.■
