Association for Free Research and International Cooperation

The Failure of centrism and the re-emergence of alternate monetary and economic theories

By Clifton Ellis from AFRIC Editorial
Reviewing the results of the May 2019 European Union Parliamentary elections, many pro-EU establishment parties suffered a bloody nose by losing a considerable number of seats, consolidating the mood and appetite by the electorate for more economic nationalism and for immigration control as a way to preserve economic prosperity and cultural identity. This trend away from centrism is coined by the mainstream the rise of populism. This message now resonates at unprecedented levels with both traditional left and right wingers, converging somewhere for the “new middle” inextricably joining both sides of the working class together against centrist policies.

The first aspect of the strategy employed by centrists (who are exclusively pro-EU politicians) is to avoid acknowledging the now obvious failures of the EU as an institution, that is, the inability of the EU to respond to the requests of the electorates in circumstances where there is a desire by the electorate for direction change that are contrary to the vision of an “ever closer union”. This disconnection between the decision makers and the electorate needs to be addressed if there is ever going to be any positive change to the current situation. Centrists therefore avoid meaningful analysis of what is behind Europe’s current socio-economic and political crisis and migration challenges. The second aspect of their multipronged strategy is to deliberately accuse those sections of the disgruntled society, primarily the working class who are pushing for EU structural changes of xenophobia, intolerance or racism in the effort to delegitimise their political positions.

When the dust had settled on the 2019 EU Parliamentary elections the populists (Eurosceptic) had managed to consolidate their position with Macron losing to Le Pen in France. The Labour and the Conservative parties were abandoned by millions of their traditional voters joining the 6 weeks old Brexit Party lead by the firebrand populist and famous Eurosceptic Nigel Farage in the UK. In Italy Salvini was able to return to the negotiating table with the European Central Bank having strengthened his mandate to follow through with his fiscal and monetary policies. While Poland, Hungary and Austria have seen increased euro-scepticism expressed through the ballot box.

Nigel Farage is riding the wave of populism, a populism that has now rejected economic centrism or globalized neoliberalism. According to Farage, his grand ambition in pursuing his anti-EU position so doggedly is to rid Britain of its undemocratic shackles referring to Brussels’s control of trading and regulatory frameworks which act in his view as serious impediment to free market and fair trade. Like Salvini, Farage has exercised enough political awareness to outmanoeuvre his centrist opponents who now resort to perpetual attack in the absence of strong supporting arguments to continue pushing forward with further EU integration. Another tactic utilized by centrists in addition to the above is fear mongering, with the intention of scaring the electorate into being too afraid to cause the enactment of a no deal or “hard Brexit due to potential economic downturns. If Salvini decides to push the nuclear populist button bybringing the central bank to zero as he has promised, that would inevitably be the end of the Euro, possibly Itexit and the complete breakdown of the EU.

Cultural identity and conversations around the importance of cultural heritage preservation are topics that are actively shunned by centrists who advocate increased immigration as a necessary reality for continued economic growth and development. Macron famously stated that “there’s no such thing as French culture. There is culture in France, and it is diverse in what could be described only as a desperate ploy to diminish French cultural identity, in line with his globalist agenda. The low birth rates that have arisen arguably as a result of increased cultural liberalism have had an adverse effect on economic forecasts when projected into the future, factoring in birth rates. With an ageing workforce across Western Europe and the central bankers’ advocacy of policies arguing the necessity for “continued” economic growth and productivity, makes the case for increased immigration mandatory.

Another tactic employed by centrists when confronted with the failures of the status quo after first avoiding acknowledgment of the EU’s obvious failures (this would legitimise policy direction change) is to resort to identity politics and to exclusively point to women’s rights, LGBTQ rights and other minority rights as the primary reason for society’s injustices while astutely creating an environment where political correctness is also mandatory. In doing so centrists for a long time have been able to control the flow and direction of these discussions for fear by some to appear politically incorrect and be labelled xenophobic or even worse, racists. Those who risk speaking more forthrightly on these topics advocating a counter narrative, potentially risk their political careers in some instances!

As the EU now battles widespread political instability that has emerged in the wake of the global financial crash of 2008 that decimated the living standard for millions of middle and working class citizens in the face of huge bank bailouts feel abandoned. The psychology at play is well known and yet still highly relevant. It suggests that whenever hope in mainstream political ideology is lost, the tendency that the electorate chooses radically is enhanced if such choices are presented on the ballot paper (Brexit & Trump). Portions of the electorate that did go on to choose radically, would have had reservations that positive outcome could have been gained from their unorthodox choice, however when economic pressures are greatly increased as they have been since 2008, a radical choice becomes the only choice to many. The likelihood that the electorate will choose uncertainty and express electoral spite at the ballot box increases the possibility of breaking electoral orthodoxy. Increased levels of economic and social hardships and pressures creates environment for the right type of populist politician to effectively woo the disgruntled and disenfranchised!

The austerity measures that were prescribed by the central bankers as the antidote for combatting economic collapse are now despised by millions across the EU who now suffer from “austerity fatigue”. Central bankers were able to achieve this by strong arming Treasury Ministries across the EU into finding areas for national spending cuts or the proverbial “belts tightening” as it were. Many governments against the wishes of their citizens, Britain, Greece and Portugal for example decided to embark on extreme social spending, education, social healthcare and housing benefit cuts. A move which exacerbated the hardships for millions of middle and working class people who then decided by critical mass to turn their backs on orthodoxy, an orthodoxy which argued that prosperity was assured for the majority by enacting policies compatible with globalisation and economic liberalism, trickledown via the liberalization of the international financial markets. When the populists commenced making their counter arguments against globalization in favour of economic nationalism, every effort was made by the centrists (entrenched as the mainstream) to discredit them by representing them as radicals who were therefore outside the realms of political acceptability, “deplorables” according to Hillary Clinton.

The working class observed as the governments they elected to represent their interests unanimously decided to bail the bankers out who themselves had committed spectacular financial fraud. It could be easily argued and shown that it was the bankers actions that caused crisis to begin with, operating in lock step with the Rating Agencies and Financial Regulators to undermine the credibility of the financial markets to introduce high risk financial assets dressed up as AAA rated assets thus exposing the middle class in particular to further financial annihilation in an environment where safe assets like bonds at virtually no yield. Their argument at the time was that if “Wall Street” is preserved then the wealth would trickledown to “Main Street”. Such measures would stabilise the economy firstly before returning normalization to the central banks balance sheets. All their efforts have failed so far and with it, Keynesian economics for central planning!

The verdict is now out on the system of central planning via the central banking system, delivering a verdict of not fit for purpose! An effective roadmap that will return the EU to political stability, must first re-establish socio-economic stability which is only possible via national governments and their respective central banks taking radical economic and monetary system reform. As a practical first step, there needs to be post mortem examinations done on the EU economic corpse, to identify exactly why the system failed in the first place. Secondly, there needs to be a re-examination of alternative economic theories and monetary economics that have been sitting on the shelves gathering dust over the last 3 centuries. Thirdly, there needs to be an examination of the strengths and weaknesses of each and how the electorate will respond based on projections. Lastly, undertake the regulatory and legislative changes in order to facilitate an effective transition.

The realization made by large portions of the European population that the status quo no longer can act to correct the current problem is of itself a paradigm shift. It is now high time that the ideas pot is stirred so that those ideas that have been laid dormant at the bottom can come be resurfaced and be examined for their relevance. Time to invoke the spirit of Adam Smith as the attempt is made to answer the age hold problem of what socio-economic structure and policies must governments champion in order to create enhanced individual freedom, prosperity, local and international stability.

By Clifton Ellis from AFRIC Editorial

Photo Credit : google image/illustration

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