New Times: Vince Cable on how a financial crisis empowered the right

With financial turmoil, the vote share of social democratic parties has fallen across western Europe. The new challenge for the centre left is to build an outward-looking economy.

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The centre left faces acute crisis. The Labour Party is being destroyed by infighting. If a general election were held any time soon Labour, under its present leadership, could expect a mauling. The Liberal Democrats are recovering from near-annihilation, at least in terms of the number of MPs we lost in 2015, yet morale is high on the back of our successful local government campaigns. However, we are yet to break back into double figures in the opinion polls. A Conservative government, which has just perpetrated the biggest policy disaster in generations, leading to Britain’s unplanned exit from the European Union and perhaps to a self-inflicted recession, is being rewarded with large poll leads. Only in Scotland is there a recognisably social-democratic public discourse, and that is secondary to nationalism.

If this state of affairs were confined to the UK, we could rationalise it as a reaction to specific events and personalities. But across Europe, parties in the social-democratic and social-liberal tradition are struggling to compete with conventional conservative parties and new populist movements.

A 2010 study of western European countries showed that the vote share of social-democratic parties had fallen by over 25 per cent during the previous decade and was 15 per cent below previous lows. The poor political outlook in the UK, France and Germany could cause further deterioration. Good news is largely confined to North America: the surprise victory of Justin Trudeau’s Liberals in Canada and the Democratic revival in Obama’s America (assuming Hillary Clinton defeats Donald Trump).

Demographics are one factor: the decline of the industrial and urban working class. Our ageing society is also more conservative. The 23 June European referendum was heavily influenced by the differential between young Remainers and old Brexiters. The Conservatives appear to have an electoral lock on the old: a key, and growing, ­demographic (the differential in support between May and Corbyn recently reached a staggering 70 per cent among over-75s, the age group most likely to vote). They enjoy supportive media such as the Mail and Telegraph, whose antennae are finely tuned to the anxieties and prejudices of the old.

The radical left has successfully mobilised many idealistic and angry young people, but fickle voting habits make this a noisy rather than effective political base and no match for the oldies.

The politics of identity is also proving very potent. When I first wrote about this growing trend, for Demos twenty years ago, I speculated about the likely impact of British politics becoming dominated by Europe, immigration and the England-Scotland divide. That is where we now are and almost every country has variants of these national and ethnic concerns. French Communists are switching to the Front ­National, “blue-collar” Democrats in the US are switching to Trump, and Labour voters in the UK are attracted to Ukip in England and Wales and to the SNP in Scotland.

For the centre left, one of the greatest challenges is to provide a convincing defence of an outward-looking economy and society while providing assurance that national ­interests – and migration – are being managed, as well as recognising that expressions of identity, patriotism and cultural tradition should be respected. That said, the skilful political balancing required alienates those who want simple solutions to complex problems.

One paradox is that a crisis of financial capitalism has rebounded politically to the benefit of parties of the right which promoted the excesses that so damaged the banking system. Labour suffered from being at the wheel when the ship hit the rocks and from hubristic overconfidence that it had cracked the problem of economic and financial instability. It and other left-wing parties in France, Germany and Scandinavia have also seemed bereft of credible ideas for post-crisis recovery. How, in practice, to harness the financial sector to productive activity? How to raise productivity and average (as opposed to minimum) wages? How to reconcile government financial discipline with government activism and investment? And the answers that make sense for parties aspiring to office, or in government, lack the emotional appeal of nationalism or the populism of the far left.

My party in the coalition government advanced that policy debate with some success in areas such as industrial strategy, innovation and training, reform of corporate governance, incentives for social mobility and diverse forms of ownership and financing. But this is a different universe from the current, dominant binary absolutes of policy debate: like/dislike “austerity”; like/dislike “neoliberalism”; like/dislike “capitalism”. Cheer. Hiss. Boo.

Compromise is contemptible. Real-world problems are treated as second-order issues, of interest only to policy geeks or dangerous careerists lusting after jobs in government. The gulf in analysis and understanding between the centre left and the far left is as profound as it is between the centre left and the right.

The electoral arithmetic is unforgiving. In 2015, the Conservatives and Ukip attracted roughly 50 per cent of the vote in the UK. Labour and the Liberal Democrats together polled 38.3 per cent of the popular vote, the Greens another 3.8 per cent and around 5 per cent went to nationalists, mainly in Scotland. If, as seems likely, Jeremy Corbyn’s allies complete their takeover of the Labour Party, they will appeal to some core voters, with the Labour brand and union money, and attract some of the “left behind” and principled left-wingers – possibly between 15 and 20 per cent of the electorate. But Labour will lose many others. The polls show the party shedding approximately 80 seats in England and Wales, my party losing some of its current handful and the Tories enjoying a 200-seat majority. That feels all too plausible.

The landscape is much like in the 1930s, post-crisis, and worse than that of the 1980s. Unless the remaining fragments of the centre left, with my party heavily involved, can find some common ground on policy and tactics and develop an appeal to people who have voted Conservative, as Labour did in the 1960s and Labour and the Liberal Democrats did in the 1990s and Noughties, the next generation faces the dire prospect of long-term Tory rule.

Vince Cable was the Liberal Democrat MP for Twickenham (1997-1015) and the secretary of state for business, innovation and skills from 2010-15

This article is part of a New Times collection of the future of the left. Read the other pieces here.

This article appears in the 22 September 2016 issue of the New Statesman, The New Times