Reform the Reformers – Part 2, Challenges in Updating Liberal Democracy

There are two types of people in this world. Those who divide the world into two types of people, and those who don’t.

The rise of left and right wing populism points reformers towards updating liberal democracy.

The remedies that left and right populists peddle are remarkably similar; one-party regimes, state control of the economy, dismantling the ‘separation of powers’, nationalism, and a rapid increase in state spending.

Less attention, however, is paid to the parallel rise of liberal, pro-democracy parties in government; Canada, Netherlands, South Korea, Malaysia, Ireland and elsewhere.

There are many lessons to be learned from liberal-democratic parties in these countries, especially in efficient organisation, fundraising, making alliances and focusing on being ready for government.

But if there is a theme underlying electoral success for liberal-democratic parties in these countries, with their publics, it is one that also applies to the populists. Electorates appear to have punished parties seen as failing in preventing or successfully remedying the perceived causes of the financial crash in 2007-8.

Indeed it might be an error to see ‘left/right populists versus liberal democratic parties’ in this context on a left-right axis at all, especially from the voting public’s perspective. Might the old left-right axis as a shorthand for understanding political choices lost its meaning after the ‘failure’ of state socialism in 1989-1991 and of ‘regulated capitalism’ in 2007/8?

For example, if a political party favours markets and is against monopoly and cronyism, and thus opposed to the economic policies of right wing populist parties, they are also called ‘right wing’. The history is telling. Since the Reagan-Thatcher era, the political concept of markets drifted away from legal measures against monopoly, cartelisation and cronyism, and became an argument for ‘laissez faire’… reducing regulation under the guise of economic freedom. A wave of monopolisation, ‘consolidation’ and cartelisation, resulted.

Calls for more regulation in response, merely resulted in rules that entrenched monopoly further, after the usual ‘consultations’ on proposals.

Another example is the concept of regulation itself. A world divided into ‘more-regulation-ers’ and ‘less-regulation-ers’, in the context of 2007/8, seems absurd. How is the quantity of regulation measured? By number of pages, number of words, cost of implementation or compliance? The problem is that a focus on the quantity glosses over the need for quality. And that requires attributes of ‘quality regulation’ to be defined. Not easy.

A further example is state spending. The ‘left’ broadly have been in favour of more state spending and higher taxes and borrowing. The ‘right’ have wanted spending reduced, with lower taxes and debt reduction.

Rarely have either defined a ‘correct’ level of spending, giving the public the impression that for example the right would still demand less state spending if it was only 5% of GDP and the left would demand more spending even if it was 95% of GDP. Confusing enough.

The nationalist popular right however, in the wake of the 2007/8 crisis abandoned lower spending ambitions and merely differed from the left in terms of what they wanted the increased money for; usually defence, security and police.

In conclusion, reformers need to understand the extent to which, certainly in the OECD, the public have given up the left-right axis in making political choices. This is both a warning and an opportunity. Either way it presents a challenge in updating liberal democracy; a challenge which must be faced.

* Paul Reynolds works with multilateral organisations as an independent adviser on international relations, economics, and senior governance. He is a member of the Lib Dem Federal International Relations Committee and an Executive member of Liberal International (British Group).

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  • Steve Trevethan 23rd Jul '18 - 6:09pm

    Thank you for an interesting piece!
    Binarism, in politics, as in pretty much every aspect of life, is extremely powerful and usually distorts thinking and decision making.
    Single fact/factoid classification and/or analysis is similar.
    Much of “public” feeling, thinking, and acting is based on these faulty foundations which are used/abused by much of the MSM/mainstream media much of the time.
    Perhaps we need be a source of more realistic thinking and more independent and objective information.
    While we base our political conversations, theory and practice upon the workings of those who manipulate information and our ways of reacting to it, for their own vested interests, we are handicapped.

  • innocent Bystander 24th Jul '18 - 1:26am

    I hate to be critical but this well meant piece just turgidly rehearses the problem but in true western liberal fashion offers no trace of a solution. Populism is rising and something must be done to return we thoughtful elite to our rightful position, is the plaintive cry.
    Offer a manifesto that’s more than platitudes and repeats of initiatives that have been often tried and often failed if you want to seize the initiative.
    Fasten your seatbelts. Populism and the lure of strong men has only started. Wait for the next, and much worse, economic downturn.

  • William Fowler 24th Jul '18 - 7:52am

    A huge program of engineering and tech apprenticeships designed to match the needs of a newly reinvigorated manufacturing sector, helped along by major tax changes, and centering on pride in making and buying products in your own country… who can argue with that? Well that seems to be what Mr Trump is doing in America and was elected to do, there are elements of both left and right in there which makes things interesting.

    Labour are up for it except they want highly paid mandarins to oversee the running of the companies if not outright control of them and want to take nearly all the profits to pay their benefits class for voting for them. The Conservatives know they should be doing it but have so few people who aren’t career politicians (in essence pretty useless in the real world) they don’t really know where to start. No-one knows quite what the LibDems want other than to stay in Europe and seem to be hoping for a new charismatic leader to stir things up, forgetting they already had Nick Clegg who ended up so removed from reality he thought he could forget his promises and survive.

    Meanwhile, muttering rotters like Boris, Osborne and Farage are revving up their minds and rhetoric…

  • John Marriott 24th Jul '18 - 9:35am

    Political parties of all hues around the democratic world are facing an identity crisis. Many of the old broad churches are struggling to hold together as racial and class tensions are not going away. When in crisis, society usually looks for the ‘strong man’ (or woman). For many, Management by the collective is for the birds.

    As Malvolio read out in ‘Twelfth Night’; “Some are born great, some achieve greatness and some have greatness thrust upon them”. Whatever the choice, that person is unlikely to come from the Liberal elite.

    Most people see the riches that certain people enjoy and want a piece of the action. Who can blame them? However, you try telling those persons who are doing very well, thank you that they ought to have a little less so others, who are less fortunate, can have a little more and you know what the response from most will be.

    There have been grand plans before. None appear to have worked for long. The 1944 Bretton Woods Agreement, under whose rules the world’s economies have largely operated since WW2, is now showing its age, as it was mainly predicated by and for a fairly small group of developed nations and took no account of the rise of economic powers such as China or India, to name just two. Now Trump’s antics could affect the future of the WTO, much beloved of Brexiteers.

    So, we are in a bit of a mess – and to think that, back in 1989 some of us thought, as the Berlin Wall came down (and the Social and Liberal Democratic Party was formed) that all our troubles would soon be over. Capitalism had defeated Communism without the need for penalties! You know, some people think that what we need is a war to sort things out. Perish the thought. The trouble is there’s only so much steam you can generate before the lid blows off the kettle.

  • I see the issue as more of a choice between those who value reward and those who are more interested in equality. For democracy to work, there must be a sense of fairness. In former times we had in uneven proportions times of Labour and Conservative governments each working for their core constituents. There is now a sense of the two Parties generally valuing the same graphic with no-one standing up for those left behind.

  • Richard Underhill 24th Jul '18 - 11:24am

    Geoffrey Payne:
    The Northern Rock had a good name which it needed to live up to.
    Its business model was actually based on having lower running costs than its competitors based on regionally lower wages, lower property costs etcetera,
    but overtrading is not unique to mutuals, it is a normal business risk.

  • Neil Sandison 25th Jul '18 - 9:01am

    John Marriott I think John may be right i am convinced the public out there thinks they are watching some third rate reality TV programme and picking the leaders that have the strongest personalities on those shows unfortunately that ends up by you getting a Trump,Putin or Bellaisconi or worse. It can also lead to positive outcomes like Macron so we need to pick our standard bearers carefully ensure policy has a broader appeal and does not just pander to party geeks who generate noise but not votes Focus on 3 issues that are not Brexit and keep on repeating as key party platforms would suggest playing to our strengths Education The Environment and Equal Oppertunites get Jo ,Layla or Christine to front them sorry old middle aged men your not popular with the public and we need new stars not tainted by the coalition years.

  • Laurence Cox 25th Jul '18 - 11:41am

    @Geoffrey Payne
    Actually during the period when all building societies were mutuals, cases of building societies getting into financial trouble were quite common (it is a hazard of borrowing short and lending long), but the Building Societies Association used to organise their takeover by one of the larger building societies to protect the reputation of the building society movement as a whole (this was in the days before the Government guaranteed investors’ deposits).

  • “…Challenges in Updating Liberal Democracy.”

    For my money the starting point should be ensuring that the way Liberal Democrats work is as fit for purpose as possible. In that context, the last really big change was the merger of Alliance partners, the Liberals and the Social Democrats, to form the modern party so it’s worth reviewing that briefly.

    I wasn’t involved in any way in the negotiations, so this is a worm’s-eye view. However, as the chair of my then local party, I was keenly interested in the outcome as it had long been obvious that the Alliance simply wasn’t working. My sense was that its problems created a headwind that was costing us up to 25% of our potential vote even in purely local campaigns.

    One root of the problem was that the two Davids (Steel & Owen) leading the two parties very obviously didn’t get on at any level. In a single party that would have been resolved by one of them winning a leadership election (think Blair and Brown) but since each had his own party at his back that couldn’t happen.

    One obvious casualty was campaign management (chaotic!) but really nothing worked properly including, crucially, policy-making let alone pulling together a coherent account of the Alliance’s aspirations for the country that might inspire the voters. The Alliance was left to fall back on ‘manoeuvres’ and the ‘none-of-the-above’ vote (which was substantial in the late Thatcher era).

    So, post-merger, there was a consensus (to which I subscribed) that policy-making had to be made properly deliberative and consultative with no shooting from the hip in random directions.

    And I think broadly that was done. We got (detailed changes apart) the present system with an elected Federal Policy Committee supported by Policy Working Groups doing much of the detailed work. They plus other committees and Local Parties work together have worked since in a carefully choreographed way to bring motions to conference for formal approval as party policy.

    There is just one problem: it didn’t work then and doesn’t work now – not even close.

    And that leaves us still left uncomfortably dependent on ‘manoeuvres’ and the ‘none-of-the-above’ vote.

    What is to be done?

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