HIKONE, SHIGA PREF. – In June last year, Britain held a referendum to determine whether the country should leave the European Union, and those in favor of Brexit won, though quite narrowly. The two major parties, the Conservatives and Labour, as well as the middle-of-the-road Liberal Democrats, argued that the United Kingdom should remain in the union. The UK Independent Party, which campaigned for Brexit, had won only one seat in Parliament in the June 2015 general election (because of the single-seat, first-past-the-post voting system, even though it garnered 12.6 percent of the total votes). That the “leave” votes still outnumbered the “remain” votes indicated that the general public revolted against the free movement of people within the region under the EU law.
Migration of people within the EU fueled popular dissatisfaction over matters related to public safety, national security and the economy. An influx of immigrants from Eastern Europe deprived unskilled British workers of their jobs, lowered their wages and increased unemployment. The country has been stripped of the means to keep terrorists at bay. It seems clear that these sentiments pushed a majority of the British masses to vote for leaving the EU.
For decades after the end of World War II, the British political landscape was characterized by the Conservative-Labour competition, in which the two major parties took turns running the government. Not only in Britain, but also in the United States, France, Germany and the Netherlands, however, a majority of voters have now become fed up with the rivalry between established major parties and begun to accede to populism, which is premised on confrontation between the general populace and the elite.
All of the major parties that took power in modern Western European countries shared the underlying ideological currents of individualism, liberalism and democracy. They had no choice but to side with globalism — which affirms globalization — and to be tolerant of accepting immigrants and pursuing free trade. There were no outbursts of latent dissatisfaction and insecurity on the part of those who either lost their jobs to immigrants and free trade or were resigned to lower wages, and the established major parties did not try to respond to their potential anger.
Populism is a term given to the political tactics of fueling people’s displeasure and insecurity as a means of gaining their support for a new leader. Inflaming such sentiments of the masses against globalization has constituted the root of the populism on which stood the campaigns of Donald Trump in the 2016 U.S. presidential race and Marine Le Pen in the France presidential election this year.
Bringing up the abstract concept of globalism alone cannot fire up the general public. Immigration and free trade were made specific targets in the fight against globalism. As concrete symbols of anti-immigrant campaigns, Trump proposed building a wall along the U.S. border with Mexico, while Le Pen called for France to secede from the Schengen Agreement. As specific gestures against free trade, Trump pulled the U.S. from the Trans-Pacific Partnership and demanded renegotiating the North American Free Trade Agreement, while Le Pen said France must leave the eurozone.
The rivalry between conservatives and liberals, which prevailed when two major established parties competed for power, has now been replaced by one between the elite and the masses. The charge that the elite support globalism because their jobs would not be lost to immigrants was quite effective in fanning the deep-rooted dissatisfaction and insecurity among the masses.
Margaret Thatcher became Britain’s prime minister in 1979, Ronald Reagan the U.S. president in 1981 and Yasuhiro Nakasone Japan’s prime minister in 1982 — all sharing conservative political ideologies. They all had a high regard for the efficiency of free and competitive market economy, and resolutely implemented in their respective countries neoconservative reforms like easing and abolishing various regulations with a view to creating “small government,” privatizing state-owned enterprises and promoting free trade.
Market fundamentalism is based on neoclassical economics. But its roots go further back to 1776, when Adam Smith published “The Wealth of Nations,” which was critical of mercantilism pursued by absolute monarchs of Western Europe from the mid-16th to 18th centuries to enrich national wealth by exporting more and importing less.
Market fundamentalism caused income and asset disparities to expand as a price for greater freedom. In his 2013 book “Capital in the Twenty-First Century,” Thomas Piketty demonstratively clarified the way such disparities had expanded in Britain and the U.S. since the 1980s. In the U.S., the wealthy top 1 percent of the population earns about 20 percent of the nation’s total income and the top 10 percent roughly half the total. It is undeniable that the widening income and asset gaps amplify popular dissatisfaction.
Immigrants compete with the local population for jobs and add downward pressures on wages. Industries that benefit from free trade and sectors that suffer from it coexist within a country. As exemplified by the expression “Rust Belt,” U.S. manufacturing industries have been on the wane because of free trade. Coal miners have lost their jobs due to policies to fight global warming. Indeed, white workers in America’s Rust Belt gave Trump their enthusiastic support. Trump did not disappoint them as he signed a series of executive orders soon after taking office to break away from the TPP, renegotiate NAFTA and scrap the Clean Power Plan.
Looking back a few years, I cannot help but feel that the administration of Prime Minister Shinzo Abe, who returned to power in December 2012, was a harbinger of populist governments that followed in many parts of the world. Abe’s “Regain Japan” pitch in the Lower House campaign has something in common with Trump’s pet theme of “America First.” Another similarity seems to exist between Abe’s top campaign pledge of ending deflation and Trump’s emphasis on bringing back jobs to American workers.
When the then Democratic Party of Japan came to power in 2009, I thought Japan had at long last entered into a political system of conservative-liberal competition between two major parties. Such optimism did not last long, as the DPJ-led government lost its liberal characteristics during its rule of three years and three months, and the party became not much different from the Liberal Democratic Party. It’s perhaps correct to say that Japan also pioneered the world in ending a political system based on conservative-liberal competition.
It appears all but certain that the age of globalization, which lasted for a quarter century, will come to an end. Also losing luster are the value standards nurtured in modern Western Europe such as individualism, liberalism and democracy. The standard economics, which highly values the efficiency of free and competitive market economy, could very well be buried as a thing of the past. Indeed, the participants in the Group of 20 meeting of finance chiefs in March succumbed to U.S. pressure and deleted a routine phrase denouncing protectionism from their joint statement. I am deeply concerned that the clock may be turning back 250 years to the age of mercantilism.
Takamitsu Sawa is a distinguished professor at Shiga University.