smallseveral years There are ways to move countries, and even continents, in new directions. In 1945, Europeans decided that nations must lead the way in building a modern economy, a broader welfare state, and a more peaceful continent. In 1979, after a decade of stagflation, oil prices doubled, leading to a shift from comfortable cooperation between the state and business to a greater role for markets and private enterprise. Will 2023 be one of those years? A decade of low interest rates is coming to an end, high energy prices and inflation are returning to the world economy, and war is raging in Europe. It also comes in the wake of one of the deadliest pandemics in history, and with China withdrawing from closer global integration.
If these trends portend a broad political shift in rich countries, you might expect politics to move left, if only in response to the largely center-right governments that have dominated rich democracies for the past decade. This seems to be happening already. In the Bavarian Alps in 2022, at a meeting of the Group of Seven, a group of wealthy nations, Joe Biden looks around (pictured) and counts the other five leaders of the centre-left: Canada, France, Germany, Italy Leader Japan – Fumio Kishida describes himself as a foreign policy dove. (A later election turned Italy to the right.) By contrast, when Biden’s Democratic predecessor, Barack Obama, met his counterparts in 2010, they were all from the right or center right.
Of course, this may just be an unusually synchronized swing of the pendulum rather than the start of a broader shift. The victory of the right in Italy’s general elections in late 2022 is a reminder of the importance of national exceptions. Still, there’s reason to think there might be something deeper going on than bashing the people who happen to be in power. This is something that crosses borders.
In rich democracies, public opinion appears to be turning left. In the US, the proportion of respondents to the Pew Research Center survey who said banks had a positive impact on the economy fell from 49% in 2019 to 40% three years later (see Figure 1). Tech companies saw a similar drop, and larger companies saw a bigger drop; only a quarter of Americans consider them a net plus. This seems a far cry from the belief in the 1980s that private enterprise would solve many of the world’s problems.
Anti-corporate sentiment is just the beginning. Half or more of respondents in the U.S., U.K., France and Germany told Pew that their economies need major change or an overhaul. Most of those calling for bigger reforms describe themselves as leftists. The public’s desire for radical change may be due to concerns about climate change and a belief that not enough is being done about it. In another Pew poll conducted in 19 countries, three-quarters of respondents described climate change as a major threat, even more worrisome than the world economy and pandemics (see Figure 2). On the surface, people want more than business as usual.
The possibility that 2023 might prove to be some kind of tipping point is supported by the kind of tectonic changes that lead to widespread change, even if they rarely grab the headlines. For decades, a growing share of the world’s population is of working age, producing more workers relative to children and retirees and providing a so-called “demographic dividend” to the global economy. That puts downward pressure on interest rates and wages, and drives higher income inequality, faster economic growth and high valuations for big companies. But as the economists Charles Goodhart and Manoj Pradhan point out, these trends can change—sometimes quickly. The share of the world’s working-age population has fallen for a decade, interest rates have started to rise, and company values have fallen, at least in terms of adjusted P/E ratios for S&P 500 companies, from 39 end-2021 to 27 December 2022.
Whether all this will translate into a major change in the direction of democratic politics, however, is another matter. To do this, public opinion or economic shifts will not be enough. Past turning points were possible not only because political parties embraced new beliefs, but also because they were able to make the necessary compromises to put ideas into practice. It is unclear whether political parties now have the mandate, power or will to do so.
Margaret Thatcher and Ronald Reagan won landslide victories in the 1980s, but such decisive outcomes are becoming rarer. From 1980 to 1996, the winner of the US presidency won the popular vote by nearly 10 percentage points. From 2000 to 2020, the gap is less than 2.6 percentage points. Joe Biden has the added problem of managing a divided government. In Britain, the ruling party won an average of 48% of the vote in elections between 1945 and 1960; the winner’s share has remained below 40% since 2010. In most wealthy democracies, voter turnout has plummeted. Political parties cannot count on popular empowerment. And even if they get one, they probably won’t last. In the French presidential election in April 2022, Emmanuel Macron defeated 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 Biden, Macron is weakened by a divided government.
In Europe in the 1960s, political parties were mass movements with millions of members. no longer. Take the UK as an example. The six political parties in parliament (excluding those from Northern Ireland) now have a combined membership of 846,000, less than that of the RSPB. Voters are also more fickle, with fewer seeing parties as tools to advance political goals. “Our partisan allegiance,” Robert Talisse of Vanderbilt University in Nashville, Tennessee, told bbc “has become a way of life rather than a principled view of what government should do”. Political parties have become expressions of narrow interest groups — or, in some cases, megalomaniac egoists — rather than broad-based social movements.
In the absence of large numbers of members and the diminishing profitability of elections, the incentive in most democracies is to keep parties happy with as many supporters as possible, not to take risks. This is not good news for anyone expecting a new direction in politics. There may be a broader demand for change, but the government and hopeful opposition will use it cautiously.■
