The global financial crisis has brought nationalization, regulation and state intervention back into vogue in Europe but the turn to the left may not last long. European governments are pouring hundreds of billions of dollars into bank rescues and economic stimulus plans to try to prevent the crisis becoming a deep depression.
Governments in France and Italy, suspicious of freewheeling “Anglo-Saxon” capitalism, seem happy to play a more active role in the economy to combat problems widely blamed on capitalist excess. Germany’s government has also shifted to the left.
Others, such as Britain, are more likely to resume business as usual when the crisis eases, even though the merits of the world financial system are being questioned and world leaders will seek solutions at a summit in Washington on Saturday. “People are looking to politics and the state to bail out the failures of economics and the market,” said John Monks, general secretary of the European Trade Union Confederation. “Events have taken us some steps to the left, (but) obviously there are a lot of people just trying to get back to business as usual as quickly as they can,” he said.
Sometimes reluctantly, governments are resorting to policies that smack more of managed economies than the liberalism that has held sway in Europe since the days of former British Prime Minister Margaret Thatcher and US President Ronald Reagan. Deregulation has become a dirty word, and bankers earning big bonuses and oil companies raking in huge profits have become whipping boys for politicians and the media. Many voters blame speculation and lax lending practices by banks for precipitating the crisis. Nationalization, out of favor with European governments for years, is back in fashion, with governments being forced to rescue banks reeling from the credit crunch.
John McDonnell, a left-wing British Labour legislator, said people were asking “how did we get into this situation and questioning the system that has allowed it to happen.” “There are opportunities for the left to explain how the economic system works at present, how unfair it is and what the alternatives are,” he said.
But McDonnell, like others on the left, doubts how deep the changes go and suspect that, once the immediate crisis is over, it will be back to business as usual. “My worry is, exactly what’s happening in banking at the moment, we intervene with state money, restore the financial institutions to some form of stability and profitability ... and within three years they are speculating again,” he said.
Simon Tilford, chief economist at the Center for European Reform think tank based in London, said: “Some governments are actually quite keen to exploit the precedent that has been set to re-establish a more ... interventionist industrial policy, or economic policy more generally.” France and Italy were among European governments that sought a more activist role in the economy, he said. But he said both of these governments were center-right, and the shift in European politics may be more populist than toward the left.
