That politics has changed fundamentally is now beyond doubt. Across much of the democratic world, recent years have seen the victories of previously unelectable candidates and ideas along with a massive weakening of traditional political establishments or parties.
In the last year, the most dramatic example of this has been in Italy. Two years ago, this was a country with an energetic centre-left Prime Minister leading a majority government on the brink of enacting crucial long-term reforms. Now, it is led by an unstable combination of two populist parties from the left and the nationalist right, responding to intense public dissatisfaction with high immigration and lack of economic progress.
The case of Italy is obviously important in itself. It is correctly assumed that any future crisis in the Eurozone or in the European banking system would hit Italy hard. And since it is a country truly in the front line of migration flows from Africa, no wider European solution to that issue can be arrived at without strong support and agreement in Rome.
In addition, however, there are much wider effects and a global lesson. Those effects are on the whole future of the European Union, where any hopes of close integration along the lines of the wishes of French President Macron now come up against a nationalist and uncooperative attitude from one of the major founding states of the EU, as well as from more recent arrivals such as Poland and Hungary.
Italy's politics also has a damaging impact on negotiations between the UK and the EU over Brexit. In Brussels, there is an obvious fear: if they let the UK have substantial access to the single market without freedom of movement of people, what is to stop the new Italian leaders demanding some form of that for themselves, calling an election to receive the endorsement of the people and tipping the EU into a process of disintegration?
The large rock that has been hurled into the center of the Italian political pond is therefore sending waves all over Europe, in ways that damage the prospects of future political and economic stability. It is an example of why the political changes of this decade really matter, even though businesses got used to the idea that chaotic elections or failure to form governments in the years since the Second World War did not always have any damaging effect.
The wider lesson is important too. This is that analysts, thinkers and more centrist political leaders can now see what is happening but have not worked out what they can do about it. To continue with the example of Italy, the election of the Five Star Movement and the League has not been followed by any revival or rallying of the centrist parties now in opposition. Indeed, all indications are that any new election held in the near future would produce an even bigger victory for populism and nationalism.
Across Europe and much of the West, a social Democrat, Christian Democrat, liberal or mainstream conservative can now make a fairly accurate diagnosis of what is happening to politics but finds it very difficult to envisage a cure, let alone communicate one. For the moment, this is the surest sign that the rise of unconventional political leaders and movements is set to continue and intensify.
Fragmenting Identities
The common ground of the diagnosis is that many voters are moving away from a primarily economic basis for their decisions towards more cultural motivations. For Francis Fukuyama, who has retreated from his 1990s assertion that the triumph of liberal democracy had brought the “end of history”, economic considerations are now being replaced by voting on the basis of identity. For Yuval Noah Harari, one of the most important and pioneering thinkers to emerge in recent years, voters are rebelling against their growing irrelevance in a globalised system. In the view of Tony Blair, the dividing line in politics is now increasingly between those who seek an open society and economy and new forces attempting to close them.
These are different ways of describing the wave of electoral change but all overlap and contain important insights. We can all recognise what they are each describing in election results not only in the United States and across most of Europe but also in Mexico or the Philippines. Some combination of the effects of global economic competition, accelerating technological change and seemingly threatening flows of migrants is dislocating established political loyalties. Parties of the centre-left are particularly severely affected, because they are perceived to be unable to protect their traditional supporters or to have concentrated excessively on identification with minority groups.
There is no consensus, however, about what the centrist political answer to this might be. To Fukuyama, the solution to fragmenting identities is for nation states to establish a stronger common identity for their own citizens, built around strict citizenship laws and policies such as compulsory military service. For Harari, the answer is for leaders to show that only global solutions can deal with the massive technological, political and climatic issues facing the human race, and it is important to advocate policies that are less nationalistic.
Aligning With Populists
Such contrasting views illustrate the dilemma for anyone trying to work out how to keep mainstream political parties in government. Do they try to prevent politics becoming more about culture and identity, or do they seek their own better form of that? Governments around Europe are each answering that question in a different way. Sebastian Kurz, the new Chancellor of Austria, has made a pact with the populist right and takes a strong line against new immigration into Europe. Angela Merkel struggles to hold together a coalition highly sensitive to such issues. Macron calls for a new drive for European unity and political union. Within the mainstream of politics, there are therefore sharp differences over whether the answer to populism is to reassert national identity or to submerge it.
The British version of this is the intense debate about the meaning and purpose of Brexit. Are we really saying that Britain should make as many of its own decisions as possible, at the price of shedding the structures, certainties and close cooperation of recent decades? Or are we trying to have a new version of the best of both worlds, staying close to the EU and still incorporated into many of its policies and structures, while leaving those things we like least?
The interminable political manoeuvres and controversies of British politics, and within the Conservative party in particular, are essentially about how to answer this question. While the nature of Brexit would be very difficult to resolve under any circumstances, it has become vastly more complicated because of two particular factors. One is the long and tortuous history of Irish affairs in the governing of the British Isles, and how to preserve intact the immense gains of the last 20 years while still accomplishing a separation of the UK from a union that includes the Irish Republic.
The other is the outcome of the general election that followed the EU referendum, leaving a weakened Prime Minister with no buffer to withstand diverging opinions or rebellions on an issue in which such differences are abundant. The Irish border and the finely balanced parliament are a combination of issues that, at the time of writing, looks likely to result in decisions of massive consequence going down to the wire. Already the expectations of negotiators on both sides are that the many huge questions about the future relationship between the UK and EU would have to be settled during a transition period after the formal date of Brexit, on 29 March 2019. With only months to go, any outcome is possible, ranging from a negotiated and ratified agreement, to the UK leaving with no deal, to the deferral of the leaving date and the calling of a further referendum.
Effects of Social Media
In the meantime, the British case demonstrates another alarming development for the centre ground political leader, which is that the habits of compromise and consensus building within many political parties are breaking down. Fundamental disagreements about policy decisions of the reasons for this, but other explanations include the dramatic rise in the importance of social media and the public enthusiasm for ‘authentic’ political leaders who are disdainful of trying to represent all strands of opinion within their parties.
US President Trump’s leadership of the Republican Party is a classic example of this, and by far the most important one in world affairs. His use of twitter and pursuit of unconventional policies has given him a connection with many voters that has allowed him to override the normal methods of policy-making in his party.
In Britain, the election of a hard left leader of the Labour Party, Jeremy Corbyn, has brought an end to a long tradition of Labour leaders seeking to represent social democratic views. In the Conservative party, the attempts of Theresa May to reconcile differing views on Brexit led to resignations from the Cabinet. In both parties, leading figures have preferred to stand by their publicly expressed long-held views rather than to act in ways that would allow their parties to present a coherent and united front.
So in Britain, the political center is fracturing. In Italy it has been swept away. In Germany it is under siege. In France, it is in power but beginning to falter. In the United States, it is disappearing in a steadily more polarised and partisan party rivalry. Overall, it is a bleak time for moderation.
There is a paradox, of course, in that the established political parties and ideas have just presided over the creation of unprecedented prosperity and security. Germans have never been better off. French people have never lived longer. Britons have never been employed in such numbers. The average person in the West has a longer lifespan, better health care, more material wealth, better security from violence, and greater freedom to choose how to live their life than ever before.
Yet the feeling that such benefits are not flowing evenly or fairly, and that if they do they are nevertheless under threat from the many consequences of globalisation will not be going away any time soon. On the contrary, massive population growth in Africa and the Middle East is likely to ensure that the fear or the reality of migration dominates European politics to an even greater extent over the next 30 years.
New Political Dividing Line?
At the same time, the disruptive effect of technological change on employment seems likely to create intense stress on individuals and society. That is bound to create profound changes in political attitudes. It is possible that a new dividing line will arise that transcends left and right – a divide between focusing on national or ethnic identity on one side or favouring internationalist solutions on the other.
How that will develop is hard to predict, although we can already see the impact of this debate in the trade tensions and tariff impositions of recent months as well as the many travails of Europe. Other trends might be easier to forecast, and it is now time for political thinkers to try to get ahead of them. It seems likely, for instance, that technological change could easily exacerbate inequality and almost certainly lead to progressively more dominant and indispensable corporations. It is a commonplace assumption that it will make a good education an even more fundamental requirement of a successful career, or series of careers for any individual.
We should not be surprised, therefore, if political debate focuses more closely on issues of equality and fairness; on how to ensure that large corporations are accountable and transparent; and on how education can be radically improved. There will be more discussion of basic incomes, new ways of levying taxes and new frameworks of anti-trust legislation. Deep concerns about the environment and climate change are likely to intensify.
Beset by the problems I have described earlier, centrist politicians are struggling to come up with the ideas on these and other issues that could give them the opportunity to get ahead. The need to wrestle with the rise of populism and nationalism is seriously inhibiting the flow of books, speeches and blogs about a mass of issues that cannot be avoided over the next decade. The political centre is not only shrinking in size electorally, but is also increasingly hollowed out of ideas.
A Task for Business Leaders
What does this mean for international businesses? I have drawn attention in the past to the need to build great resilience into plans for the future, given how much the risk of sharp changes in government policies has increased. Local intelligence has become more important as political leaders diverge more from each other, even in neighbouring countries, and behave less predictably.
But now, the state of mainstream politics calls for something else as well. While business leaders should exercise caution about becoming caught up in more polarised and embittered political battles, they do have an important opportunity to try to demonstrate what might work well – and even solve political problems in doing so – if we look ahead. This is particularly true in education. Businesses can see better than anyone else what skills are needed now, how those need to develop for the future, and how the provision of them is currently performing. Many governments are going to struggle with ensuring their education systems keep up with the speed and scope of further technological revolution probably now on its way.
This seems to me to be the most vital area for corporations to examine what they can do in their own interests, and simultaneously in the wider interests of the society around them. To equip people throughout their careers for future challenges and to deal with the way the world is changing, with a greater responsiveness then state education systems can usually provide could, for some businesses, become a central goal. It could be part of the answer to the wave of concern or criticism that might arise in the future. It might help to show the global, competitive economy can work for many more people. And it could conceivably make a contribution to political stability, at a time when we are going to be increasingly and anxiously looking for it.