We’re desperate for a new, better
world. Who can deliver it?
Parties of the progressive Left are the last, best hope to rebuild democratic societies and avoid domination by the populist far right. But are they up to the job?
For a couple of decades now, the peoples of the western
liberal democracies have been demanding change. After half a century of
governments retreating from their essential role in the pursuit of fair and
equitable societies, the dissatisfaction with politics-as-usual is palpable,
universal and increasingly angry.
For most of the new century, people in every developed
nation have yearned for a new New Deal, for the kind of brave and visionary
change that, 90 years ago, saved capitalism and perhaps saved democracy itself.
In their despair, they have turned to any emergent leader with a plausible line
in how to rescue their nation. But those choices produced not Franklin
Roosevelt or Clement Attlee but Donald Trump, Viktor Orbán, Marine Le Pen and
Nigel Farage. Those plausible charlatans turn out, in every case, not to be
saviours but wreckers.
There is an alternative. The old parties of the left and
centre-left once embodied the ideals that the democratic world now so urgently
needs but those grand ideals are now in deep shadow; and the visionaries who
gave those parties their reason for existence are long gone, replaced with seekers
of power for its own sake who have abandoned the search for a newer world and
embraced instead the comforts of power and privilege.
If those parties cannot regain the profound sense of purpose
that they once had, the world really is in trouble: because there is no viable
alternative.
How did it come to this?
By now, we all know the story. First, out of the wreckage of
two world wars and the Great Depression came a resurgence in human decency in
the form of the welfare state, Keynesian demand-side economics and a new
prosperity more evenly shared than it had been. But then, amid the chaos of the
1970s oil shocks, stagflation and disenchantment, it all started to go
backwards. “Government is not the answer,” declared Ronald Reagan. “Government
is the problem.”
That era saw the transfer of huge amounts of money from
government and labour to the owners of private capital. Tax cuts overwhelmingly
favoured investors, transferring money from government budgets to individual
and corporate coffers. Public services were impoverished but, because cutting
taxes is easier than cutting spending, budget deficits blew out and borrowings
soared. Interest payments on those borrowings transferred still more public
money to the owners of capital.
All that money had to end up somewhere, and it did. Asset
prices – shares, property, and so on – rose and rose. Vast amounts of footloose
money flowed around the world in search of quick returns, creating financial
chaos in many countries as it suddenly flooded in and, just as suddenly,
flooded out again. New labour laws skewed industrial relations against unions
and in favour of employers. Union membership collapsed, and even workers
covered by unions found themselves constrained in taking industrial action and
undertaking collective bargaining. Wages suffered, and the cost-of-living
squeeze was born.
Employers, on the other had, strengthened their bargaining
position. Employer organisations thrived.
By 2008, with the Global Financial Crisis that the policies
of Reagan and Thatcher had made inevitable, the whole edifice collapsed. The
era of small government, trickle-down economics and the triumph of the 0.1% was
no longer supportable. But what was to replace it?
Fifteen of the 20 richest people in the world are in the
United States. Of the other five, France has two and Spain, India and Mexico
have one each. Together, those 15 richest Americans account for over $US31.3
trillion. Let’s spell that out: $31,320,000,000,000. On average, that’s $208.8
billion each, or 1,683,314 times as much as the average (median-level)
American.
That country is not like any other but because of its
predominance in politics, finance and media, people elsewhere tend to think
that what happens in America also somehow happens to them. Mostly, though, it
does not. In the rest of the developed world, new wealth has not been as
limited to such a tiny, powerful elite.
The clearest evidence of that is in the data on wealth
inequality. This chart shows the share of total personal wealth held by the
richest 1% in each of nine countries, as well as the European Union. Three
nations stand out: the US, Russia and Hungary.
In the US, the richest households have been concentrating
their hold on the nation’s wealth for many years. Perhaps surprisingly, that
process has stabilised ever since the global financial crises of 2007 to 2012.
In Russia, the process began under the chaotic reign of the
democratically-elected Boris Yeltsin, who gave away most of Russia’s
state-controlled enterprises in a preposterous attempt to privatise the
economy. Those assets ended up in the hands of the new breed of oligarchs, with
great benefit to them but none to the great mass of the people. Under Putin’s
kleptocracy, that process of enriching the rich at the expense of the poor has
continued.
Until about 2016, Hungary’s wealth concentration was no
worse than many other European nations. But the grab for wealth by the richest
coincided with Viktor Orbán’s introduction of a flat tax for everyone,
abandoning a more conventional progressive system. It was a bonanza for the
wealthiest and a disaster for almost everyone else.
But in other countries, there has been no such sudden,
massive change. In the EU, the wealth share of the richest 1% went from 23% in
1995 to 25% in 2023. The richest still control far too much, but the change in
most countries are more modest and cannot, by itself, explain the
disenchantment that has arisen over the past couple of decades.
If inequality does not explain it, we will have to look
elsewhere. And, in doing so, we will see that inequality is a symptom of
dysfunction, rather than its cause.
Governments have failed at their most
basic tasks
One of the first acts by the United Nations, back in 1948,
was the Universal
Declaration of Human Rights. That document set out, for the first time,
fundamental human rights to be universally protected:
“Everyone has the right to a standard of living adequate for
the health and well-being of himself and of his family, including food,
clothing, housing and medical care and necessary social services, and the right
to security in the event of unemployment, sickness, disability, widowhood, old
age or other lack of livelihood in circumstances beyond his control.”
It is in these basic functions of statehood that the
governments of the western democracies have fallen short.
The increase in asset prices has fuelled the
financialisation of world economies. An unprecedented proportion of economic
activity now comprises the shuffling of money between entities in dazzlingly
complex forms which make money as financial organisations clip the ticket on
each pass but which add little or nothing to real production. Buying and
selling shares, for instance, adds nothing to the amount of money available for
genuine productive investment, but it makes a lot of money for a lot of people.
See how the developed world’s sharemarkets have boomed. Even savage downturns
have not interrupted the gravy train for long.
This is the triumph of capital (investors and speculators)
over labour (wage earners). Financialisation has meant the assets necessary for
life – houses, for instance – have become investment opportunities rather than
places to live. The boom in shares is reflected in the boom in house prices: a
trend which has brought massive wealth to some and misery to many others.
In most developed countries, wage earners have been priced
out of the housing market. As mortgage costs increase, people are having to
make impossible choices between housing, education, healthcare and even food.
For several years, growth in rents lagged the increase in
house prices, largely because rental agreements have to run out before the
landlord can put the rent up. But over the past five years, rents in most
countries have been catching up – most spectacularly in Hungary and Ireland.
The people at the bottom of the heap are the unemployed. In
the postwar world, full employment was regarded as being around 2%; now, 5% is
accepted. Unemployment rates are currently lower than they have been for some
years, but these figures comprise an awful lot of people.
For anyone without substantial savings, unemployment is a
disaster. Losing a job and relying on unemployment benefits shifts whole
families from a decent standard of living into poverty. According to the OECD, “the poverty
line is taken as half the median household income of the total population.”
As the OECD data show, people on unemployment payments in
most countries are plunged into deep poverty, unable to afford the basic
elements of a normal life: food, shelter, healthcare, transport.
Governments commonly argue that raising each person’s
benefits even by a small amount costs far too much in the aggregate, and would
place an unsupportable burden on the budget and the economy. But even the
briefest look at the cost of unemployment benefits shows developed economies
are entirely able to afford a much better deal for their unemployed
underclasses, though it might mean a modest increase in taxation and a retreat
from half a century of tax cuts.
As the ideal of universal healthcare retreats, the financial
burden on individuals increases and people on lower incomes face the
ever-greater likelihood of being locked out of the care they need. The richest
countries in the world, which could well afford to adhere to their obligations
under the Universal Declaration of Human Rights, are choosing not to do so.
The figures in this chart show the average
out-of-pocket costs borne by individuals across the whole population. That
includes everyone, from those in robust good health to those who are very ill.
It also does not include people who do not seek necessary care because they
can’t afford it. So, for people with significant needs for treatment, the
financial burden can be very high indeed.
Our fracturing nations
As the social safety nets on which we once relied have
unravelled, the sense of security among the people of the democratic world has
eroded. Even those who are currently in well-paid employment, and who have some
assets, worry whether their good fortune will last, and what will happen if it
does not. They contrast that sense of precariousness with the advantages of
those they perceive as having control over the nation’s wealth and power.
Elites have always existed, always envied and often hated. But in today’s
world, with aristocracies in advanced decay and clearly not in control, it has
been harder to identify which elites are culpable; and so we find the most
vulnerable people – the unemployed, aborigines, migrants, refugees and asylum
seekers and religious minorities – perversely being identified as elites,
getting something the rest of us aren’t. The campaign against the Indigenous Voice
to Parliament referendum in Australia hinged almost entirely on this reflex.
Surveys put numbers on all this angst. They look at the
unfocussed but pervasive sense of grievance against the people in charge –
governments and rich people.
With the sense of grievance goes a deep distrust of
government. Only in a few western democracies do more than half of electors
trust the people they elect to govern them. In most, the figure drops to about
a third: and on this unsteady foundation is built the liberal democracy which
in previous times was so hard-won and so valued.
There is something else in these findings. People in
countries with authoritarian rule and with restrictive, partial democracies
trust their governments. At the top of the list is China.
In the circumstances, it is not surprising that populist,
plausible scoundrels can attract such strong support. Without exception, when
these people gain power they use it to worsen the inequalities and injustices
they swore to correct. Rich cronies become richer, inequality increases and the
mass of the people lose even more. But by then, it may be too late. The
populists turn out to be authoritarians determined to hold on to power by any
means.
Our dilapidated democracies are in urgent need of
renovation. But the political establishments have proved themselves incapable
of initiating the profound changes their peoples need. To whom, then, do we
turn?
Reform and reconstruction of this magnitude will require an
established, organised party. It cannot be undertaken by individuals or loose
groupings without a party organisation or experience in governing. Independents
and small parties are unlikely to gain enough consistent support to constitute
a long-lasting political force.
The parties of the Right remain attached to the policies of
small government and fiscal austerity that got us here in the first place. That
rules them out from any major role in democratic and social repair.
The populist far right is, for the moment, ascendant, much
of their support bleeding from the discredited conservatives. But, as the Trump
experience has powerfully demonstrated, their blandishments are a hoax. The
same applies to Farage, Hanson, Le Pen and the others.
That leaves the parties of the Left. But they are in poor
shape, lacking the clarity of purpose which once defined them and bereft of any
leader capable of inspiring a nation. Nevertheless, there is no plausible
alternative. Reform must begin with the reform of these old parties that, once
upon a time, changed the world.
Back to the beginning
Reform is difficult. The checks and balances of democratic
politics, designed to limit the undue accretion of power, make statis easy and change
difficult. The more significant the change, the harder it is to implement. All
change produces winners and losers, and losers always shout louder than winners
– particularly when the losers are those with the most money and the biggest
megaphones and the winners are ordinary people who probably aren’t paying much
attention anyway.
Politicians like to stay in power. That’s why they’re in the
game. Without power, they argue, you can’t get anything done. The problem with
that outlook is that even with power, not much is being done.
It didn’t start off like this. The social democratic and
labour parties were formed in the last years of the 19th century out
of various socialist groups surviving the revolutionary disasters of that
century. They were largely working-class affairs, advocating for a more
equitable sharing of wealth and privilege between labour and capital. Social
democrats abandoned the revolutionary dogmas of the past in favour of evolutionary reform through democratic means.
After the Second World War, social democratic and labour
parties hit the big time, forming a powerful coalition of industrial and public
sector workers.
“This new coalition established social democrats as one of
the main electoral forces in European politics between the 1950s and 1990s,” wrote the political scientist
Giacomo Benedetto and colleagues from the University of London.
“This was the classic period of social democracy, which at
that time aimed to manage or moderate capitalism mainly via public spending.
Yet, this coalition unravelled in the 2000s. Globalisation and technological
change meant that one pillar of this coalition, industrial workers, was now a
relatively small group in many countries. Also, as social democratic parties
tried to appeal to younger, urban professionals, many industrial workers
increasingly supported other parties (such as the populist right or the radical
left). This left social democrats relying increasingly on public sector
workers. But, with the growing restraints on public spending after the Great
Recession, this was no longer a winning strategy.”
When political parties try to be all things to all people,
they end up being nothing to anyone. This is where social democracy now finds
itself. It is the period of dull, uninspiring leaders: Joe Biden, Olaf Scholz,
Anthony Albanese and Keir Starmer. They have all won elections, often
handsomely, but then failed to deliver. In 2025, Scholz’s Social Democrats
suffered their worst result since World War 2, with 13% of the vote. They now
serve as the junior partner in a coalition led by their rivals, the Christian
Democrats. In the US, the Democrats carried just 16 of the 50 states at the
2024 presidential election.
Keir Starmer’s Labour Party won the 2024 election in a
landslide, taking 412 of the 650 seats in the House of Commons. A year later, Starmer has the distinction of being the most unpopular British Prime Minister
since polling began. According to the Politico polling average, at the time of
writing just 21% of voters approve of
his leadership and 78% disapprove. His party has just 16% of the vote,
according to Politico, against 18% for the Conservatives and 30% for Nigel
Farage’s insurgent Reform UK.
In Australia, Albanese’s Labor has retained most of the
enormous lead it gained in the 2025 election, but that is largely due to the
absence of any viable opposition. The squabbling and disunited Liberals, having
lurched so far to the right that they have lost touch with the majority of electors,
have lost support to Labor on one side and to the racist far-right One Nation
on the other. But, as former Labor treasurer Wayne Swan noted, Labor’s majority
is less secure than it looks.
“Our victory this year was wide but shallow, and a small
drop in our primary vote in a national election could see the loss of a large
number of seats,” he
said. “Our trade union base has given us a core strength, and I believe it
has led us to underestimate the urgent need for party renewal …
If you look beyond the polite, coded words, Swan’s message is
profoundly critical of the state of the Australian Labor Party. The message can
equally be applied to social democratic parties everywhere: out of touch, uninspiring,
lacking the transformative fire that provided, once, their reason for being.
Conservatives sell fear. Progressives sell hope.
But the parties of the Left have lost track of that basic
reality. They have become so enmeshed in the politics of short-term advantage that
they no longer arouse that hope for a better tomorrow. But there are signs that
some in these parties are grasping for that hope again.
In the United States, the shock of Trump’s demolition of
decency, fairness and democracy has sparked a change in the Democratic Party. After
only a year of Trump’s second coming, left-wing Democrats – the people Bernie
Sanders calls “democratic socialists” – are trouncing both the Republicans and
the tired establishment figures of their own party.
In Britain, Keir Starmer’s leadership is now precarious.
Challenges are looming from two left-wing insurgents, former deputy Prime Minister
Angela Rayner and Andy Burnham, currently the Mayor of Manchester and a senior
minister in the last Labour government.
Elsewhere, the picture is gloomier. Germany’s SPD got rid of
Olaf Scholz after the electoral defeat but new leadership has not, at least so
far, been decisive or inspiring. The parties of the Left could, if they worked
together, form a powerful bloc and could change the nation. But they cannot
agree on almost anything. And, rather than working with those other left-wing
parties – Die Linke and the Greens – the SPD has joined a conservative-led coalition.
In Australia, Labor’s Anthony Albanese is now being recognised
as the machine-man politician he has been all his adult life but his authority in
the party is, for now, unassailable.
But even where the old guard remains entrenched, the hunger
for transformation is palpable and growing.
“There’s been an emerging agenda since the global financial
crisis that focuses on inequality and to a certain extent is almost going back
to basics, because the socialist project is a project of human emancipation,” said Eunice Goes, a
British political scientist specialising in the study of social democracy.
“So we have got again to a moment where we have rising
inequality, rising insecurity that is felt in a variety of ways in all areas of
life. And many social democrats have realised that they’ve conceded too much
power to the market and they need to rediscover a different role for the state.
It will be along those lines that social democrats can try to carve out a new
agenda.”