Divided They Fell: Crisis and the Collapse of Europe's Centre-Left

By Sean McDaniel

Why has Europe’s centre-left failed to respond to the crisis of neoliberalism in Europe? Rather than opening up a moment in political time for the centre-left to puncture the dominance of neoliberalism, the multitude of crises in Europe since 2008 have consolidated its difficulties and contributed to the rise of radical and populist alternatives.

Divided They Fell examines the failures of mainstream politics, and in particular the inability of the centre-left to respond to the global financial crisis more effectively. By exploring the cases of the UK Labour Party and France’s Parti Socialiste, the book investigates the role of, and interplay between, institutional intra-party dynamics, the parties’ ideational landscapes and the wider political economy in shaping their responses to the crisis.

Important reputational, ideational and strategic path dependencies in both parties, it is shown, constrained the flow of fresh ideas and entrenched their internal organizational divisions, leaving them unable to offer an effective post-neoliberal economic alternative. Ultimately, this fractured the parties and sparked a crisis of centre-left identity that opened the door to emergent alternative parties and movements in both cases.

Divided They Fell helps to diagnose what has gone wrong for the centre-left in Europe and forces us to consider whether such parties are, in the context of new and emerging crises, still fit for purpose.

• Language: English
• Publisher: Agenda Publishing
• Release date: Feb 23, 2023
• ISBN: 9781788216074

Sean McDaniel

Sean McDaniel is Senior Lecturer in Political Economy at the Future Economies Research Centre, Manchester Metropolitan University. He completed his PhD at the University of Warwick in 2019 and has been a visiting research fellow at the Centre d'études europénnes, Sciences Po, Paris.

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Building Progressive Alternatives

Series Editors: David Coates†, Ben Rosamond and Matthew Watson

Bringing together economists, political economists and other social scientists, this series offers pathways to a coherent, credible and progressive economic growth strategy which, when accompanied by an associated set of wider public policies, can inspire and underpin the revival of a successful centre-left politics in advanced capitalist societies.

Published

Corbynism in Perspective: The Labour Party under Jeremy Corbyn

Edited by Andrew S. Roe-Crines

Divided They Fell: Crisis and the Collapse of Europe’s Centre-Left

Sean McDaniel

The European Social Question: Tackling Key Controversies

Amandine Crespy

Flawed Capitalism: The Anglo-American Condition and its Resolution

David Coates

The Political Economy of Industrial Strategy in the UK: From Productivity

Problems to Development Dilemmas

Edited by Craig Berry, Julie Froud and Tom Barker

Race and the Undeserving Poor: From Abolition to Brexit

Robbie Shilliam

Reflections on the Future of the Left

Edited by David Coates

For Charlotte and baby Albert

© Sean McDaniel 2023

This book is copyright under the Berne Convention.

No reproduction without permission.

All rights reserved.

First published in 2023 by Agenda Publishing

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CONTENTS

List of abbreviations

Acknowledgements

Introduction

1. Neoliberal convergence and the politics of austerity: is there still space for the centre-left?

2. Struggling to win: centre-left electoral decline and the strategic dilemma of the Third Way

3. Developing a strategy: the internal dynamics of the centre-left’s response to the crisis of neoliberalism

4. Delivering the strategy: how the centre-left sought to communicate a response to the crisis of neoliberalism

5. Stagnation, failure and fragmentation: the rise of the radical left

6. Post-pandemic politics: how are the centre-left rebuilding?

Conclusion

Appendix: interviewees and interview locations

Notes

References

Index

ABBREVIATIONS

ACKNOWLEDGEMENTS

My interest in the political economy of the centre-left began while I was a student at the University of Sheffield, writing my MA dissertation under the guidance of Colin Hay. That dissertation formed the basis of my doctorate and, in many ways, has led me directly to where I am now. I was fortunate enough to spend a few months working under Colin again at Sciences Po, while I conducted interviews in Paris for this book and am indebted to his help along the way. I completed my PhD at the University of Warwick, where I was extremely fortunate to have two such engaged and conscientious supervisors in Ben Clift and Chris Rogers, whose guidance helped me enormously then and has continued to do so ever since. I am grateful to the Economic and Social Research Council and Warwick for the Chancellor’s Scholarship that allowed me to complete my doctoral studies.

My thanks go to all the participants in my research over the past few years (listed in the Appendix); meeting and talking with different figures from the two parties was (almost) always a pleasure and I am particularly grateful to those who went out of their way to help put me in touch with others and enabled my research to take flight.

I have been fortunate to be surrounded by great colleagues in the Future Economies Research Centre at Manchester Metropolitan University. Particular mention must be given to Craig Berry, who has always been so supportive of my work, as well as David Beel, Nick O’Donovan and Dan Bailey. Not only have they been good friends and colleagues, but they have helped read through drafts and provided valuable comments on earlier versions of chapters. There are too many others to mention, but friends and colleagues such as Scott Lavery and Jeremy Green have been incredibly helpful, and so my thanks go to all of them also.

When the time came to think about writing a book, several colleagues suggested that Agenda Publishing would be a good fit for my work and I am delighted to say they were right. Matthew Watson was, as ever, incredibly generous with his time in helping me to think through how the book might work and put me in touch with Alison Howson. It has been a pleasure working with Alison at Agenda, who has made the whole process a smooth and enjoyable one.

Writing a book is never an easy task, and there will inevitably be frustrations along the way. But publishing a book is a privilege, and not something I would have always believed was possible. I owe a lifetime of gratitude to a history teacher who, on my last day at high school, told me that he was convinced I would one day write a book. For him, it may have been little more than a supportive comment to a student. To me, however, that one remark planted a seed in my mind that has shaped my adult life. Publishing this book is a testament to the work that teachers everywhere do every day.

I am lucky to have a such a caring and generous family – Mum, Dad, Paul, Laura and Aimie – to support me. I reserve special mention however for Charlotte, without whom this book would not have been possible. Ever since our undergraduate days at Sheffield, Charlotte has been an ever present source of encouragement and guidance. Through the long, lean years of the PhD to moving to the other side of the country for my work, she has helped me navigate through life and pushed me to fulfil my ambitions. This book is for her and Albert.

Sean McDaniel

INTRODUCTION

The crisis of neoliberalism

This book is concerned with the fortunes of two of Europe’s centre-left parties in the context of the crisis of neoliberalism, beginning with the Global Financial Crisis (GFC) in 2008; to better understand why this crisis of neoliberalism is significant for the centre-left, we need first to go back several decades. The beginning of the neoliberal period in the late 1970s spelled trouble for Europe’s centre-left parties. With the economic crises of the mid-1970s, including the 1973 oil shock and growing stagflation, the postwar Keynesian settlement that had characterized much of the 30-year period from 1945 was put under threat and was eventually displaced by neoliberalism. Neoliberal ideas began to strongly influence governments and policy-makers across the globe in the late 1970s, and particularly in the UK and USA, which oversaw the dismantling of postwar capital controls and permitted a growing role for global financial capital, as well as a focus on price stability and sound money over full employment and redistributive welfare.

For many commentators, the new stage of liberalized global capitalism it ushered in rendered traditional centre-left social democratic politics impossible. Widespread financial deregulation following the collapse of the Bretton Woods international monetary system had, it was argued, engendered a new age of highly mobile global capital which disempowered domestic policy-makers. Deindustrialization, exacerbated by economic globalization, further fragmented the traditional working-class electoral core of centre-left parties, while there was a growing feeling that a new age of popular capitalism – underpinned by widening access to, for example, housing assets – spelled trouble for progressive political actors.

The 1990s, nonetheless, ushered in a new age of the European Third Way centre-left (see Giddens 1998). The Third Way was an ideological approach and political strategy that saw the centre-left redefine its relationship with capitalism as an economic system and recast its ambitions for what modern progressive governments can and should do in power. For some, such as the UK Labour Party under Tony Blair and the German Social Democratic Party (SPD) under Gerhard Schröder, this was simply about accepting the realities of modern capitalism, albeit while attempting to ensure sufficient protection from market forces for the population at large. For its critics, the Third Way centre-left simply co-opted the neoliberal ideology (see Hay 1999a). Whichever perspective is taken, it is clear that Margaret Thatcher’s famous quip that there is no alternative (TINA) was – to a greater or lesser extent – accepted by the European centre-left at this point. That was all, however, put into question in 2008.

The major crisis of this neoliberal model, the 2008 GFC, could have – or rather perhaps should have – been a significant moment for the centre-left. The crisis, with its roots in the USA’s subprime mortgage market crisis bled out into a wider credit crunch before escalating into a full-blown global crisis as liquidity froze and financial markets collapsed around the world. The GFC represented not just a crisis of financial markets, but a crisis of neoliberalism. The entire scaffolding of the neoliberal economic model – a near blind faith in markets and an unwillingness to draw upon greater state intervention in the form of regulation and taxation – was fundamentally shaken by the nature of the financial crisis. With the GFC, the idea that there was no alternative to neoliberalism suddenly appeared less convincing. Crises on a similar scale, in the 1930s and 1970s, signalled dramatic changes for how the global political economy operated: changes that were paradigmatic in nature (see Hall 1993). Thus, the events of 2008 provoked many to predict that the political pendulum would swing, eventually at least, back towards the left (see Wood 2012a; Bailey 2016; Bailey et al. 2014; Berman 2016). With more than a decade’s worth of hindsight, however, we can see that this has not happened. Centre-left parties across Europe are no better off than they were in 2008, and in many cases are far worse off (see Benedetto et al. 2020).

Failure to respond

In late July 2012, just a few weeks after he had swept to power as president of France, François Hollande brushed aside diplomatic protocol to welcome the leader of the UK Labour Party to Paris. The meeting between President Hollande and Ed Miliband was seen as a snub to UK Prime Minister David Cameron who, during the French electoral campaign, suggested that he would roll out the red carpet to investors fleeing France in the wake of a Socialist victory. Miliband, for his part, viewed the meeting as the beginning of a new stage of hope for the European centre-left. Hollande’s victory – which saw the Socialists claim the presidency and a majority in the Assemblée nationale for the first time since 1988 – blew a warm current of optimism across the centre-left in the UK, France and beyond that now was their time. The era of Camerkozy economics – a nod to the self-destructive neoliberal economic programme and austerity strategies of both Cameron in the UK and the recently departed Nicolas Sarkozy in France – was over, the Labour leader argued. The two centre-left leaders agreed that the tide is turning against an austerity approach and that there needed to be a move towards jobs and growth in Europe rather than a Europe of austerity (Miliband cited in Woodcock 2012).

The optimism expressed by Miliband and Hollande was, however, misplaced. Instead of a dramatic shift towards a more progressive political economy, we have rather witnessed a period of widespread austerity from 2010 and the subsequent growth of economic nationalism from 2016. The period since 2008 is characterized by the failure of the centre-left to mobilize a progressive response to the crisis of neoliberalism and, in particular, to advocate for an alternative to austerity (see Bremer & McDaniel 2020; Bremer 2018; McDaniel 2017; Kraft 2017). As with much of the European centre-left, the UK Labour Party and France’s Parti Socialiste (PS, Socialist Party or Socialists) have found themselves mired in electoral difficulty during this period. In 2015, Miliband’s Labour were humbled at a general election, allowing the Conservatives to win a majority in parliament for the first time in 23 years. Two years later, the PS collapsed and almost disappeared as an electoral force altogether, winning just 30 seats in parliament (down from 280 in 2012) and obtaining just 6 per cent of the vote in the presidential election.

In Paris in that summer of 2012, Miliband’s prediction of the tide turning against austerity and neoliberal economics was prefaced with the recognition that there needs to be a different way forward found (Miliband cited in Woodcock 2012). In power and opposition, neither the PS nor Labour were able to find that way forward. The question that this book seeks to ask is, why? In the context of Hollande’s and Miliband’s optimism, how can we understand and explain the strategies that the centre-left in the UK and France adopted in this period? Why were these parties unable to better exploit the crisis of neoliberalism? And, in light of more recent and emerging crises such as those linked to the climate crisis and the Covid-19 pandemic, what does this tell us about the current state of these parties to operate effectively as progressive actors within a representative democracy?

The book’s argument

Drawing upon in-depth interviews with members of parliament, party officials and key economic and strategic advisors from both the Labour Party and the PS, the book provides a unique insight into a critical but underexamined period in the history of the European centre-left. Not only did centre-left parties like Labour and the PS fail to assert themselves electorally, programmatically and ideologically during this period, but the GFC and attendant post-crisis politics of austerity gave rise to a crisis of centre-left party identity in both cases. Underlying this examination of the post-2008 period is a broader question that the book helps us to consider: are centre-left parties still capable of advancing a progressive cause? Divided They Fell provides a number of insights into this situation by speaking to existing literatures on the political economy of European social democracy, democratic representation and theories of ideational change.

For some, the failures of the centre-left post-2008 are straightforwardly a further manifestation of the crisis created by shifting demographic trends, capital mobility and the pressures of European integration characteristic of the neoliberal period. Such factors are, of course, extremely important and have undoubtedly conditioned the strategies of both Labour and the PS in this period. This book, however, challenges the idea that these constraints are entirely non-negotiable and suggests that they do not in themselves fully explain why the centre-left failed to develop an alternative to neoliberalism and austerity post-crisis.

Divided They Fell argues instead that in order to understand and explain the strategies adopted by the centre-left post-GFC, we must acknowledge the interaction between the ideas and discourses employed by party actors, parties as complex institutions and the wider political economic environment in which those actors and institutions operate. In each case, Divided They Fell illustrates how important reputational, ideational and strategic path dependencies ran through the parties, upheld by actors and institutions within, and shaped their responses to the economic crisis environment and emerging austerity policies. These path dependencies reflected the adaptation of the centre-left to the neoliberal order in the 1980s and 1990s, during the so-called Third Way era. This period saw the centre-left reimagine their relationship to capitalism and their relationship to voters, with their party ideologies, strategies and programmes reconstituted. It produced a different conception of what progressive politicians could, and indeed should, do: an effect which is critical to understanding how key actors within these centre-left parties thought and behaved in the post-GFC period.

This process played out differently across the two cases, but in both accounts, we see how these path dependencies exposed significant internal divisions over the strategic orientation of the centre-left in a post-Third Way political landscape. They constrained the flow of new ideas within the parties and entrenched internal organizational divisions between competing factions. This, in turn, ensured the continued dominance of a neoliberal intellectual framework within both parties. In Labour’s case, the GFC represented a significant moment which created deep divisions over how to engage with the crisis and New Labour’s governing record from 1997 to 2010. While Miliband initially sought to utilize the crisis as a moment to engineer a new strategic direction for the party, a lack of support internally and the continued intellectual and sociological domination of New Labour within the party rendered it difficult to set out a clear critique of the pre-crisis neoliberal order for fear of tarnishing the party’s own record in government. Consequently, Miliband’s Labour found itself incapable of articulating a vision of what a post-neoliberal growth model might look like and over the course of the Parliament its strategy increasingly fell back on well-established strategic and programmatic ideas developed under New Labour. Primarily this involved pursuing a cautious electoral strategy that sought to position Labour as the party of fiscal rectitude and which could demonstrate how a Labour government would deliver consolidation in a more progressive way than the Conservatives.

The dynamic in the French case is different, although we similarly see how reputational, ideational and strategic path dependencies shaped the Socialist administration’s strategy in this period. Initially, given that the PS were out of power since 2002, Hollande was able to exploit the crisis more effectively than Miliband. Indeed, the dynamics of the electoral competition Hollande faced both internally and externally resulted in him advancing a more interventionist Keynesian programme of le changement and an anti-austerity agenda. This helped him to fend off competition from his left to become the PS’s candidate, as well as draw voters away from more radical left options during the presidential election first round in 2012. Yet, as has historically been the case with the PS, the strategic pressure to present a more left-wing programme eventually rubbed up against several different dynamics that altered the course of Hollande’s administration. Driving Hollande’s strategy from the beginning was an economic agenda based upon liberalizing the French economy and reducing its debt and deficit. This saw the Socialist administration pursue controversial supply-side reform and fiscal consolidation almost immediately. Hollande’s own intellectual perspective – forged in the context of Mitterrand’s 1983 U-turn, in particular – reflected that of the party’s small but powerful centre and right wings that formed the core of his governments. Furthermore, such ideas were supported and intellectually nourished from the very beginning of his candidacy by a set of liberal economic advisors, which included France’s future president, Emmanuel Macron. It is true, of course, that in the context of the eurozone crisis, financial market turbulence and European integrative pressures did weigh heavily on the Socialist administration in the early phases of Hollande’s presidency. However, as the following chapters illustrate, Hollande’s consolidation and liberalizing agenda went above and beyond what was necessitated by market forces or obligations to European Union (EU) partners.

The continued domination of an intellectual and strategic perspective developed within the parties during the neoliberal era ultimately created an ideological stagnation that restricted their capacity to develop a progressive, post-neoliberal response to the crisis and the politics of austerity. The weakness of these strategies lay behind the two parties’ significant electoral failures in 2015 and 2017. In particular, attempts to triangulate between the pro- and anti-austerity positions via the adoption of a social democratic approach to austerity ultimately saw them both outflanked on either side of the debate (see Bremer & McDaniel 2020). Yet these failings, as the book illustrates, went far beyond the ability of either party to win an election. Rather, they were central to the exacerbation of historical ideological and factional divisions within the two parties which has led to their fragmentation. This fragmentation manifested itself differently in the UK and France, but in each we witness a collapse in the nature of the two parties as they had existed during the neoliberal period, shattering the constellation of actors, institutions and ideas that had underpinned two of Europe’s mainstream centre-left parties for decades. In doing so, it opened the door to alternative radical left movements and parties in the form of Jeremy Corbyn in the UK case and Jean-Luc Mélenchon in France.

These findings, in turn, allow the book to contribute to two distinct but interrelated literatures on the crisis of democratic representation and party behaviour. Divided They Fell argues that parties must be understood as complex organizations wherein limited information on political strategies, different factional groupings and particular institutional path dependencies shape and inhibit the potential for parties to adapt and change their ideological make-up. Parties are sticky institutions, not rational unitary actors (Hooghe & Marks 2018). This is, moreover, particularly true of centre-left parties, which have historically put emphasis on party membership and internal democracy. This conceptualization of party behaviour allows us, therefore, to reconsider the nature of the crisis of democratic representation. Without dismissing the relevance of wider structural issues, Divided They Fell turns our analytical gaze back on political actors themselves and the institutions within which they operate to consider the role they play in the ongoing crisis of democratic representation. This, in turn, is critical for appreciating how the centre-left are operating in relation to contemporary issues including the rise of economic nationalism, the climate crisis and the Covid-19 pandemic. In the context of these shocks, the book’s final chapter reflects on some of the central dilemmas facing the centre-left in the UK and France and illustrates how key path dependencies continue to constrain their ability to respond effectively to the current conjuncture by delimiting intellectual and institutional change within.

The context of decline

The heyday of the European centre-left in the three decades following the Second World War has long receded from view. Nevertheless, understanding the struggles of centre-left parties tells us something important about the contemporary state of our political economies and democracies. Over the past century or more, such parties have been one of the key vehicles through which progressive political ends have been achieved in Europe. If left and centre-left parties have little option but to simply accept the status quo of the neoliberal paradigm, as some suspect, then contemporary democratic capitalism is defined by its lack of democracy. Understanding the ability of centre-left parties to develop progressive alternatives and challenge the status quo is a critical component in understanding the character and quality of our democracies. In an age of growing political volatility, comprehending the nature of the politically possible is more important than ever.

Naturally, there are multiple ways of theorizing the reasons for centre-left decline pre-GFC, which can help us to understand why the political pendulum has not swung back to the left since 2008. For some, neoliberalism and austerity are structurally embedded features of the global economy and