On 23 June, the British people voted to leave the European Union. Against all odds and, above all, against all reason, one of Europe’s most moderate and pragmatic of peoples has decided to disregard overwhelming evidence that such a decision would have negative consequences for the country.
Almost the entirety of the country’s intellectual, economic and political establishment had explicitly opposed Brexit. There had been letters by Nobel laureates detailing the cost to UK research of a ‘Leave’ vote, a public statement by over 250 academics to the same effect, the official opposition of most British businesses as well as an avalanche of expert reports indicating the significant economic cost of leaving the world’s largest single market. In political terms, the ‘Remain’ campaign had the formal support of the country’s four largest political parties, of the Tory-led national government and of a plethora of international leaders, including the President of the United States.
But, as Michael Gove, a Brexit supporter, recently said: “People in this country have had enough of experts”. He was, of course, right. The fact that Gove is an Oxford-educated politician who recently led the UK’s Department of Education, an institution dedicated precisely to producing experts, seems to have been inconsequential.
The British are not alone in their rejection of their elites. Over the past few months, there have been numerous indications that many other Western societies are following a similar path. The presumptive nomination of Donald Trump as Republican candidate for the US Presidency is perhaps the most significant case. Trump’s nomination was not only something very few had predicted but also a significant blow to the Republican Party’s establishment, which opposed it en masse. Bernie Sanders’ almost successful run for the Democratic nomination, and in particular his results in caucuses (i.e. primaries in which party elites had less control over the outcome), points in the same direction. Spain voted in an historic general election overnight that saw a significant share of the vote go to Unidos-Podemos, a far-left coalition composed of former communists and a newly-born anti-establishment party. In Austria, it was the Far Right that almost won the presidency only a few weeks ago. And in Italy, a party founded only in 2009 by a comedian in protest against the political class recently won the mayoralty of Rome – and Turin.
Opposing elites is not necessarily a negative development in itself. However, it so happens that the elites being opposed are precisely the ones that support the fundamental values and institutions of the Western liberal-cosmopolitan order. Therefore, this convulsion will see the reconfiguration of the classical left-right political axis into one composed of liberal cosmopolitanism versus anti-liberal populism. If this illiberal populism takes hold, anti-trade, anti-immigration and anti-capitalist policies will proliferate. The European Union will be a particularly easy victim of this new mood, in large part because it is an elite-driven project. The benefits of being a member of the EU are mostly understood by intellectual, business and political elites. If those elites are unable to carry the support of the broader European population, the project will be in dire straits.
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More pressure will be placed on politicians to detach themselves from European integration or to call for a referendum on membership – results in such elections and plebiscites will be very difficult to predict. Uncertainty will be the name of the game. Marine Le Pen has now called for an EU membership referendum in France, and the latest Ipsos Mori poll in Italy shows that 60% of Italians want the same, with 48% saying they would vote to leave the Union.
Free trade and globalisation more broadly will be other casualties of the upcoming illiberal era. Trade is a technical matter that requires experts to arrive at deals that are not understood by those of us who do not dedicate our lives to such matters. Again, if trust in elites is not there, we are bound to see simplistic messages take hold and suspicion of free trade grow. The prospects of the Transatlantic Trade and Investment Partnership (TTIP) and the Transpacific Partnership (TPP) being signed and ratified look slimmer by the day. Ultimately, anti-capitalist and, perhaps, anti-democratic movements will emerge. We know, for example, that many of Europe’s Far Left parties have in the past questioned capitalism as a system, or that Far Right parties bring with them strong anti-democratic tendencies. Immigration and multiculturalism in general will also be increasingly questioned; they already are in Europe and America. Minorities and others are normally victims of populist movements because they are seen as bearers of problems, as stealing people’s jobs or as security threats.
Why is this happening? And why now? Some have said it is a consequence of globalization, free trade and immigration. These factors surely play a role but I would like to suggest that the lion in the grass, or the hidden threat, is rapid technological development and its impact on labor markets and wealth distribution. Middle-class workers are today competing not just with cheap labor in the developing world but also with machines and algorithms that are ever cheaper and ever better. This structural process is producing large amounts of material prosperity, but it is undermining the middle class in the process through the destruction of jobs. We have never been wealthier in terms of total output of goods and services, but the US and Europe have both seen a steady rise in inequality over the past two decades. We know that from the 1970s to today, productivity and labor income have decoupled; we have gained productivity without increasing wages, which means that our most important redistribution tool, labor income, has ceased to function. Wealth concentration in the US has now reached dramatic levels. And people are losing faith in a system that produces aggregate wealth but fails to distribute it.
Now, the barbarians are at the gates. Populists come to break the system and in the process destroy a great deal of wealth. Hopefully it is only wealth that is lost in this convulsion. The liberal cosmopolitan elites of the world need to diagnose this problem quickly and effectively, and start thinking about the new equilibrium after the upheaval. How do we build an inclusive economic system in which entrepreneurship, innovation and private enterprise are still driving growth but do not produce politically unstable levels of inequality? What is to be the future role of governments and corporations in an environment of high productivity but lower employment? These questions will need to be answered in the next decades if we want to arrive at a politically sustainable arrangement. The current model built by our elites is not. And we shall all pay the price for it.
This piece first appeared at Europe’s World