This spectrum applies pretty well in the United States. Here, center-left President Obama made an initial attempt at fiscal stimulus, is vainly proposing more, or at least avoiding too much austerity, and has appointed officials to the Federal Reserve who favor monetary expansion. Center-right Republicans call for major fiscal austerity, possible monetary tightening, and warn that our problems are structural and that not much can be done in the short run. Over on the far right, Ron Paul is calling for a gold standard, but is still generally regarded as crazy old uncle. (No one is calling for central planning, and devaluation is a non-issue since we have a floating currency).
In Europe, by contrast, this spectrum does not hold up so well. There all "respectable" opinion holds to the center-right view that what is needed are structural reforms, including austerity, with any sort of fiscal or monetary stimulus rejected as madness. On the European center-left, we are seeing the earliest stirrings of not-quite-Keynesian views that austerity is doing more harm than good and should be ended, although "respectable" opinion still sees this as madness. No one is calling for central planning, nor, so far as I can tell, for a gold standard. But the only people calling for an end to the European equivalent of a gold standard, the euro, are on the far right. The allegedly far left Syriza in Greece opposes any further austerity, but rejects Friedman's favored solution of devaluation. In the Netherlands, it was the far-right Freedom Party of Geert Wilders that rejected further austerity. In France, it is the far-right National Front that wants to abandon the euro. In short, while the right wing view in the United States is to embrace austerity, fear falling currencies, and let the whole thing work itself out, in Europe the far right is that faction that most strongly rejects that view.
Much the same thing happened during the last great economic crisis of the 1930's.
Much the same thing happened during the last great economic crisis of the 1930's.
In the United State, center-right Herbert Hoover maintained a currency peg to the gold
standard and wavered between trying to balance the budget and fighting
unemployment with public works. He was
unceremoniously voted out in 1932 and replaced by the center-left Franklin
Delano Roosevelt, who abandoned the currency peg, launched a major fiscal
stimulus, and experimented (not very successfully) with moderate forms of
central planning.
Things were more complicated in Europe.
Things were more complicated in Europe.
In Sweden, the center-left Social Democrats came to power, abandoned the gold
standard, adopted a fiscal stimulus, and quickly recovered. Elsewhere the picture is more muddled.
In Britain, the Labour Party was in power for only the second time. Faced with a major fiscal crisis, the Labour
government struggled vainly to balance the budget and maintain the gold
standard, raising interest rates in the middle of a depression in a desperate
bid to stem the gold flight. These
polices cost them the next election. The
successor Conservative government devalued against gold and began to experience
a modest recovery. Recovery did not
really take off, though, until Hitler began to menace and force a military
buildup.
In Germany, the center-right government of Heinrich Bruning struggled
to balance the budget as the economy sunk deeper and
deeper. The center-left Social Democrats
did not question the need to balance the budget, but urged cuts in the military
instead of unemployment insurance. By
late 1932, General Kurt von Schleicher, a right-wing militarist with ties to illegal paramilitaries, was beginning
to grope his way toward something like a Keynesian theory of fiscal stimulus
and desperately sought an unofficial accommodation with the Social Democrats to
implement it. The Social Democrats
rejected this approach, simultaneously calling for a balanced budget and seeing
the Depression as the final death throes of capitalism. The result, as we know, was that Hitler came
to power and turned out to be the greatest military Keynesian of them
all.* The Japanese government also
turned out to be both far right and highly successful military Keynesians.
Depression came late to France and the Netherlands, but just as they
thought they have escaped, it hit them as well.
Perhaps because they were the last to decline, these countries were also
the last to leave the gold standard and the last to recover. In France, too, conservative governments
struggled to balance the budget, raise interest rates to keep the franc from falling, and manage a deflation that was considered necessary. When
the economy only sank more and more, the French, in desperation, elected the
Popular Front (Communist/Socialist coalition) under Leon Blum that introduced pro-labor policies, but resisted devaluation until it became inevitable, and witnessed an ever-greater disintegration. In the Netherlands, a conservative government remained non-interventionist and struggled to balance the budget, but did eventually leave the gold standard.
In short, in the the assumption that the left favors countering economic downturns with expansionary policies and the right opposes it has held good in the United States both in the 1930's and today. In Europe, the correlation is much less clear. (It should also be noted that if one defines a fascist party as one that favors economic expansion and nasty scapegoating of immigrants, as appears to be the case in Europe today, there is no equivalent in the present-day United States. The party that favors expansion and the party that scapegoats immigrants are separate here).
My next post will address why this might be so.
My next post will address why this might be so.
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*And I am well aware that many on the right classify Hitler as left
wing on the grounds that he was the ultimate Keynesian. By their logic, the far more classically conservative Schleicher would also have to be a leftist.
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