American Labels Don't Fit in Europe

To continue, American political labels just don't work in Europe.  They didn't hold well in the 1930's, and they don't apply well now.  In the US, the macroeconomic left can roughly be identified with people who favor counteracting economic downturns with stimulus, whether fiscal, monetary or by currency depreciation.  The macroeconomic right either believe that stimulus is futile and what is needed are structural reforms, or that the downturn is a necessary correction and any attempt to counter it simply prolongs the pain.  The macroeconomic left tends to correlate with the microeconomic left (i.e., people who favor health and safety regulations to protect labor, consumers, and the environment), although there are a few exceptions like market monetarists.  These things tend to correlate, although they do not have to.  Indeed, one of the basic concepts my freshman year macroeconomics textbook had was that how activist one believed government should be in demand management and how large one believed the public sector should be were separate issues.  But no one in the US makes the distinction.

Europe is another matter.  This article suggests that in the German economic and ideological framework of "ordoliberalism":

[F]or ordoliberals the state is not an impediment to the efficient functioning of markets; for them strong government regulation is a necessary prerequisite for competitive market activity. And unlike in the Austrian or Chicago variants of neoliberal thinking, a strong state is seen as necessary to produce the moral, legal, and social frameworks (the Ordnung) essential for the functioning of markets. 

These state-initiated rules were intended to approximate as closely as possible the functioning of a perfectly competitive market. Consequently, ordoliberals place an outsized emphasis on preventing the establishment of cartels and monopolies. By preventing the formation of powerful economic agents which can influence the prices of goods and services, the state can create a situation approximating a state of perfect competition, which will drive economic development without government stimulus or non-regulatory intervention. By controlling the size and power of economic agents, and by encouraging the formation of a strong state, ordoliberals hoped to prevent a situation of regulatory capture, thus protecting the market from subversion by powerful economic actors. 

Perhaps unsurprisingly for a philosophical tradition from Germany, a famously rule-obsessed country, the need for a robust system of rules runs throughout the ordoliberal project. For them, economic rules are seen as constitutional, as an inviolable part of the fabric of society. For people in the ordoliberal tradition, as the legal scholar David Gerber put it, any action “which does not conform to constitutional economic principles should be overturned by the courts…just as if it had violated the political constitution.” In effect, ordoliberalism “constitutionalizes” the economy and embeds it in a broader normative framework.

Social democratic parties have been paralyzed by fidelity to the euro, acceding to ever harsher austerity that slowly grinds their economies down.  In the words of Matt Yglesias, "[S]ocial democrats feel paralyzed by the bounds of the eurozone. They don't have a strategy for changing the rules and they don't have the guts to tear up the rulebook."  It has been right wing parties, irate over the invasion of their country's sovereignty, that have been the serious challengers to austerity and the modern equivalent of the gold standard.  And I confess, much though I disapprove of the scapegoating of immigrants, it is hard not to applaud far right parties for their clear-headedness on economic matters.

Which leads to the subject of Ambrose Evans-Pritchard, right wing British journalist, euroskeptic, business editor for the conservative Daily Telegraph, Clinton conspiracy theorist -- and Keynesian. He writes column  after irate column on the subject in language that makes Paul Krugman sound temperate.  And in particular he calls on the left wing to rediscover its identity and make common cause:

We Conservatives have watched in disbelief as one Socialist party after another immolates itself on the altar of monetary union, defending a project that favours the elites - a "bankers' ramp", as the old Left used to call it. 

We have watched our friends on the Left apologise for 1930s policies. We have seen them defend a regime of pro-cyclical fiscal cuts imposed on the whole eurozone by a handful of "Ordoliberal" reactionaries in the German finance minstry. . . . It has somehow found ways to justify a youth jobless rate still running at 42pc in Italy, 49pc in Spain and 50pc in Greece, despite mass emigration.

. . . . . . 

This is what they agreed to, and what they have reluctantly defended, because until now they dared not question the sanctity of EMU. And so the once mighty Dutch Labour Party has been reduced to a pitiful relic. Pasok has been obliterated in Greece. 

The Spanish Socialist Workers' Party has lost its left-wing to the rebel Podemos movement, freshly victorious in Barcelona. France's Socialist leader, Francois Hollande, has been languishing at 24pc in the polls as the French working class defects to the Front National.

And this is not so far from what happened to the center-left in Europe as well in the 1930's, even as the US was electing Roosevelt.  And, as I said before, I begin to see why some US liberals in the 1930's might have applauded Mussolini or even Hitler for having the gumption to "tear up the rulebook" and save their countries' economies.