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One of the political puzzles of continental Europe is the persistently poor performance of the centre-left. Events should have favoured the socialists and social democrats. The crises of the euro and the global financial system in part resulted from the extreme deregulation of financial markets overseen by the centre-right, along with its refusal to create a tighter-knit economic union in the eurozone early on.

European centre-left parties rise to political power from time to time, but less often than the centre-right. When they do, they tend to stay in power less long. Their natural position these days is as a junior partner in a grand coalition. One exception is France — but even there, President François Hollande and his party are languishing in the polls. Italy’s Partito Democratico fares better, but this is in part due to the fragmentation of the opposition.

So why is the centre-left by and large not benefiting from the failures of their political opponents? The deep reason lies in its absorption of the policies of the centre-right, going back almost three decades: the acceptance of free trade agreements, the deregulation of everything, and (in the eurozone) of binding fiscal rules and the most extreme version of central bank independence on earth. They are all but indistinguishable from their opponents.

That was not always so. In the 1970s Helmut Schmidt, the fairly conservative social democrat, who was then Germany’s chancellor, tended to drop by at the Bundesbank when it held its policy meetings and dispense his advice. In those days, there were no fiscal rules as we know them today. When the economy contracted in the late 1970s, he used a Keynesian fiscal strategy to counter the effects of the recession. My point is not that it was a better economic policy. Possibly it was not. My point is that the left used policies that were different from those of the right, and that it worked for them politically.

The big policy shift came during the 1980s and 1990s, a time some of the main European parties of the centre-left spent in opposition, except in France. During that period, the consensus view in Europe towards economic policy shifted to the right. Macroeconomic policy became rules-based. Discretionary policies were abandoned, state-owned companies privatised and markets liberalised. Central banks all over Europe became fully independent. When the eurozone was constructed, it was given neoliberal foundations. I recall a prominent social democrat politician who was proud that he could recite all the European treaty rules by heart. Nobody questioned whether the rules made sense.

How did it come to this? By the end of the 1990s, the centre-left parties of Britain and Germany had been out of power for almost two decades. The shift to the right seemed to work initially. It brought the electoral successes of Tony Blair in the UK in 1997 and of Gerhard Schröder in Germany in 1998. Mr Blair was re-elected twice; Mr Schröder once. Those victories changed the political narrative to which the centre-left policy establishment is still clinging on today: that they can only win elections from the political centre.

That narrative worked until it did not. What triggered the change is the onset of the serial financial and political crises that have erupted since 2007. Having abandoned the tools of macroeconomic policy management, the centre-left deprived itself of alternatives. Here we had the ultimate crisis of global capitalism delivered to them on a platter, and they did not know what to do with it. They bailed out the banks instead of nationalising them. They imposed austerity. They had nothing original to say.

When rules were broken, as they were in Greece, the European centre-left reacted no differently than the centre-right. In early July, the SPD amplified the pro-Grexit mood in Germany. Sigmar Gabriel, SPD leader and economics minister, turned out to be as hostile towards the Greeks as Wolfgang Schäuble, the CDU finance minister. The only Keynesian party in Germany today is Die Linke, which derives from the former communists of East Germany. In Italy and France, the Keynesians are on the extreme left and right.

Would centre-left parties do better if they shifted back to the left? The election of Jeremy Corbyn as leader of the British Labour party may herald such a shift. But Britain is not bound to the eurozone consensus. It takes only a change in government to change policy, whereas in the eurozone it would take a treaty change — or more likely a revolution. It is far from clear that today’s centre-left parties will emerge as the agents of change. I suspect not.

munchau@eurointelligence.com

Letters in response to this column:

Behind the disenchantment with Europe’s centre-left / From Michiel van Hulten

The centre-left principle should be that the winners compensate the losers / From Malcolm Levitt

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