Welfare state investments need to grow, we need "socialism that really protects and nurtures," Tõnis Saarts writes in terms of how mainstream parties could rise to the challenges of the end of neoliberalism in a comment originally published in Sirp magazine.
It is probable that slogans such as "the market will sort it out" and "the state is a poor owner" cannot deliver an elections victory in the conditions of soaring inflation, the energy crisis and political uncertainty. It seems that the need for a stronger state has returned and the promise of global and unbridled market freedom meant to make everyone wealthier is far less attractive than it was a few decades ago.
The pendulum started swinging towards the state on the market-government axis in the days of the previous decade's financial crisis (2008-2011) and really picked up momentum during the coronavirus period when market-centeredness demonstrated its inability to handle such megacrises.
The current cluster crisis of geopolitics, energy, economy and inflation is bound to increase the influence of governments further. It is difficult to imagine the deliverance of the project of market liberalism or how it could be made attractive to the masses again using recent slogans.
All this means that the neoliberal era of market-centeredness and the minimal state principle is nearing its end and we are seeing the return of neo-statism. It does not herald a return to Soviet-style planned economy and state ownership, while politicians on both the left and right wings will expect much greater state intervention in the economy and social affairs.
Of course, the right and left wings have very different ideas about what post-neoliberal policy and society should look like. Estonian and global policy of the coming decades will largely depend on which side's view will come to dominate: the right's vision of a self-assertive nation state that will get rid of some minorities not seen as part of it, or the left's more cooperation oriented and universally protective alternative.
Italian political scientist Paolo Gerbaudo, who has spent a long time teaching at King's College London, recently published a noteworthy book titled "The Great Recoil: Politics after Populism and Pandemic."
It not only attempts to explain the causes of crises, major change and populism, but also makes note of the possible keywords and confrontations of the post-neoliberal era. According to Gerbaudo, three keywords will come to characterize the era that will follow the neoliberal hegemony: sovereignty, protection and control.
Sovereignty means that countries and their citizens get to make their own decisions, instead of being fully reliant on global markets and currents. Whereas the right is mainly talking about territorial sovereignty, while the left is emphasizing popular sovereignty.
Protection stands for countries' obligation to offer their citizens security and protection from all manner of global and socioeconomic threats. The right wing sees this as protection against immigrants, the left as warding off global markets and the excess greed of those operating there.
We might recall the main Brexit slogan as "Take back control!" Control over borders (right wing), global currents, democratic decisions (left wing) and many other processes manufacturing security and ensuring the sustainability of states/peoples forms the core of the post-neoliberal age.
Market liberalism has opposed control and regulations that worked as constrictions and resulted in inefficiency. The coming era will attempt to give citizens and states back certainty that they can control their own lives and fate, and that decisions are not made over their heads.
EKRE in the lead
Looking at parties and looming elections [in Estonia], paradoxically, it seems that the Conservative People's Party (EKRE) is the best prepared for the post-neoliberal era. The party, run by the Helme family, uses all three aforementioned keywords in its messages, either directly or indirectly. Returning to sovereign national statehood where Estonia would cease to be a province of Brussels and take control over its decisions and borders has been the party's ideological core from the first.
Now, we can add state intervention to the list. It would rein in price advance, bring energy prices down and offer citizens socioeconomic security. EKRE are also talking about democratic control of citizens through referendums.
Looking at the recent messages of left-liberal mainstream parties, protection is the only aspect in their sights. The Reform Party sees it from the national security aspect – protection from the eastern neighbor.
The Center Party and SDE are talking about social protection, while they are by no means the only ones anymore. Right-wing parties are also promising caring state intervention in critical areas. Almost no one is talking about sovereignty (perhaps only Isamaa in an attempt to echo EKRE), while the topic of democratic civil control, which should be the bread and butter of left-leaning liberals, seems to have been surrendered to EKRE almost in full as well.
Therefore, the national conservatives have opened up a comfortable lead in terms of entering the post-neoliberal era. Our peculiar post-Soviet history makes it much more difficult for our mainstream parties to readjust when compared to peers in the West, while the situation is not hopeless either.
Gerbaudo offers a lengthy analysis of how we have come to the current situation. What went wrong during the age of neoliberalism to spark such a strong reaction in the form of left and right-wing populism and make mainstream parties doubt their recent course. The author claims the development is inevitable, very broadly speaking.
Throughout the 20th century, market cycles have introduced new ideological hegemonies in favor of older ones every 30-40 years. The Great Depression in the 1930s and World War II dethroned classical liberalism and ushered in the hegemony of the social democrats. This crumbled in the oil crisis of the 1970s and was followed by the dominance of market liberals that started coming apart during the 2008 financial crisis but seems to have been delivered the killing blow in the coronavirus crisis and other setbacks of this decade.
This begs the question of what will take its place. According to Gerbaudo, it is the return of protective neo-statism.
What has made this shift possible is neoliberalism's growing inability to offer its citizens protection and security from threats and market instability of the globalizing world. Citizens and states face all manner of global currents (migration, trade, finance, information etc.) over which they have almost no control as the market was supposed to regulate everything during the neoliberal era.
This leads to deepening agoraphobia where everyone is seemingly in a huge open space where they don't know from which direction threats, a crisis or game-changing development might come next. It is, therefore, only logical that people turn back to the state as the most capable actor that is expected to restore protection and control.
There are several reasons behind this deepening agoraphobia. Neoliberalism stood for a minimal state, low taxes, deregulation (primarily of financial markets), privatization, globalizing economy and trade flow. The promise was that everyone would eventually benefit by way of trickle-down economics.
Neoliberalism did improve the standard of living for billions of people, mainly in Asia, while the working class and residents of small towns in the West soon started seeing the downsides of globalization: industrial jobs moved to Asia, wages stagnated, rural areas and small towns no longer found a niche in the new knowledge-based economic model, social security networks weakened, which caused many to fall through the cracks into a spiral of unemployment and falling status.
The working class, small town residents, bourgeoisie and the middle class sporting more modest educational capital (worried about their declining position) started realizing they were on the losing side in the new globalizing world, could no longer look to the future with confidence.
Therefore, it is little wonder the previous decade culminated in Brexit, Donald Trump and populist parties more than doubling their vote yield in Europe. They were the first who promised to bring back control, protect against the dangers of excess global openness and restore the sovereign decision-making capacity of states and citizens.
Gerbaudo warns that if mainstream parties on the right, but especially on the left, fail to meet expectations in the post-neoliberal world, they will lose and be forced to surrender the stage to right and left-wing populists for good.
Discordant treatments of sovereignty
Let us take a closer look at those three keywords, their meaning and interpretations on the right and left wings. There was almost no talk of sovereignty during the height of neoliberalism. There was no need, as national sovereignty (especially when coupled with economic protectionism) hampered market freedoms and free trade.
Excess democratic sovereignty of citizens threated to culminate in a "tyranny of the majority" that jeopardized personal freedoms, consumer and lifestyle choices. Sovereignty has by now become the primary slogan of right-wing populists.
Sovereignty is understood as decisions by states and their citizens being superior to whichever economic factors, markets or other countries and international organizations. The right wing emphasizes the latter half of this: sovereignty is chiefly territorial, and our main goal is to take back national decision-making capacity from all manner of supranational organizations, such as the EU etc.
National interests need to be on top, ahead of more general goals. The first step is border control, followed by self-assertion on the nation state level. Every state decides its own values and customs, limiting, if necessary, the rights of social groups who could jeopardize the longevity and well-being of the nation, and does not have to accept the external dictate of left-liberal values.
The left has a very different idea of sovereignty in the independence of communities, citizens and states from the will of international corporations and the world market. Their battle cry is "citizens' sovereignty" or "citizens' capacity," meaning that decisions by nation state citizens need to take precedence and there has to be enough leeway in matters that concern them.
For the left, the mistakes of neoliberalism do not lie in the growing influence of the EU and international organizations but globalization having subjected states and their citizens to the dominance of markets and major corporations, gradually robbing nation states of levers with which to pursue their own economic policies, from taxes to controlling the movement of capital. The result is that states no longer offer their citizens social security and welfare services (quality education and healthcare).
Because citizens can no longer affect socioeconomic processes, state instruments are few and market dominance is stifling debate, the emphasis has shifted to culture war (values and identity), which has only added to the right wing's influence.
Citizens and states need to take back enough decision-making capacity to restore social safety nets, economic security and hold major businesses (also in the tech sector) responsible for the consequences of their actions, as well as contribute to common prosperity.
Protection and control
Words like "protectionism" and "social protection" did not have a nice ring to them during the golden age of neoliberalism. The first stood for an ineffective and nostalgic economic policy that hindered free trade and mutually beneficial globalization, while the other was associated with an inefficient welfare state that robbed citizens of the motivation to improve their situation.
In the post-neoliberal era, protection and security are once more seen as the main tasks of states that are expected to address any and all anxiety-inducing and global risks, such as falling salaries, inflation, digitalization and automation of jobs, immigration, climate change etc.
The right vows to protect citizens from immigration and sees immigrants as the source of all problems and bringing with them diseases, crime, pay cuts, deteriorating job opportunities, meager social services, as well as threatening the nation's survival and that of its culture and customs. Economic protectionism makes for a new topic in the right wing's toolbox – protection of local companies and capital, and trade wars.
Welfare chauvinism is considered a possibility in social policy, meaning that the native majority has better access to social services, work opportunities, education etc. compared to immigrants. All of it is meant to promote feelings of security among one's "own" people.
The left emphasizes economic security and protection from the excessively eroding forces or the market, leaving aside matters of culture and ethnic cleansing. The immigrant is not the enemy, which role is reserved for the profit-hungry owner of a major corporation who allegedly lacks any and all social and environmental responsibility.
The goal is offering basic social security and maintaining the standard of living to protect the most vulnerable social groups. The ecological dimension of a clean and sustainable living environment is added. Calls go up to strengthen the welfare state, invest in education and healthcare, lay down stricter environmental standards, promote global fair trade, hike taxes for international corporations and banks, develop industrial policy to support domestic innovation (even if that includes elements of protectionism) etc.
All of it ties into the third major keyword of control. The main downside of the neoliberal age was citizens' growing feeling of losing control – over the economy, migration, financial flows, technological development, the environment and finally democratic decisions and institutions. All of these spheres were meant to be regulated by the market, not inefficient states and their shortsighted citizens.
For the right wing, taking back control concerns the nation state's territory and decision-making jurisdiction over international institutions (for example, the EU). Processes undermining nationalities, such as immigration, invasion of alien values and lifestyles etc., must also be brought under control.
The left prioritizes democratic control and restoring state capacity to give people back social security and sustainable development of communities. In other words, social development must once again be guided by the state in place of markets, and citizens' possibilities to participate must grow.
Geopolitics to the rescue
Gerbaudo phrases three main strategic starting points for rising to the challenges of the post-neoliberal age. First, emphasis needs to be placed on social protection and welfare state investments ramped up for "socialism that really protects and nurtures." Secondly, democratic control – people need to be able to have a say in matters that directly concern them and communities.
Thirdly, democratic patriotism needs to be encouraged. Gerbaudo proposes the left forget about cosmopolitan citizenship, the disappearance of nations and nation states and admit the historical fact that democracy has only functioned when confined to a fixed territory and the people who live there, and when it considers the region's specialty, culture, customs and values. Democracy simply does not work without a specific local identity and sense of affiliation.
In a situation where the right talks about exclusive nationalism where social groups should be excluded from the body of the nation, the left should be talking about democratic, inclusive nationalism where all citizens in a given territory can participate in decision-making, with social justice and equal treatment the motto of the day.
While Gerbaudo's recommendations sound beautiful and smart, they will be very difficult if not impossible to implement in post-communist Eastern Europe, including Estonia. Eastern European and especially Estonian mainstream parties have associated themselves with neoliberalism so firmly that they find it very difficult to distance themselves from it quickly and painlessly. The neoliberal market reforms of the 1990s are still considered the foundation of Estonia's success. In the 2000s, there was talk of national liberalism when the Reform Party cleverly merged anti-Russian nationalism and market liberal economic ideology.
Moving away from neoliberal dogmas, whether in tax, economic or social policy would be extremely time-consuming and cumbersome – the effect of path dependency is too strong and neoliberalism too woven into the national myths and self-awareness of re-independent Estonia.
Talk of greater democracy and civil decision-making are equally useless here. Typically for a post-communist state, Estonia sports a low level of political participation, with studies suggesting few citizens feel their democratic influence on politics and decisions.
While people might recognize the need for referendums, talk of deliberative democracy and other more complicated forms of inclusion come off as illegible left-liberal balderdash. Talking about nationalism has been the monopoly of the right wing for 30 years, and I see no realistic way for the left to change that in the coming decades by preaching democratic patriotism or the like.
And so it seems that Estonia's left-liberal mainstream parties will have a hard time handling the dusk of the neoliberal era. Recipes that work in the West are not applicable here and extra-system parties with no neoliberal past, such as EKRE, have a major advantage. They can tirelessly play on the new era's contradictions where the fading neoliberal order and voters' expectations are in constant disharmony.
And yet, Estonia's geopolitical location also holds opportunities. Our fragile geopolitical position makes it unlikely EKRE's Hungarian-style illiberal democracy project could happen here in the same form in the near future. This buys the mainstream breathing room and time for ideas to crystallize.
Hegemony in Estonian politics will probably go to a party that can merge guarantees of geopolitical security with promises of increased state support, which needs to come together as a coherent narrative. A narrative that is not too far removed from the earlier neoliberal legacy the roots of which still run deep in Estonian society, politics and identity.
Editor: Marcus Turovski