Portugal and austerity: what European model?

In today’s blog post, Roberto Falanga and Simone Tulumello describe the trajectory of Portuguese austerity politics, from the post-crash bailout. Portugal is often held up as an example of anti-austerity politics, especially by the left in other countries. Roberto and Simone argue while it is correct that the left coalition is reverting austerity policies, it does so under contradictory conditions that call for a broader rethinking of the European model if the approach taken until now is to be sustainable.

The Memorandum of Understanding for the 3-year economic adjustment programme in Portugal was signed in May 2011 under the supervision of the International Monetary Fund, European Commission, and European Central Bank (the so-called Troika). The bailout package of 78€ million provided to the country was agreed by the three mainstream parties – the majority made up of the Social Democratic and Popular parties, and the Socialist party in the minority – to consolidate domestic finances and improve international competitiveness against the increasing vulnerability of the country to the effects of the global crisis.

Preceded by preliminary rounds of austerity (the Programmes of Stability and Growth, Programas de Estabilidade e Crescimento) imposed by the European Union to the socialist government led by José Socrates, the intervention of the Troika between 2011 and 2014 imposed significant pro-cyclical fiscal consolidation measures (like in Ireland, Greece, Cyprus, and Spain, where similar Memoranda were signed in the same period). At the local level, for instance, fiscal retrenchment entailed a reduction of administrative units, state grants (about 60% of local revenue), municipal staff, municipally-owned enterprises, while decreasing local debt and enhancing new mechanisms for risk management control, reporting and monitoring (Teles, 2016).

Against the negative effects of the austerity measures on social, economic and political life (economic recession, increasing unemployment, impoverishment of large sectors of civil society, emigration of young and high-skill generation, private housing speculation, etc.), protests and social mobilisation erupted in the peak of the crisis between 2011 and 2012. Labour unions and political parties at the end of the left spectrum tended to support movements (e.g. ‘Indignados’, ‘Que se lixe a Troika’, etc.) and civic networks (e.g. the ‘Congresso Democrático das Alternativas’ composed of people from trade unions, left-wing parties, academics and social movements). In this period, public interest over large payroll tax increases – and more broadly austerity measures – grew and key institutional actors like the Constitutional Court directly challenged the government and pushed the suspension of austerity measures, like Labour Code amendments.

Portuguese mobilisation spread after decades of low participation in political life and within a global scenario in motion, with the ‘Arab Spring’ and the Spanish occupations in Madrid rising interest and concern worldwide. This notwithstanding, when compared to countries like Spain and Greece, protests, occupations and strikes in Portugal attracted less public than expected and did not produce new ‘anti-system’ groups. According to Caldas (2012), this was due to an increasing alienation from politics and representatives, perceived as corrupt and dishonest, which exacerbated historical trends of disaffection with political institutions and representatives (De Sousa et al., 2014). Moury and Standring (2017) explain that alienation of grassroots movements and self-organised groups was the result of the government attitude against social partners and professional bodies, placed before austerity as a fait accompli.

The reasons behind the growing mistrust towards the political class, as well as towards protests at occasion perceived as controlled by labour unions and political parties (Observatory for the Quality of Democracy report 2012), should be searched in the way the adjustment programme was implemented. Disaffection in civil society was coupled by discontent among business sectors (for instance, due to the rise of the valued added tax), and within party ranks of both government coalition and opposition. The major mainstream party at the opposition, the Socialist party, decided to stop supporting the government in 2012 by voting against amendments to the 2012 budget and the 2013 budget, in a time when pools on voting intentions gave it an edge over the centre-right coalition (De Giorgi et al., 2015).

Despite the attempts to persuade society on the need of austerity through the TINA (‘There Is No Alternative’) rhetoric and blame shifting communication strategy on previous administrations (Fonseca and Ferreira, 2015), confidence on government dropped-off. Alienation from the political sphere reached the highest abstention rates since 1979 in the 2013 local elections (47.4 %; preceded by 41.9% in 2011 and followed by 44.1% of abstention in 2015 in legislative elections). Noticeably, abstention resulted positively associated to lower socioeconomic resources and educational skills, furthering the exclusion of the most vulnerable groups from public decision (OECD, 2015).

It is worth noting that the blurring borders between institutional and non-institutional spheres have always characterised political life in the country. If compared to neighbouring countries social mobilisation was weaker, this may have been compensated by easier transfer of ideas and instances between movements and parties, as the same actors often played multiple roles. As a result, in contrast to the growth of anti-system groups, like in Spain and Greece, political parties tended to incorporate social claims, taking ahead political strategies that eventually prepared the field for the ‘Geringonça’ to be in power from 2015.

The term Geringonça means something with an unstable structure (and few chances to be durable in time), and is informally used to describe the coalition between the Socialist, the Communist, and the Left Block parties that is currently governing the country. The coalition, emerged from the initial impasse for the formation of the national government after the legislative elections in 2015, has a peculiar character: the left-wing parties do not take part in the government, but form, together with the governing Socialist party, the parliamentary majority. This situation has brought the parliament back into the core of political action, in that every governmental proposal needs to go through the negotiation with the Communist and Left Block parties – and in some cases with the centre-right parties, in the name of ‘large agreements’ and ‘stability’.

Amid the deep recessionary effects of the austerity policies, the dismantling of the welfare regime, the crisis of corporatist traditions and the interruption of secular trends of greater equality and inclusion, the new majority declared its intention to reverse the austerity agenda implemented between 2011 and 2014 – though with significant contradictions. The priority has been restoring the purchasing power of workers and civil servants – for instance, by reversing the tax increases and the extension of the work week from 35 to 40 hours put in place by the previous government. Though some economists and experts have been criticising these measures,[1] 2016 and 2017 have seen a fast economic growth, giving the government the possibility to keep up with the expansionary agenda as well as maintaining good financial fundamentals.[2]

However, some fundamental contradictions persist. On the one hand, the economic growth is based on exportations and, expressively, the boom of tourism, and doubts persist on its sustainability in the long run. On the other hand, amid the Socialist will to not break up with European conditionality, the investment in purchasing power has meant that virtually no action has been put in place so far to revert the dismantling of the welfare state of the previous years – the national health system, housing policy and public transport are possibly the fields where austerity hit the hardest. While ongoing discussions for the 2018 budget seem to signal a renewed attention to the welfare state, particularly in the field of health[3] and housing (a ‘New Generation of Housing Policies is ongoing public discussion), it seems to us that the potential for consolidating a different path to development lies exactly in the engagement with the contradictions we highlighted, which is quite unlikely in absence of a more general rethinking of European institutions and mainstreams.

While many in Europe are pointing at Portugal as the evidence that the austerity (and neoliberal) hegemony may start their path to decline, we believe Portuguese successes and contradictions point toward the need for a deeper questioning of the European model of development.

Roberto Falanga and Simone Tulumello, are Postdoctoral Research Fellows, at the Instituto de Ciências Sociais, Universidade de Lisboa

[1] The Post-Programme of Surveillance initiated in May 2014 in order to monitor economic, fiscal and financial policies in Portugal stress spread weakness in labour market, public administration, and judicial system inter alia. The programme also critically observes the reverse of some previous reforms, as the return to the 35 hours working week in civil service; the increase of public employment via new hiring policies; the reduction of VAT for food at restaurants; backtracking in reforming state-owned enterprises and concessions negatively affecting the capacity to attract foreign direct investment.

[2] The Ministry of Finances, Mario Centeno, has even been included among the potential leaders of the Eurogroup.

[3] See http://expresso.sapo.pt/sociedade/2017-10-14-Orcamento-para-a-saude-aumenta-44.

Book Debate: The End of Representative Politics?

Today we publish a two part blog on Professor Simon Tormey’s book “the End of Representative Politics“. In this work Tormey argues that narratives of democratic decline are too tightly focused on representative forms of politics, and thus conceal processes of politicisation and democratisation outside the purview of representative institutions. Tormey’s opening statement in part 1 is followed by a reply by CURA’s Adrian Bua in part 2, asking Simon to expand upon the democratising potential of “post-representative” forms of politics.

Part 1: Simon Tormey on the End of Representative Politics

For nearly half a century political science has been gripped by “the crisis of democracy”. After a period in which liberal democracy seems to be in rude health with high turnouts for elections, mass political parties, and high level of interest in and knowledge about politics, citizens seem to have turned off and tuned out.

2016 gave us a partial correction of this image of apathy and indifference with the emergence of populist movements and leaders. The reinvigoration of politics as it least a talking point in many households off the back of Brexit, Trump et al. Some parties, notably the Labour Party, also bucked the trend in managing to recruit a new generation of enthusiastic young members.

Yet political scientists remain gloomy about the overall trend. Many note the lack of engagement in for example sub and supranational elections. Others note the “easy come, easy go” nature of our political affiliations, our fluctuating preferences, low boredom threshold, and the inconsistency of the manner by which we engage as participants. Many also note that populism arises not out of renewed interest in politics, but it’s opposite: frustration with mainstream politicians, technocrats, experts, representatives of all stripes.  In short we should not be sanguine about the future of democratic participation because of populism. On the contrary, populism should be a wake-up call for all of us concerning the health and well-being of our democracies.

Looking back over the relevant literature three variables have been explored by political scientists to explore the problem: the lack of civic engagement, the decadence of the political class, and the deathly grip of neoliberalism and austerity politics.   Depending on one’s intuition about the matter and reading of the relevant data, the solutions flow from the diagnosis:  increasing civic education, understanding and knowledge of political institutions; better training, payment and preparation of the political class; acknowledging the complicity of market based strategies and privatisation in the emptying out the public realm.

This is all quite persuasive at one level.  However there is something missing in this puzzle, and this is the representative function itself.  What I argued in The End of Representative Politics (polity, 2015) is that we have arrived at a moment when we need to look more closely at how representation itself works, and for whom. My reasoning is that the core elements that historically compose the representative claim:  commonality of interest, identities or ideologies is under stress as we move from societies marked by stable hierarchies, respect for tradition, for elites toward societies marked by “individualisation”, flatter or even horizontal social structures, and a consequent erosion of the traditional basis for authority, a respect for hierarchy.

Sociologists regard these developments almost invariably in negative terms.   They represent the loss of the kinds of society they grew up in and have done well in: societies in which there is a deep respect for, for example, academics and professionals we have special claim to knowledge and insight. On the other hand, what it means is a different  way of relating to politics and a different repertoire of political engagement. Henrik Bang uses the term “everyday makers” to describe the emergence of new kinds of political actor who do not wish to be represented by others, who are not satisfied by a periodic engagement with the electoral process, and with the assignment of the capacity to act to representatives.

In my own fieldwork in Spain, this sense of impatience with representation was all too evident. It’s an impatience borne by a strong belief that politics should be about individuals joining together to help themselves rather than to be passive recipients of something whether that be welfare, jobs or whatever. But what also became evident is that a mistrust of mainstream politics need not necessarily lead to apathy or indifference. Nor does it have to lead to populism, or at least the kinds of populism that we associate with Trump and Brexit.   It can lead to the development of an imaginative repertoire of new kinds of political action, initiatives which led me to describe Spain as “a political laboratory”. It’s a laboratory where citizens conduct the experiments. It is one where what was considered impossible yesterday becomes quite possible today, whether it be the creation of pop-up parties, Twitter-led citizen insurgencies, a proliferation of direct action groupings of every stripe and colour, or latterly the election of “unelectable” radical figures, notably Ada Colau and former communist Manuela Carmena.

And so we arrive full-circle.  Representative politics is not dead. It is not even dying. It is mutating and changing. With the emergence of new kinds of political subjectivity armed with new tools for individualised collective action, we are seeing “everyday makers” move from the periphery of political life to the centre. Whether the emergence of a more active citizenry and of institutions better attuned to their needs succeeds over the counterveiling forces that so preoccupy political scientists is needless to say far from a formality.

But nor can we go back.  The Golden Age of representative politics is long past.  Either we reformulate democracy in terms that are more engaging and inclusive for citizens or we can anticipate continued gains by those for whom democracy is a means to their own advancement, rather than to an improvement in how we govern ourselves.

Part 2: Reply by Adrian Bua

There is much to agree with the argument set out in Simon’s book. First, it is a refreshing departure from narratives about democratic decline that do not sufficiently recognise the importance of the politics that occur outside of the purview of traditional institutions. Second, underpinning his argument is an understanding that democracy is a highly adaptable system, shape-shifting in reflection of social balances of power. Third, The End of Representative Politics does not attempt armchair design of institutions intended to “fix” the system – the big changes the book traces do not come from blueprints, but emerge from dynamics that exist in the present. For these reasons Simon’s book is necessary reading for those thinking about how to shape a more democratic future.

In my response I ask Simon to extend his argument in one area: that of the massive challenges that democratising projects face contemporarily. In doing so, I will focus on issues related the third variable that Simon identifies in the literature – that of neoliberalism and austerity politics. Specifically, I question whether new forms of post-representative and progressive politics pose a threat to the deeply de-democratising trajectory  of contemporary capitalism. My challenge is that whilst Simon’s work is indeed refreshing in challenging ubiquitous decline narratives, it runs the danger of Pollyannaism absent a clear account of how post-representative politics can challenge the deepening and expanding capitalist system.

One way to cast this challenge is the development of plutonomy – an idea developed by Citibank in the mid noughties to reassure its equity clients that global prosperity was not threatened by widening inequality, and would not again depend on a redistributive fix akin to the post-war settlement.  A decade on, and following the global financial crash the move toward global plutonomy seems to me to be alive and well – and also seems to dwarf post-representative politics.

The democratic spaces that Simon identifies emerge at a time when the space for politics is unprecedentedly constrained by the imperative to protect appease capitalist markets. Responses to the crash by nation states and global state institutions have been designed to insulate neo-liberalism and austerity from democracy.  The increased use of coercive enforcement does point at a crumbling hegemony – neo-liberalism resorts to the hard hand of state power to protect accumulation as it can rely less on popular consent or acquiescence. In the face of a phenomenal expansion of protest movements, the austerity state has developed measures for policing and criminalizing protest. Simon would be right to argue that these are signs of a system struggling to cope and with and control new political dynamics. However, absent an alternative capable of mobilising protest and governing it seems to me that evanescence – one of the features of post-representative politics identified by Simon in his book – is all we can expect. Without moving from protest to effective proposition two outcomes seem likely: for neo-liberalism to continue on in its de-democratizing path, in zombie fashion and under the protection of the austerity state, or for it to be de-railed by authoritarian nationalism, or fascism.

Developments in Spain, described by Simon and colleagues in other work as a “political laboratory”, are indeed hopeful. Here we have an attempt by post-representative social movements to move into the representative state.  As well as the election of Ada Colau (Barcelona) and Manuela Carmena (Madrid) mentioned in Simon’s post, an impressive array of other major cities have elected administrations claiming to represent social movements. An array of policies are being implemented that advance minority rights, protect the welfare state, combat gentrification and experiment with participatory democracy. However, this politics is constrained by governance challenges linked to a hostile Spanish state that dutifully implements austerity measures, the development of policies that contradict international capital, and contemporarily, regional independentist movements that have arguably pushed social issues down the political agenda, and are being quashed in decidedly undemocratic and authoritarian fashion, by a reactionary government that mendaciously claims to be acting in protection of “democracy”.

In summary, I do not want to question the development of post-representative politics, but its ability to perform and deliver democratisation in the context briefly sketched here. Simon is right to reject nostalgia, and focus on emergent possibilities. The question I want to ask is linked to one posed by Simon at the end of the book – can post-representative politics transform their critical energy into a genuinely reforming political initiative? How can we expect radical democratic impulses of post representative politics to interact with the de-politicising, de-democratizing tendencies of increasingly authoritarian neoliberalism and, perhaps most importantly, its capacity for co-option and usurpation?

Simon Tormey is Professor and Head of the School of Social and Political Sciences at the University of Sydney

Adrian Bua is a researcher at the New Economics Foundation and at CURA