It all began around the late 1970's when the then prevailing liberal consensus, which had lasted since the latter years of the Great Depression, began to break down. It came into full force in the 1980's with the elections of Ronald Reagan and Margaret Thatcher. In Canada it came into full force with the election of Brian Mulroney and the findings of the MacDonald Commission on the Canadian economy, which were released soon after his election.
The conservative consensus was:
- The uncritical belief in free trade.
- Government regulation was a bad thing.
- Taxes were too high and needed to be reduced.
- Government spending was too high and needed to be reduced.
- Social programs were ineffective and reduced economic activity.
- Deficit financing was bad and should be eliminated. (This one was mainly given lip service.)
- Unions and organized labour was too powerful leading to a reduction in competitiveness and economic activity. That power had to be curtailed.
It took more than a decade for this consensus to solidify. Politicians, conservative academics and the media began a concerted effort to convince ordinary people that they would be much better off following the conservative consensus. They claimed that following it would lead to greater economic success for everyone and not following it would lead to more of the economic upheaval that characterized much of the 1970's. They were successful. By the end of the 1980's the conservative consensus was pretty well set and any government, even progressive governments, that proposed going back to the liberal economic policies of the 1970's did not enjoy lasting success.
For that first decade conservatives were more circumspect about pushing their agenda too hard. They had to bring people along slowly and they still had to deal with the Soviet Union appearing to be a viable alternative to capitalism.
That all changed in the 1990's. The consensus was set and the Soviet Union collapsed leaving capitalism as the only game in town. That lead to the proponents of the Conservative consensus to begin pushing the boundaries of their ideology. That lead to the election of the first neo-conservatives, including our very own Michael Harris, who pushed deep tax cuts and deep government spending cuts. They sold this by stating that the tax cuts would increase economic activity enough to make the tax cuts revenue neutral. Their sell job worked although their claims were proven to be completely false.
Eventually, the neo-conservatives began to ignore the ordinary person claiming that tax cuts for the wealthy and business along with the government cuts was the way to go. Again, for a time their sell job worked.
However, under the surface things were not going very well for ordinary people in the West. Free trade lead to globalization, which lead to massive job losses. Reductions in government spending lead to their inability to assist those who lost their jobs in a meaningful way. Reduction in taxes to the wealthy and the neutering of organized labour has lead to unprecedented inequality in the West.
This has been going on for two decades and it is finally coming to a head. Brexit and the election of Donald Trump are the results of this situation. Both happened because "populist" politicians managed to tap into the anger and and deep uncertainty that living under more than 30 years of the conservative consensus has created. Of course, those politicians are just pushing more to the same while stoking hatred of the "other" to "explain" the plight being experienced by these ordinary people.
That will only work for so long. You can only promise to fix a problem and then do the exact opposite of fixing it for so long before people begin to direct their anger at you. Inevitably it will lead to change, not just of government, but of a new way of governing.
We may already be seeing the beginning of the breakdown of the conservative consensus.
In 2016, Bernie Sanders was a credible candidate for the President of the United States despite the fact he admitted he was a socialist, a democratic socialist to be certain but still a socialist. If he would have attempted to run as a socialist in 2008 he would have been creamed.
Here in Canada, in 2015, our very own Liberal government ran on a political platform that included running deficits, while their two main opponents ran on promises of balanced budgets, and they won handily. That is significant. Governments routinely broke their promises of balanced budgets but they at least promised it. No government in recent memory has realized any success by promising to run deficits. The government also ran on introducing a carbon tax, a new tax. Again that has been unheard of for decades but they were still successful. As well, both of these promises have been kept and the most probable outcome of the next election is still a Liberal majority. Two policies that go against the prevailing economic orthodoxy and they are still realizing success.
In 2018, more and more candidates running in the mid-term elections in the United States are versions of Bernie Sanders. Despite this the consensus amongst the political classes in the US is they will be successful in at least retaking the House of Representatives, perhaps retaking the Senate and taking their fair share of governors' mansions in the States. We will have to wait and see if that really comes to pass.
There is a change in the economic consensus taking place. We are seeing the beginning of the end of the conservative consensus, which will be replaced by a progressive consensus in due time. It is early yet and the proponents of the conservative consensus may be able to mount a rear guard action effective enough to slow down the transition but that is all they are going to be able to do, slow it down. Their lack of effective policies to actually help ordinary people, to mitigate the impact of technology on the nature of work and to mitigate the impacts of climate change will lead to the conservative consensus being cast aside, probably within the next decade.
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