Explaining the Rise of Radicals Donald Trump and Bernie Sanders
first published on The Street | Feb 10, 2016

Surprised at the results of the New Hampshire primaries? Radicals Donald Trump and Bernie Sanders handily defeated all comers in the Republican and Democratic contests, respectively. Their wins, while shocking in the scope of American politics, are part of a larger and disturbing worldwide trend.

Few would have predicted coming out of Iowa and New Hampshire, that among the top candidates with delegates would be bombastic billionaire Donald Trump, tea-party Texas Senator Ted Cruz and Democratic socialist Vermont Senator Sanders. These radicals — on the right and left — are serious contenders to be the next U.S. president.

But, here’s the thing — said radical politics has been appearing all over the Western world like a brooding shadow for the last few years. There are individuals coming to high power, or very close to it, who even ten years ago we would not have expected to see in these lofty echelons. The new(ish) leader of the British Labour party today (Jeremy Corbyn) is perceived by many as an unreconstructed 1970s style radical socialist. Marine Le Pen, the far right wing French politician, is more popular than ever as the first round of recent French local elections demonstrated. She is expected at least to be one of the candidates in the traditional two-candidate final run-off for the French presidency. Alexis Tsipras came to power as a radical socialist leader in Greece as the country fell into economic turmoil.

What is exactly happening here?

It is not something that can be explained in purely political terms; it needs a broader politico-economic explanation — and it is in large part perhaps linked to a set of perhaps once-in-a-century shifts in our global economic tectonic plates. These are various changes that have come together as if a growing storm, creating a series of connected economic developments which are struggling to forge what can only be called a “post-industrial economic zeitgeist.” Compared to the industrial society of the mid-to-late 19th century and certainly the first half of the 20th century, we find ourselves today in a quite different economic environment. It has manifested itself around us (even quietly creeping upon us) over the last 30-plus years. It is indeed a form of post-industrial society, involving post-industrial production methods as well as post-industrial patterns of thought and cultural icons. And as most voters become increasingly baffled by these great forces of economic entropy, it is washing up more political radicals on our shores; that is, people offering simple solutions in an increasingly desperate and complex world.

What are these large economic and political economic changes? Here’s a quick summary:

1. The sources of future wealth-generation in OECD countries are radically changing — to a degree last seen probably only in the machine-electrical revolution (automobiles, electricity, etc.) that created the wealth of 1920s America. This is a much debated topic, but most innovation today will be manifest in high technologies and unique patents (pharmaceuticals and otherwise).

2. The outsourcing of labor to produce cheap goods to emerging economies has become a central feature of globalization over the last 20 years. This increasingly denuded the West of manufacturing activities. For example, the U.S. share of global manufacturing has gone from approximately 29% in 1970 to 18% in 2010[i]. It may well have been a contributing factor to the 2008 credit crisis because the number of jobs in manufacturing in the U.S. fell dramatically and this gap was filled by the financial services sector.

3. The increasingly limited need for significant human labor to produce our simpler goods (as robots replace labor as they did with agriculture). This itself has somewhat stalled the Chinese miracle and will likely do so until China can significantly increase its capabilities to produce much more high tech, complex goods.

4. The increasing growth of service economies as most people simply have no role in the food production or manufacturing process. Services in various forms now accounting for roughly 75% of the GDP of most OECD economies.

5. This has all led to a peculiar puzzle: What are the future drivers of growth in the Western world, if not manufacturing? Maybe it is, for example, high tech, although as the Solow Computer Paradox has indicated, even IT has yet to show material additions to GDP growth. As Robert Solow said, “You can see the computer age everywhere but in the productivity statistics.”[ii]

6. Modest Western growth in GDP and broader measures of wealth (with the exception for an elite few) since the credit crisis. There has, technically, been a recovery for some six years in U.S. GDP since the formal end of the Great Recession, but there has not been the big pop in GDP that so often follows a recession. GDP growth in the U.S. since 2009 has never been over 3% and many parts of Europe we saw multiple repeated recessionary periods. Nor has the recovery “felt” like a recovery — per Joseph Stiglitz’s “Great Malaise”[iii]. It is as if to reference Tolkien, “The days have gone down in the West behind the hills into shadow”[iv] — at least for now;

7. With this has come simultaneous increases in wealth inequality, increases in the Gini[v] coefficient, or at the very least a sense of alienation felt by large parts of society. This has been well documented (albeit with some controversy) by economists such as Thomas Picketty[vi]. Although his analysis, like others, is materially compromised by his own political agenda.

8. A sense (whether correct or not) of the relative decline of the U.S. as global hegemon, in large part driven by the economic trends above, and a resultant increased isolationism in U.S. foreign policy.

And so it is that from all this arises a new breed of political-economics. Emerging out of this complex brew we see a type of post-industrial existential crisis. Witness high levels of consumerism, feelings of alienation and low levels of cultural interest — an increasingly dystopian type environment. In some cases, it encourages even very radical destructive religious ideology such as we see among those from the West, who, for example, get entranced by twisted forms of Islamic fundamentalism. It results often, in various forms, in an ongoing rise in popularity of precisely the more radical genre of politico-economic identity and leadership that is rising in the U.S. and the West.

But the real irony here is that this radicalism has emerged precisely as old “left” vs. “right” macro-economic perspectives have become increasingly stale, and largely unhelpful in today’s changed world. Critically (and as a prime, but not sole, example) the terms “left” and “right” merely came from designations as to who sat where in the French Assembly after the French revolution. Industrial “capitalism” and “socialism” are also very much concepts of the industrial revolution itself, and yet — as indicated — we just do not live any more in an industrial society. Indeed, experiments in left-wing economics have been tried in many formats and in many ways over the last 150 years, as have similar experiments in right-wing economics. Notwithstanding that both have been found wanting, we seem to keep on arriving at and trying the same type of recipes.

Are the current howlings of these radical leaders are like the final dying swan songs of the now antique ideas of “industrial capitalism” and “industrial socialism”? Radicals have been giving us endless banal rhetoric, suckering everyone into the need for ever more entrenched, yet antiquated, economic and political ideologies. The same mantras repeated by both sides over and over. And yet, how relevant is any of it, any of it at all, to us today?

I’m not sure I have a simple answer to politico-economic radicalism, nor am I suggesting the answers lie in the middle political ground either. But I am suggesting new politico-economic thought, original insight, relevant to today’s economic world and problems is very urgently needed.

NOTES:

[i] See The Data Mine, (part of CQ Roll Call, April 23, 2012)

[ii] Robert Solow, “We’d better watch out,” New York Times Book Review, July 12, 1987, page 36

[iii] See, for example, Joseph Stiglitz in his article, “The Great Malaise Drags On” in Project Syndicate, Jan 4, 2014

[iv] JRR Tolkein, “The Lord of the Rings, The Two Towers, Book Three, Chapter VI: “The King of the Golden Hall” 1954/1955

[v] The Gini coefficient is the most standard measure of statistical dispersion intended to represent the income distribution of a nation’s residents, and is the most commonly used measure of inequality. Broadly, the higher the coefficient the greater inequality in a society. Hence a Gini coefficient of zero expresses perfect equality (where everyone has the same amount of wealth). A Gini coefficient of one expresses maximal inequality among values (for example, where only one person has all the wealth).

[vii] “Capital in the Twenty First Century,” 2013 by Thomas Picketty; or see “A theory of Optimal Inheritance Taxation,” Econometrica, Vol 81, No 5 (Sept 2013), 1851 – 1888, Thomas Picketty and Emmanuel Saez