The Political Physicist

For some time I’ve been curious about what’s been happening with of the Left-supported social democratic government in Portugal. It struck me as the best argument against my suspicion that a classical social democratic government are not possible within capitalism today. This was brought to the fore the other day when a Portuguese member of the Labour Party in Oxford posted a link on the local Momentum Facebook group to a pamphlet called The Portuguese Government Solution: The “Fourth Way” to Social-Democratic Politics?. This was produced by a European social democratic think-tank (FEPS—Foundation for European Progressive Studies) looking at the model provided by the Socialist Party government in Portugal and suggesting this shows “that there is a way for these parties to reaffirm a left-wing agenda within the EU”.

The document explains how in 2015 the right wing government which had been pursuing fierce austerity lost its overall majority in parliament (while still remaining the largest party). The Socialist Party (PS) chose not to support them or to enter a grand coalition, instead opting to form a minority government with the support of the radical Bloco de Esquerda (Left Bloc) and the orthodox Communist Party of Portugal (as well as the latter’s close allies, the Greens). While there were large areas of disagreement between these parties, they were able to unite around policies which reversed course on austerity while respecting EU rules. Representatives of PS say that this was largely consistent with what they had run on in the election, except with the implementation of some policies accelerated. They have since celebrated the success of this government, claiming it has functioned far more smoothly than anyone expected. The economy has started growing again while the deficit has fallen to within EU-sanctioned levels. The government is popular, with support for PS growing significantly and support for the juniour partners staying relatively stable.

I had read a fair bit about the situation in Portugal when this government was formed in late 2015, but had not heard much since. Nonetheless, much of what I was now reading ran counter to the more critical line I remembered coming from members of Bloco. As such, I read the report with a great deal of scepticism. One thing which I noticed, in particular, was how modest most of the measures enacted by the government were. By and large, they were simply reversing some of the worst policies of the previous government, doing little to actually implement new progressive measjres. Personally, I would question whether that really amounts to a repudiation of the Third Way and a return to social democracy’s roots, as the PS claims.

I was very interested to hear Bloco’s side of the story. I started by rereading some of the material produced in 2015. These contradcited on a number of assertions made by the FEPS report, starting with the idea that the PS had campaigned on ending austerity. Bloco members claimed that PS had run a contradictory campaign and ran on policies similar to those of their right wing opponents. As such, it was initially expected that they would support a minority right wing government. In fact, it seems to be a running theme that Bloco was overly pessimistic about the prospects for a left government. They didn’t expect PS to be interested in trying to build one, then they didn’t expect PS to agree to their demands, and then they assumed that fulfilling even these modest demands would quickly require defying EU budgetary rules and collapse the government. In all of this they have been proven wrong.

What I really wanted to learn, though, was how the situation had progressed since then. Unfortunately, much of the international left-wing websites are very good about reporting on developments when something exciting like an election happen, while very bad at letting us know what actually comes of those events. After a bit of digging I found an interview with Bloco’s leader, Catarina Martins, from sometime last year. While published in German, Google Translate proved sufficiently advanced for me to get a good grasp of what was said. It is clear that Martins views the government’s achievements as extremely limited. She points out that most of what it has done has simply been to stop the implementation of new austerity and reverse some of what had already been applied, as I noted earlier. She does not consider Portugal to have a left government, as action has been woefully inadequate to address the deep problems facing the country and been unable to undo the effects of austerity.

This was an interesting corrective, but didn’t provide the deep level of analysis I was looking for to contrast with the The Portuguese Government Solution. After some rooting around on the Rosa Luxemburg Stiftung website, I eventually found an English-language report written by Bloco and Die Linke activist Catarina Príncipe (whom I hold in high regard as a leftist commentator). This report, titled Anti-Austerity and the Politics of Toleration in Portugal: A way for the Radical Left to develop a transformative project? explains the government experience from Bloco’s point of view; indeed, although I am not certain of this, possibly from the perspective of someone on the left of Bloco.

This report provides background on the pre-2015 political situation in Portugal which complements that of FEPS. Once again, Príncipe emphasised how Bloco had not expected a deal to be reached to support a PS government. As such, they were on the back foot during negotiations. Claims by the PS that they had always supported many of policies demanded by the left parties are cast into doubt. Príncipe suggests that many of these they were pushed by Bloco and the Communists against great resistance from PS. While the government has introduced some progressive measures, it was pointed out that Bloco has not been completely successful in preventing new privatisation, particularly of banks which were bailed out by the state at massive cost to the public purse. Though not stated outright, other reading I have done suggests that EU pressure contributed to those privatisations. It is noted that the EU demanded new cuts in some areas to offset increased social spending, while NATO insisted on an increase in the military budget.

Príncipe also present a considerably less optimistic view of the state of the economy in Portugal. She points out that while the revival is partially due to citizens now having more spending power, it is also heavily dependent on external factors such as an increase in tourism and the low price of oil. Crucially, it is the result of unused economic capacity being utilised once again and not of new investment. In an interview (starts at 24:56) she says that public investment is extremely low, with the funds instead being used for increases in current expenditure. Likewise, there has been little investment in the private sector. This contradicts claims made in the FEPS report, although some of their investment figures are in terms of year-on-year percent increases and could be hiding a very low starting point. Príncipe feels that the lack of investment and precarious state of the financial sector leaves Portugal’s economy vulnerable. Should there be a new downturn or crisis, she predicts that the PS and the EU will quickly insist on the return to austerity in order to balance budgets. Of course, she had also predicted that they would not agree even to their current policy.

The report ends with an assessment of Bloco’s strategy, as well as some notes on the relation of the Left to the EU. While acknowledging that Bloco had little choice but to support the PS government, Príncipe is clearly uncomfortable with parts of the direction her party has taken. At times this comes across quite clearly in the above-mentioned interview. She believes the party must be reoriented away from an overly parliamentary focus and seek to build the capacity to fully challenge austerity and even capitalism.

There are some areas of clear contradiction between the two accounts, particularly around the PS’s electoral campaign and levels of investment in the Portuguese economy. Not being able to read Portuguese, I’m unable to properly assess who is correct in these areas. Overall, however, I find Príncipe’s account of the situation to be the more convincing one. Of course, that may just be because it agrees more with my preconceived notions.

So, what are the consequences for a Labour government trying to implement something like the 2017 election manifesto in the UK? That manifesto was, after-all, essentially just a return to mild social democracy (although John McDonnell’s Alternative Models of Ownership report starts to point in some more radical directions). In one regard, at least, Labour will have it easier: even in the EU, the UK retains more control of its monetary and fiscal policy than Portugal by virtue of not being in the Euro. On the other hand, there are a number of extra difficulties. For one, the PS has implemented this program with Bloco and the Communists in parliament holding their feet to the fire. Labour would have no such anti-capitalist left force keeping them accountable. On the contrary, they would have a rump of right-wing MPs who may well defy party discipline and vote against even mildly progressive measures.

Labour’s program would also go considerably further than what has been done in Portugal, to include much greater increases in social spending and some nationalisation. These measures are more likely to antagonise capital, with the CBI already denouncing the latter and claiming they would deter investment. Perhaps this is just an empty threat (there was plenty of such rhetoric during the formation of the PS government), but perhaps not. British capital is very powerful, after all, and has often defeated measures which its European counterparts accommodated themselves to. What’s more, while the PS remains very much an establishment party whose leaders are trusted by Portuguese and European capital, the same can not be said of the current Labour leadership. As such, capital may be particularly unwilling to tolerate progressive measures coming from Corbyn and McDonnell.

But most of all, we must remember how vulnerable the Portuguese government is. If Príncipe is to be believed, the economic recovery has been contingent on factors outside of their control. Should the economy sour, the entire project of “turning the page on austerity” would be at risk. Labour might find there is suddenly no room to implement their mild social democratic program if there is a recession in the UK. Given the sickly state of the British economy and the uncertainty surrounding Brexit, a recession could certainly happen. There is no indication that the sort of soft end to austerity practised in Portugal would be able to counteract it. On the contrary, I’m inclined to believe that only a more radical left project which started to look at asserting public control over investment decisions would be able to prevent the return of austerity.

So, while the Portuguese experience may suggest a bit more room for social democracy than I expected, I still don’t think there is all that much.