The online media is full of stories today about the entirely inconclusive results of the Italian general election. The populist parties did terrifically well with the 5 Star Movement out in front, followed not too far behind by the League and its right-wing siblings. I don’t intend to add too much to the vapid coverage of this general election other than to observe that this all feels like a GroundHog Day moment: “Italian elections produce an inconclusive result”. If I were a hyper internationalist who believed in the unbending forces of globalisation I would also add that this simply confirms what we also already know – that national politics are increasingly irrelevant before the forces of globalisation. No amount of populist anger can really drag countries away from their national trajectory – despite what Steve Bannon and his ilk believe. I don’t actually believe that last statement though, largely because Brexit and Trump do remind us that national politics have a nasty way of interfering in the inexorable march of globalisation and technological triumphalism (even if the politicians left to deal with the mess have an almost impossible task). As for specifics of Italy, my guess is that nothing has happened – yet – which will fundamentally change any investor’s view of either Italian stocks/bonds or of the prospects for the European Union. The only interesting idea is that whoever gets into power will probably end up spending more money and thus increase the massive stock of government debt.
What I find much more interesting is how Italy has completely reinvented its party-based political structure. Long gone are the days where the old Christian Democrats along with the Socialists and Communists dominated the system. The CD vanished first, followed swiftly by the Socialists (who were anything but socialist). The Left hung around for longer in the shape of the PD but even that is now being eclipsed by a new generation of parties which mix Left and Right wing policies in the same manifesto. An early echo of this fluid transformation of party structures was glimpsed in France where Macron smashed the old duopoly (helped by the FN and Melenchon).
This new political landscape reminds us that in many nations parties and politics is as fluid as a marketplace, with new brands constantly evolving – and then vanishing. But not all countries are following this superfluid marketisation of politics. The Anglo Saxon countries, in particular, are resisting this trend, as well as the Germans – in the latter the old right (the CSU/CDU) and left (the SPD) are still in place although they are under assault from both the Right (the AfD) and the Left (Die Linke and the Greens). But in the UK and the US, the old duopoly has reinforced its grip on the system, in the shape of the Conservatives and Labour in the UK, and the Democrats and Republicans in the US. I’ve already observed in this blog that if politics were purely seen as instrumental market forces, the current system would be beyond repair. It fails to serve huge groups of voters not least on the centre and the nationalist right in the Uk and the Left in the US. But scratch a bit further under the surface and we see another market force at work – the hostile M and A deal where a brand is taken over and then reinvented. Trump has effectively morphed the Republicans into a new nationalist party of the hard Right while Corbyn has taken over and then restructured the old right-wing social democratic Labour Party of Blair into a genuinely Socialist party (of strong Marxist inclinations). But here my weary familiarity with markets kicks back in. history teaches us that these rebrands proceeded by M and A rarely ever work. Eventually the reboot comes unstuck and the end consumers spot a fraud. More importantly the centrifugal forces of the marketplace – aided by technology and globalisation – eventually tear apart the new brands.
To repeat – at some stage the old party structure of the UK will crumble under the pressure of new market forces. It simply isn’t working and the only reason why so many people vote for the two main parties is that we have a political system which forces people to vote for the party they least fear. At some stage the cynicism about these toxic brands becomes overpowering and everything crumbles away. The clock is ticking.