Simon Toubeau is assistant professor in the school of politics and international relations at the University of Nottingham, where he conducts research and teaching in comparative politics, specialising in the field of territorial politics and federalism
The European left seems under siege. It governs again in Sweden as well as in Italy. Elsewhere, it is in opposition. All the large and historically important social democratic parties – the British Labour party, the Spanish PSOE, the French Parti Socialiste, the German SPD – are out of office, and, to a greater or lesser degree, electorally weakened, internally divided and in disarray.
And yet, some of these parties have seized upon one of the most acute political challenge of our time – the secessionist pressures generated by the resurgence of regional nationalism – to reiterate some long-held political views and encourage progressive political reform. The PSOE has played an integral role supporting the Spanish central government’s hard-line stance against Catalan independentism, refusing to recognise the legitimacy of the independence referendum. At the same time however it has sought to promote political dialogue between conflicting parties and to usher in a constitutional reform that would aim to meet some of Catalan government’s demands for proper recognition and for a better fiscal deal. In this endeavour, it echoes the position of Podemos, the new left-wing populist party.
Meanwhile, in the aftermath of the Brexit vote, Jeremy Corbyn announced that the Labour party was in favour of returning all devolved competences that the EU currently exercises back to the devolved governments. He also backed a federal reform that would make the House of Lords into a senate with regional representatives, as part of a larger constitutional convention that looked at how Britain worked. The party remains lukewarm however towards granting the Scottish government further fiscal autonomy.
The PSOE and the Labour party have thus adopted a dual-edged stance that enables them to reconcile conflicting imperatives: recognising national pluralism and encouraging gradual institutional reforms that decentralise authority, but opposing anything that threatens the unity of the state or the solidarity between its constituent parts.
Dual-edged stances towards federalism
This duality is at the core of left-wing thinking on the question of federalism, or the question of how political authority should be distributed to different tiers of government. Historically, the left has always found itself in a quandary on this issue. The first socialist thinkers, such as Pierre Joseph Proudhon, were great believers in the power of local cooperation: professional guilds and workers’ unions were to be organised first at the shop-floor level and then, in a bottom-up fashion, by associations between firms managed by workers. They rejected all forms of centralised authority and state control over the means of production, preferring instead a system of mutualised control of industries.
This philosophy stood in stark contrast to the theory of state socialism, according to which all means of production were to be socialised via state control, first propounded by Karl Marx but later embraced by social democrats such as Harold Laski who had accepted the rules of parliamentary democracy. The Great Depression gave way to the era of FDR’s ‘New Deal’ and other similar initiatives which saw a rapid and strong centralisation of authority and fiscal control to central governments. Social justice was henceforth to be achieved by meaningful redistribution between social classes, which could only be undertaken using the tax and spend levers available to states. In the immediate post-war period, this doctrine had become a matter of orthodoxy for most social democratic parties.
However, in response to the rise of regional nationalist sentiment across western democracies in the 1970s, social democratic parties became key architects of the construction of regional governments in Europe during the 1980s and 90s. Most emblematically, the Blair government introduced devolution to Scotland, Wales and Northern Ireland. This was mirrored by left-wing forces elsewhere: the PSOE was an instrumental actor in the constitutional negotiations governing Spain’s democratic transition that gave birth to the State of Autonomies’; the Belgian Parti Socialiste fought for the creation of a Brussels and Walloon region; the French Parti Socialiste also instituted regions as a new tier of government. The influence of left-wing thinking has reached countries outside Europe: for instance, the Congress Party of India – whose leader Nehru was a notable student of Laski’s – also fostered the accommodation of particularistic nationalist demands within a centralised union, in the early decades following independence. Federalism thus lies firmly at the heart of the European left.
The need for transparency and clarity
However, the left is currently faced with two demands – for fiscal autonomy and for sovereignty – that seriously challenge its ability to manage the demands of national minorities. Both defy the fabric of the political and social unions in their countries and both imply unavoidable trade-offs. There is no substantial ‘solution’ to these challenges. What the European left might pursue however is a position on the principles that should be maintained by governments when managing these demands.
Striving for transparency in the balance between autonomy and solidarity Fiscal autonomy – regional control over the base and rate of different groups of taxes such as income, corporation and VAT – constitutes a challenge because it weakens the ability of the central government to redistribute wealth between regions. If more wealth remains in the territories where it is generated, central governments have fewer financial resources flowing into their coffers and regional governments will rely more on their own tax base to fund their public services. This is good news for wealthy regions like Flanders and Lombardy, but bad news for poorer ones like Wallonia and Calabria. It is especially bad news for ideological proponents of a social union in which social and economic risks are pooled across a territory.
So it is unsurprising that the British Labour party proposed far weaker taxation powers than were proposed by the Smith Commission and eventually granted in the Scotland Act 2016, or that the PSOE was reluctant to transfer to Catalonia a greater share of the income tax receipts it produces. The Belgian Parti Socialiste has steadfastly opposed more taxation autonomy for Flanders or regional control over social security payments for similar reasons. However, electoral considerations are as important a motivation as ideological values: the PSOE has dominated politics in Andalusia in the same way that the Parti Socialiste has dominated Wallonia. These parties are standing up for their constituents’ territorial interests as much as anything else. The strength of this motivation can be witnessed by the fact that in Italy, it is the Alleanza Nazionale, the mainstream party on the right, dominant in the impoverished southern regions, that has opposed fiscal autonomy.
So what are the options for the left? It can continue to oppose fiscal autonomy. But then it risks fomenting resentment in wealthy regions and merely postponing reform. It can also expect to face accusations of discouraging self-reliance among the backward economies and failing to address the root causes of their relative languor. Or, it can concede to demands for full fiscal autonomy, known as devo-max in the UK, and allow regions to collect all relevant taxes and pass a specific share up to the Treasury for central public services, a set-up that would resemble the Basque concierto economico. But, in this scenario, parties on the left risk the electoral suicide that would come with condemning their core base to misery.
In between these two poles are an important range of options upon which most regional and federal countries’ territorial financing model rests, including those of Belgium, France, Italy, Spain and the UK. These options will combine different shares of ‘own’ taxes, shared taxes, central government block or earmarked grants, central discretionary transfers and horizontal equalisation payments into the revenues of regional governments. These options are attractive because they maintain some balance between autonomy for regions and solidarity between them. But they also present their own problems, namely, the weak accountability and fiscal sustainability of regional spending. A widely held view is that poorer regions will spend more than they need and certainly more than they could raise themselves, because they do not face any electoral punishment for this irresponsibility.
One way for the left to maintain its commitment to these intermediary options but to tackle the problems they involve is to strive for transparency, something that has been sorely lacking in all the countries mentioned here so far. For instance, in Spain, the central government often uses discretionary supplementary funding to reward regional co-partisans, rather than just ensure equality of service provision. Similarly, in Belgium, some tax autonomy has been used by the Flemish region, but how much of the centralised social security payments benefits which region remains difficult to detect exactly. In the UK, the block grant transferred from HM Treasury to the Scottish government uses an antiquated formula linked to population and changes in central relative spending. This is diminishing in relative size, due to the transfer of power over income tax to Scotland, but how this reduction is calculated remains opaque.
This absence of transparency not only strikes at the heart of democratic accountability, it also lies at the basis of grievances by minority nationalities in Catalonia, Flanders and Scotland who seek to obtain clearer and more equitable territorial financing systems that reflect the fiscal effort of their regions. The left, as a progressive and democratic political force, should aim to address these demands by striving to create a transparent system; one in which regions’ fiscal effort forms the basis of the revenues they manage to deliver public services, which is then supplemented by horizontal solidarity payments, the calculation and size of which are made publicly available. Autonomy should be made compatible with solidarity, and the relationship between them made transparent.
Ensuring ‘clarity of expression’ in sovereignty claims
An equally difficult challenge for the European left has recently presented itself in a highly emotional and dramatic fashion: the sovereignty claims or the demand for self-determination advanced by stateless nations, such as the referendums on independence, in Scotland in 2014, as well as the more controversial one in Catalonia in October this year.
This challenge is a very significant one indeed since the result can potentially lead to the territorial dismemberment of the state and to the redrawing of geo-political maps. It can also undermine prevailing conceptions of nationhood espoused by a majority of the country’s population whether they are Canadians, Brits or Spaniards. This challenge is no less significant for social democratic parties than it is for parties of the right, which have traditionally heralded the glory of their nation. After all, the left’s main policy successes, especially the construction of welfare states, were achieved within the borders of existing nation states. Moreover, despite an ideological outlook shaped by the universality of class struggle, there exists a vigorous undercurrent of national patriotism among segments of the working class, as colourfully recounted in Orwell’s essay ‘The Lion and the Unicorn’.
So what are the options for the left? The first is to remain true to its historical commitment to the recognition of national pluralism, meaning a recognition of the presence of distinct nations within the territorial boundaries of the state and of differential feelings of identification with several nations simultaneously. Most Catalans and Scots also feel Spanish and British as well. They often wish for differential treatment, including asymmetric territorial autonomy, but more rarely independence.
This insight should allow parties on the left to accept granting sovereignty to stateless nations as a matter of principle. As social groupings with a distinct culture and a common historical trajectory, these nations have a fundamental democratic right to freely deliberate and choose where they belong. If this principle is accepted, then the referendum needs to be sharpened as a tool for legitimising collective choices. Referendums are historically quite rare, but are becoming increasingly popular devices for making decisions, especially on matters of the constitution. Witness the rise in number of referendums in the UK: devolution, alternative vote, Scottish independence, Brexit. But they are also rather blunt instruments: how can we be sure what people really want? What, in the words of the Canadian supreme court in its ruling on the question of Quebec’s independence, is a ‘clear expression’ of will?
How well we can answer this question will depend on the procedural details of the referendum: the number of options, the wording of the questions, the requisite level of participation and the requisite majority for sanctioning change. Except for the few rarer federations with a ‘secessionist’ clause, such as Ethiopia or St Kitts and Nevis, in which required majorities for separation are stipulated ex ante in the constitution, this is not something that is usually spelled out. And during referendums themselves, these matters are often left undefined so that protagonists may use any ambiguity in the outcome to their advantage. But, if parties on the left commit themselves to stateless nation’s fundamental democratic right to self-determination, then they must also have a defined understanding of the procedures which should regulate this process.
Questions should remain simple and easy to understand by the whole voting population; the question posed to Scottish voters: “Should Scotland become an independent country?” was exemplary in that respect. This should elicit a simple yes or no answer. But expecting a binary answer need not necessarily imply offering just two unique constitutional options: independence or the status quo. Options should reflect the full gamut of people’s preferences, including the middle option of further decentralisation. To avoid contradictory answers, voters could be forced to cast yes only once, in favour of one option.
The number of votes necessary to win the day is a matter of controversy. As a fundamental and irreversible constitutional decision that affects forevermore the future of the country, it is proper that the threshold for change should be higher than for normal legislation. The UK is a bit of an outlier in this respect. Neither the Scottish nor the Brexit referendum stipulated in advance what kind of majority would be required in support of independence or leave; it was presumed that a simple majority woulddo. That was enough to determine the outcome: there was a winning margin of 10 per cent in the case of the Scottish referendum and 4 per cent in the case of the Brexit referendum, on the basis of a turnout of 84 per cent and 72 per cent respectively, both of which were significantly higher than the turnout witnessed in general elections. The results were thus uncontestable.
But the withdrawal from the EU is still being driven by only 36 per cent of the voting population, which many remainers view as insufficient. If we look elsewhere, we find that changes which affect the constitution or constituent regions, require much higher thresholds. In Belgium for example, ‘special laws’ that affect the powers of the constituent entities require the support of two-thirds of the national parliament, representing at least one-half of each of the two linguistic groups.
There is no magic formula that will correspond to the different conceptions and practices of democracy across countries. But if left-wing parties are concerned about nations’ democratic right to self-determination, it is critical that the decision is fully representative of the people concerned. A simple majority of the entire votingelectorate would constitute a clear expression of will and a legitimate outcome. A lower turnout would thus force those in favour of change to mobilise more support behind their cause.
It is entirely consistent for left-wing parties to recognise national pluralism and accommodate sovereignty claims while putting the burden of proof on the instigators of fundamental change. The way to do so is to stipulate from the start the proper procedure to follow and the kind of results that should obtain for a ‘clear expression of will’ to prevail. As the European left seeks to refurbish its credentials in its preparation for office, it should seek to address one of the key political challenges of our time by reasserting its commitment to basic principles: to transparency and to clarity.