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No more recessionomics

Ben Folley on lessons for Labour, and for Europe, from other parts of the world

Across Europe, governments of all political hues imposing austerity on voters struggling through the economic crisis are losing popularity and being turfed out of office.

Since 2009 we have seen it in the UK, Ireland, Spain, Greece, France and the next could be Germany. The highest profile casualties this year have been the socialist George Papandreou in Greece and Conservative Nicolas Sarkozy in France – demonstrating how this has afflicted both those on the left and the right.

It is worth reflecting on the left governments who have lost power. Labour lost office here in the UK in May 2010, the Spanish Socialist government in November 2011 and Greece's governing PASOK, who polled 44% to win the 2009 election, crashed to third place in the May 2012 election and dropped back further in the repeat election a month later, taking only 13%, after imposing repeated rounds of austerity.

The austerity agenda has meant the same thing in every country across Europe. Spending cuts in government departments are transferred into fewer available jobs, public sector pay cuts, reduced social security payments, infrastructure spending drying up.

But why is it that parties of the left are attacking the institutions they have successfully built up over the past sixty years? What is clear from the past few years is that across Europe, the neo-liberal right has been successful in framing the terms of the debate and directing the economic course of governments regardless of their political persuasion.

The right has turned the economic crisis into one of public spending and determined the default response of any government is to impose austerity. It is no surprise therefore that social democrat governments, can make no headway in attempting to prettify spending cuts that harm their core electoral base of those on lower incomes and, increasingly, the unemployed. The social democratic left has so far failed to mount an effective challenge or map out an alternative economic agenda.

It is therefore no surprise either that social democrats propelled into office as a response to austerity, rapidly lose favour if they fail to offer a serious alternative. In Ireland, the Labour Party have signed up to an austerity coalition as the junior partners to Fine Gael, while Francois Hollande who rode to power on the back of a strong anti-austerity campaign in May this year is already plummeting in the polls as he rows back from his manifesto commitments, particularly his pledge to rip up the EU Fiscal Treaty. Both will have to change direction if they have any hope of reversing their decline in support.

The clearest challenge has been from political parties to the left of social democracy, Syriza in Greece and Parti de Gauche in France – and now the trade unions are increasing their co-ordination, following the strikes and protests on the 14th November Europe-wide day of action.

As with Syriza, a new generation of left leaders are emerging in Latin America which point the direction Europe's left should take. Across Latin America, governments are investing public funds in developing better public services for their citizens. Housing and health in Venezuela, in the environment in Bolivia. Ecuador recently announced it would increase taxes on bank profits to fund welfare payments to the poor.

And with that investment has come renewed support. Since the start of the economic crisis, left leaders in Latin America have been re-elected. Rafeal Correa was re-elected in April 2009 with a massive increase in his vote, Evo Morales was re-elected in April 2009, Dilma Rousseff won for Brazil's Workers Party in 2010, Christina Kirchner won in Argentina in October 2011, and Hugo Chavez was re-elected in 2012.

In Britain, without another significant left political force, Labour is riding high in the polls just two years after losing the election, such is the unpopularity of the coalition – particularly the Lib Dems who had campaigned for an alternative to austerity but who have backed George Osborne's so-called medicine as the Tories coalition partner.

But Labour's support is so far based on increasing disillusionment with the government, not any enthusiasm for Labour's muddled message of ‘austerity-lite'. An impressive six parliamentary by-election wins on the trot, with a number of Labour candidates scoring over 60%, has obscured the derisory turnout as voters stay at home.

There are some welcome signs of fight with Ed Miliband suggesting he will oppose the latest round of benefit cuts announced by the Chancellor in the Autumn Statement. It is vital that this represents not just a one-off challenge, but a rethinking of austerity and Labour's economic approach that will make a bolder challenge.

Labour cannot win with middle England alone and it cannot take its working class electoral base for granted – it's already done that for far too long. Labour needs to offer a clear vision with the jobs and pay and conditions that match the scale of the crisis, based on government planning long-term investment.

This must include boosting pay and pensions, tackling tax avoidance, directing nationalised banks to cut bonuses and invest in infrastructure like schools, hospitals and new homes. Only then can it inspire and mobilise the army of voters struggling under austerity.