It is tempting to consider last week's U.K. election — in which the two major parties combined to take more seats in Parliament — another indication that the anti-establishment phenomenon that propelled Brexit and President Donald Trump's victory is waning. That would be a mistake. A closer look suggests that, far from going away, the phenomenon is evolving, with potential consequences for key upcoming European elections.
Up until the Dutch elections in March, the political narrative was a simple one. Years of low and insufficiently inclusive growth delivered populations that had lost confidence in "expert opinion” and the "establishment," both public and private. They were angry, inclined to become single-issue voters, and open to alternatives, even if these lacked details and sufficient upfront implementation plans.
In 2016, and in successive blows to consensus predictions, Bernie Sanders challenged Hilary Clinton right up to the end of the Democratic Party primaries in the U.S., Brits voted for Brexit in June and, having prevailed over 16 adversaries in the Republican primaries, Donald Trump was elected president in November.
It was an anti-establishment movement like no other in the western world. It upended long-established electoral behaviors and made a mockery of most political analysts. It suggested that far-right candidates would prevail in Dutch and French elections in the first half of 2017, that Italian politics may also be upended, and that even Angela Merkel could face a once-unlikely challenge to her continued dominance of the German political landscape when parliamentary elections are held in September.
But the Dutch and French elections did not adhere to this narrative, nor did regional elections in Germany that traditionally have served as precursors to the general election there. Meanwhile, last week's U.K. elections saw its two major parties, when aggregated, add to their seats at the expense of smaller parties and, in particular, the Scottish National Party, which had advocated a second referendum on Scotland’s independence.
With that, it is becoming more fashionable to postulate the end of the anti-establishment movement. Yet that would be both premature and misleading.
Yes, the extreme right did not win the French presidential election, but the person who did, Emmanuel Macron, was a previous unknown, who ran under his own newly established “movement” and humiliated the long-standing mainstream parties — which, for the first time, failed to put a candidate into the second round of the presidential election.
Yes, the mainstream parties did better in the U.K., but this came solely on the back of an unexpectedly strong performance of a Labour Party that, visibly and purposely, opted for more extreme left-wing policies under Jeremy Corbyn, a leader whom more political analysts seem to have ridiculed than took seriously — an outcome that led the Economist, a mainstay of the British establishment, to argue that Corbyn "has revolutionized the British left."
Rather than dying, the anti-establishment movement is undergoing an endogenous evolution as some of the mainstream parties scramble to adapt. And, judging from the U.K. elections, those who do adapt can hope for an increase in support.
All of which serves to keep the big political question very much in play: Will the anti-establishment phenomenon that is still playing out in Europe and in the U.S. serve as an orderly disruptor that breaks the deadlocks that have paralyzed economic governance, dimmed long-term growth prospects, and worsened the inequality trifecta (income, wealth and opportunity)?
Up to now, the evidence on the ground has not been comforting. Despite talk to the contrary, anti-establishment movements have yet to decisively break the political malaise that has held back both actual and potential economic prosperity. And voters remain disillusioned, divided and disappointed with their ruling elites — suggesting that yet more political surprises may await down the road, including in the next Italian elections.
This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.
Mohamed A. El-Erian is a Bloomberg View columnist. He is the chief economic adviser at Allianz SE, the parent company of Pimco, where he served as CEO and co-CIO. He was chairman of the president's Global Development Council, CEO and president of Harvard Management Company, managing director at Salomon Smith Barney and deputy director of the IMF. His books include "The Only Game in Town" and "When Markets Collide."