Yascha Mounk and Martin Wolf discuss how democracy grew out of capitalism and why both our political and our economic systems are now imperiled.
Very interesting! Thanks!
It does seem that, at least at the moment, this is more of a political question than an economic one. The imposition of Reaganomics back in the ‘80’s, can be characterized as political policy masquerading as economic imperatives. The better part of a century’s worth of political policies designed to “spread the wealth” -- via not just progressive taxation but also through support of organized labor, expansion of the safety net in health care and income support, state subsidization of public and higher education, etc. -- were all effectively reversed. The broad middle/working class was effectively eviscerated over the following 40 years, capped by the 2008 financial meltdown that virtually eliminated what little wealth this broad middle of our population still possessed -- in the form of equity in their homes. The result has been an explosion of a fear- and resentment-induced populist revolt that Trump has so deftly mainstreamed and mobilized.
Capitalism is amazingly productive and durable. Our means of production continue to evolve and to create greater and greater wealth. Of course, there are all sorts of technical economic issues and corrections that must be addressed to keep it from imploding from intrinsic tendencies. But the real challenge is the political one.
Capitalism, as an economic system, is amoral. Intrinsically, it will reward the nefarious or the enlightened owner of the “means of production.” What we call our Republican form of democracy is essentially our society’s unique approach to ensuring that our economy is informed and sometimes “steered” by our liberal values. We know that capitalism can work pretty darn well when infused instead with illiberal values.
To me, it’s the political fight over the values, and the mechanisms of their deployment, that we use to keep capitalist economies from becoming overly exploitative and/or from being captured by the brutally nefarious (autocrats and worse).
I think Wolf has identified many essential liberal values and mechanisms that could be adopted and already in use by especially Northern European countries.
But the more immediate question is: how do we here in the US, in the pro-democracy camp, in the midst of our immediate political crisis, compete, politically with the allure of the seductive simplicity of the autocratic diktat-based solutions to mass popular disillusionment?
It’s not just a matter of convincing masses of people to renew their faith in the complex, often plodding, mechanisms of democracy. It’s a matter of confronting and countering what has become a burgeoning, increasingly coordinated insurrectionary movement that is led by a network of like-minded democracy-averse leaders and mega-wealthy funders who have captured one of our two major parties.
I think Biden has understood the need to address the evisceration of the broad middle and working class and, to the extent that the more conservative members of the Party have allowed, has initiated policies to bring back good jobs and bolster safety net programs. These are good economic policy responses. But I believe what is missing is a strategy to address the politics of this insurrectionary moment, and in particular, a strategy to counter the political and financial leadership that is exploiting and sustaining this anti-democratic movement.
For the future of our “experiment in democracy,” I just hope, once Biden gets into campaign mode, that he will “center” the political challenge: That he will name and call-out the anti-democratic agenda of the leadership that has come together to stoke and turn mass discontent into an insurrectionary movement, rather than into an opportunity to redouble the application of American democratic values to the deprivations visited upon our middle/working class over the past decades.
It is time for our leaders to gather-up and assert, against the increasingly dangerous domestic forces of illiberalism, the awesome power of a people determined to breathe free..
It’s great that Mr. Wolf takes seriously the economic dimension of the rise of the far right. I worry, however, that he still has too much faith in economic globalization. He described the decline of the industrial working class as “inevitable.” If something involves decisions by human beings (whether to liberalize trade, whether to accept new technologies in workplaces, etc) it is not inevitable.
It would make perfect sense, for example, for the US to have huge tariffs on all Chinese imports (preferably while liberalizing trade with most other countries). The higher prices would be worth the cost to be less dependent on a rival superpower whose interests conflict with America’s, and to employ more Americans in the dignified work of manufacturing, rather than less dignified service jobs (or falling into addiction and depression).
I also think Mr. Wolf underestimates the value of government spending on infrastructure and housing. Infrastructure crumbles and needs repair and replacing (made more difficult in the US by absurdly long environmental reviews). Prosperous metro areas tightly restrict where housing can be built. Loosen these rules, invest in building, and you create more useful, dignified work.
Social services and education are important, but so is dignity.
Here are three economic factors that are impacting our ability to function as a constitutional democratic republic. First: A difference between yesterday and today is that in the 19th and 20th centuries workers no longer needed with the mechanization of agriculture found productive work in industry. Today workers made redundant by industrial automation have limited opportunity no matter how well (or poorly) they are educated. Second: Government can redistribute wealth, and government can promote or not promote wealth creation, but it cannot create wealth. How much of our society's ability to create wealth is being stunted by the growth of government? Third: If you do not develop, produce or sell goods and services in the private and not-for-profit sectors, you are overhead even if you are necessary. However, we seem as a society to reward people who perform overhead functions more than the people who actually develop and provide the goods and services that we need and want.
The discussion misses, except obliquely, the information revolution. The internet is a firehose of information, good and bad. How democracies evolve to deal with the crisis in trust catalyzed by all that information is central to everything.
This is a quite remarkable Persuasion entry in that it says the quiet part out loud, unusually candidly.
We have Mounk and Wolf concede flat out that in the years leading up to 2008 "a new plutocracy took power." There was a "populist" backlash to this. And somehow to Mounk the plutocracy is the one that exemplifies a "politics that adheres to basic democratic values and norms."
For Mounk plutocracy is "democracy" and voters voting a way he doesn't like is "anti-democratic." He admits as much here, plain as day.