Op-Ed: Crisis of Capitalism and Democracy

Welcome dear reader,

Happy New Year!

As you may notice I have included within the title the words, op-ed, which will indicate from now onwards that my intention is to give a less facts based and more opinion and observational based article.

This is I hope, the first of several. In this piece I would like to analyse and comment on what is going to be the tenth anniversary of the 2008 economic crisis this year.

Now, that year I was also preparing the end of my academic career and making the big transistional leap into the world of work and the beginning of my professional life. By the time I finished I had been fortunate to have been taught by a broad range of teachers and professors of differing political hues but who had all instilled in me (unwittingly or not!) the need to constantly challenge and review my beliefs and always approach those I met with an open and questioning mind.

However, there was a general acceptance amongst the academic and policy making community at that time that the John Williamson defined ‘Washington Consensus’ model of managing our economic lives was largely unquestionable and here to stay. There were some hiccups along the way, the Asian Financial Crisis in 1998, Argentina in 2001 and Turkey in 2002. In the end though these warning signs in history were brushed over and the guardians of the Washington Consensus orthodoxy, namely the IMF and World Bank, continued doling out the same policy prescriptions of ever more deregulation and privatisation as before. It represented the cosy and smug set of ideas that had complacently been accepted by thousands of policy makers and politics students worldwide. Although, often with an air of resignation by some opposing ideologues it must be noted, and they were usually tarred as being dreamy idealistic leftists or bigoted no hopers on the right.

I have to confess that I was one of the conceited graduates of the school of thought that believed Western style capitalism and the post war Kantian international order were where society would build and develop from in the foreseeable future. Multilateral cooperation, hand in hand with capitalism, would see institutions such as the European Union, IMF and World Bank, North Atlantic Free Trade Association, Asia Pacific Economic Community and United Nations, emulated and venerated globally and increasingly the focus of peace and security internationally at the expense of the withered Westphalian nation state. Socialism, Communism and Fascism were the romantic or fevered dreams of fringe groups who would always be consigned to the margins of power and their philosophies discredited by their past associations with the turbulent 1920s and 1930s and the horrors that reaped on the world.

Fast forward to 2018 and we now have a weakened world order to say the least. From the traditional bastions and main beneficiaries of capitalism and democracy we now see a multitude of differing voices questioning and doubting this way of working. You merely need to look in any self respecting bookshop or Amazon bestsellers lists to see the world grasping for a new fresh idea to heal this phase in our existential crisis. Why even I now have a copy of Mao’s Little Red Book on my bookshelf! From Trump’s USA, to Brexit Britain and Populist plagued mainland Europe the devotees of liberal democracy are on the defensive. They breathe a collective sigh of relief when talk of impeachment or the use of Article 25 in the US Constitution does the rounds, roadblocks in the negotiation of Brexit give rise to speculation of a halt being called on the whole unseemly proceedings of the UK’s exit from the EU, or Marine Le Pen in France or Gert Wilders in the Netherlands are denied the keys to the Chancelleries this time round.

These devotees of Adam Smith and John Locke, are now decidedly on the defensive. Why? What went wrong in this decade? The answer my learned friends are down to a myriad of factors which are being debated and poured over by modern day scholars. I shall endeavour as always to give some brief but I must add possibly simplistic answers to this!

Essentially, like any philosophy, it faced the vigorous challenge of cold hard human reality. Excuse me if I sound unduly Hobbesian!

The philosophers I made passing reference to above all ¬†differed on certain issues but all believed in the goodness of human nature and the thought that we would always be led by good men (always men note!). Call me a cynic but I doubt this happened during our era my dear reader. The result is that like the 1920s and 1930s I alluded to earlier, we are scarred by ever larger inequalities in our wealth and societies. For example under Donald Trump we have the singular achievement in over one year in office of the passing of only one bill designed to cut taxes on large multinational companies, the former mantra of “we are all in this together” (espoused by the British government during the financial crisis in 2008) rings hollow as UK bankers see their annual bonuses recover to pre-crisis levels, AI continues to see the diminishment or abolition of many non-educated or unskilled jobs in factories or service industries, whilst outsourcing to Indonesia or Mexico sees the same effect for the same income group. Rising rents and college education fees leave young people stripped of the same opportunities of free education and help with their rents or house acquisitions that their parents and grandparents were granted by the state.

Wealth inequality is not the sole responsibility for this crisis to hit this millennial generation, globalisation also led to a backlash from previously entitled groups, namely white heterosexual middle aged males. With globalisation came the expectation that issues like abortion, the environment, LGBTQ rights, stem cell research, racial equality and opportunities for women would see the world come together as one and combat the prejudices and stigmas these issues and individuals had previously suffered. The so called ‘culture wars’ on these and other topics had been perceived as being faced with the same Francis Fukuyama style end of history fate. Not so, and coupled with the economic disparities, we had a full on assault on these values which liberal policy makers and the media believed had been settled. The backlash came in the form of Donald Trump, Brexit and populism across mainland Europe. This isn’t just a Western phenomena though, we see the clash continuing in Mexico, The Phillipines, Liberia, Turkey, Russia and more as societies become ever more fractious.

To resolve this all is an enormous chalkenge and one that human beings seem at least for the time being incapable of resolving without a strong dose of education and reform of the working classes worldwide. Referendums for a start should be banished from the political lexicon as we know it, as we have seen they are often hijacked by the narrow minded to push their own self serving advantages. We also need fewer spineless politicians willing to lead from behind and more who are able to stand upon the parapet and risk their jobs (and possibly necks) to fight the often clueless and ill informed sections of the electorate and the vested interests that continue to hamper our societies. These are not easy answers and I aware that I sound dangerously autocratic and Machiavellian but we need far less tolerance of the intolerant if we are to construct a society that benefits us all and corrects the injustices of the past.

Otherwise I fear we will see more of the political fragmentation we are seeing in nominally prosperous and successful democracies, such as Spain, Germany, Britain, Sweden and Italy which are experiencing hung parliaments and inconclusive elections. Political polarisation and groping for new, fresh faces and ideas are in vogue right now but this presents as much as a risk as it does an opportunity to reorder ourselves. We must recall the lessons from the 1920s and 1930s when we last attempted such a reordering.

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