Capitalism and democracy are incompatible

Image: Lara Mantoanelli


Despite the liberal prediction that expanding free markets would lead to more democracy, authoritarianism only increases

It is becoming increasingly difficult to ignore the fact that democracy around the world is in decline.

On the one hand, many of the most powerful states on the planet – from China to Saudi Arabia – are governed by authoritarian regimes that show signs of getting stronger. On the other hand, respect for liberal democratic norms – such as the right to protest and the independence of the judiciary – is in decline in established regimes. And many states that seemed to be heading towards democracy – like Hungary and Turkey – are trapped in a kind of “illiberal democratic” purgatory.

In all, about 72% of the world's population lives under some form of authoritarian rule, according to some experts. researchers from Freedom House say that about 38% of the world's population lives in countries that can be classified as "not free". Liberal academic Larry Diamond has called the decline of democracy around the world a “democratic recession”.

The erosion of democracy has been especially difficult for liberals to conceptualize. After all, things shouldn't be like this. The fall of the Berlin Wall was supposed to put an end to any lingering questions about the compatibility of democracy and capitalism. The latter would inevitably expand, bringing with it rights and freedoms that many in the rich world had come to take for granted. The rest of the world was destined to converge on the model initiated by the West.

Liberal theorists and policy makers have developed a series of arguments to explain the apparent contradiction between the expansion of capitalism and the retreat of democracy.

Those on the right of the political spectrum locate the problem with foreign “enemies of democracy”. For these pioneers of the new Cold War, Xi Jinping and Vladimir Putin – though curiously not Mohammed bin Salman or Viktor Orban – are to blame for brainwashing democracy-loving Western peoples with authoritarian propaganda.

Centrists tend to claim that the real problem is “extremists on both sides,” arguing that democratic socialists like Bernie Sanders and Jeremy Corbyn, who never came close to attaining state power, share as much blame for democratic backsliding as the former. -world leaders of the populist right such as Boris Johnson and Donald Trump.

Any assessment of the problem is, of course, entirely individualistic. Many liberals sincerely believe that the biggest challenge to democracy today is a few “bad guys” corrupting a system that, by and large, works well.

These arguments are, of course, utter nonsense. Support for democracy is not waning because voters are being brainwashed by enemy propaganda on TikTok. Support for democracy is waning because democracy just doesn't work the way we were told it would.

First, the combination of capitalism and democracy was supposed to bring prosperity and progress to all nations that adopted it. For a brief period after the fall of the Berlin Wall, when globalization took over the world, this story seemed believable. The financial crisis ended this collective illusion in the global North. The generation that came of age during the 2008 crisis has had to adjust to the reality that they are likely to be no better off than their parents.

But even before the financial crisis, the Asian crisis of the late 1990s demonstrated to many in the developing world that opening up their markets to international capital can be a recipe for disaster. Some combination of authoritarianism and market control seemed the natural answer.

Second, the progress brought about by democracy and capitalism should lead to more democracy. Checks and balances would put an end to corruption. An educated population would elect the “right” leaders. And rather than campaigning with outdated ideologies, these leaders would compete for votes by appealing to the “median voter,” bringing moderation to previously divided societies.

Instead, corruption is on the rise, the ideology is back, and people keep electing the “wrong” leaders. After all, creating societies so stratified that the ruling class can barely understand the concerns of ordinary voters is not such a surefire recipe for democracy.

Some slightly more thoughtful commentators concede that this incredibly simplistic reading may not capture the whole story. In a new series of podcasts for the Financial Times, Martin Wolf seems genuinely concerned about the future of democracy, accepting a small share of the blame that falls on him and his colleagues.

The problem, Martin Wolf seems to believe, is that neoliberals, in all their zeal for the end of history, extended the free market too quickly. The shock therapy of the 1990s was not accompanied by measures to alleviate the social and economic tensions it brought with it.

The argument resembles that presented by the political theorist Karl Polanyi, who believed that capitalist free markets spread too quickly for societies to adapt. Those whose lives and ideals were threatened by the rise of this brave new world would oppose the encroachment of 'market society', often supporting authoritarian strongmen.

Progressive liberals like Martin Wolf tend to believe that the solution to the problem will come from some form of regulated capitalism. Often these commentators are Keynesians advocating a return to the post-war social democratic consensus.

But that kind of nostalgia is no healthier than that manifested by supporters of Donald Trump, who yearn to return to a world before the spread of “gender ideology”. After all, there is a reason why the Keynesian consensus fell apart.

As economic growth slowed, the simmering battle between workers and employers that had been bubbling under the surface suddenly exploded in the mainstream political. Without the surplus profits extracted from the rest of the world to keep this conflict a secret, the ruling class was left with only one option: all-out war against the workers.

For this reason, while it is absolutely obvious that capitalist democracies need some measures to reduce inequality while fighting climate breakdown, the progressive capitalist vision for the future has no chance of being applied. Only one conclusion remains: capitalism and democracy were never really compatible to begin with.

*Grace Blakeley is a journalist, editor of the Tribune website.

Translation: Ricardo Kobayaski.

Originally published on the portal Jacobinlat.

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