The wealthiest nations of the world are all in deep economic and political crisis. Explanations abound. Many come from those in such difficulties themselves, with a tendency to find the most grievous failures not in the own backyard but among other wealthy and democratic countries. Japan is thus criticized for its huge public debt; for its attempt to escape stagnation by a devaluation of its currency and for the dysfunctionality of its dominant political parties. Europe is being criticized for its lack of cohesion and failure to advance in the attempted political integration; for an allegedly oversized public sector and for a coddling and onerous system of social services. Whereas the US, on its turn, is being blamed exactly for the lack of such services, for the free reign given to markets, and for its self-assured and even arrogant ambition to dominate the rest of the world.

But such polemics, such search for splinters in the eyes of others while ignoring the beam in the own one, such distractions from the own difficulties ignore the obvious: namely that the difficulties besetting the most wealthy and democratic regions of the world have much in common and are rooted in similar causes:

The further the advance in wealth, the greater the difficulties of continuing with the model of market based economic expansion. The longer the duration of democratic governance, the weaker the capacity of this democratic system to escape political blockage, to deliver rational decisions and a sound administration of public goods.

 

I. Economy

The theories that sustain the legitimacy of the existing economic system – and there is only one and it is called market capitalism – are still based on the notion of capital being scarce and thus constituting the limiting, the strategic factor in the creation of wealth; they are also based on the belief that people conceive of work as a burden and would prefer leisure were they able to make that choice.

These theories are also based on the notion of production being geared towards goods needed for sheer survival and needed, later on, for meeting what are the generally accepted minimal standards of a decent life: physical security; food; clothing to protect against the vagaries of weather; shelter and housing; drinking water and sanitation; simple remedies against premature death such as vaccinations; and finally the basic infrastructure for that communality which underpins our existence as individuals – such cities and towns; education and a shared culture.

Such goods and service are being produced already in the first phases of economic development. At that phase they had brought true advance in human well-being. Goods and services produced and consumed in countries wealthy already provide less satisfaction; and satisfaction declines with each further increase in wealth. Squelching basic hunger and thirst gives greater joy than graduating from dining in a one star restaurant to dining in a three star one. Being the first in a family to own a car provides greater satisfaction and sense of freedom than substituting a hundred horsepower car for one with two hundred horsepower.

Expensive cars are a good example for a consumption being increasingly geared towards signaling social rank. As only few can ever be at the top of the social hierarchy, consumers are being caught in a never ending spiral of expenditure that would not be warranted, were it just for their survival or for their tangible comfort. If I want to be seen as being on the top of the social hierarchy, it does not suffice to have a hundred horsepower car if everyone else has one too. I have to get the flashier two hundred horsepower model, though it provides the same service as the cheaper one hundred horsepower model.

The all-pervasive competition for social rank is pointless. In the end and after having spent much on “conspicuous consumption”, most will hold the same position on the social ladder that they had held before. Therefore, this never ending race does not result in any greater well-being, but in resentful frustration. Yet these are not its most pernicious consequences. As this race sets everyone against everyone, it undermines the sense of reciprocity and belonging. Social cohesion erodes and with it the base for common efforts as they are required for a community to prosper.

That does not imply that, after having reached a certain level of wealth, further economic growth would yield no further benefits. According to most gauges used for measuring human well-being, wealthy Swedes are better off than poorer citizens in “Upper Middle Income Countries”, though in the latter, basic human needs have been met already. Nonetheless, the correlation between wealth and well-being becomes more loose and less cogent, once a certain threshold of wealth has been passed.

Whenever they exist, such diminishing yet still positive returns of growth do not benefit all citizens equally. Quite on the contrary: in wealthy countries, the gap widens between those on the top and those at the bottom of the economic and social ladder. Gains such as rises in purchasing power, or in better education and health – care increasingly accrue just to those better – off. The figures on the average thus hide the fact that notwithstanding the continuation of economic growth, those at a middle and lower level of income will be frequently worse off than they had been before.

These unequally distributed gains are bought at high social costs. Prominent among them are the costs of inequality as such. These are exorbitant and come, inter alia, in terms of rising rates of suicide and crime, of social tension, of political instability and of general unhappiness.

One should assume that increasing wealth would permit and entice people to work less. Part of the rise in overall productivity would thus translate not just into an increase in wages. It would also be used in the “purchase” of a longer time of leisure. In the past that had indeed been the case and time devoted to remunerated work had become shorter. Weekends and time for vacation had expanded. Yet in the US, that trade – off between a slower rise in wages against fewer hours worked came to an end in the Seventies of the last century. A bit later, the same happened in Europe. In several instances, the former trend has even become reversed[1], with hours of work growing again. The burden of work has become heavier. The luxury of leisure has become scarcer.

The burden of work has also grown because work has become more intense. Globalization had made competition world – wide. Firms in wealthy countries now have to prevail against those in the rapidly growing “emergent” ones, where labor costs are lower. That forces firms in the “mature economies” to raise productivity by shrinking their labor force and by squeezing the remainder into an ever tighter cuirass of computer designed efficiency. Unemployment spreads while those in employment have to work longer and harder. That detracts heavily from any gain in well-being that might be achieved by further economic growth.

Damage to the environment is well recognized as a negative side effect (“externality”) of economic growth. Such damage is worse in early and medium phases of economic development[2]. But it accompanies economic growth even in countries that have become very wealthy and which are resolved to seriously address the issue of these negative ecologic externalities of economic activity. This is because some of this damage is unavoidable and irreversible even where governments in wealthy countries accord priority to the preservation of a sound environment, as in certain problem – fields no practical means have been found to break the nexus between the economy and environmental damage. This holds true, in particular, for the damage inflicted upon biodiversity or unto the world’s climate by the emission of “greenhouse gases”.

Given the few advantages and the high costs of such further economic growth, shouldn`t the wealthy countries opt for a policy of “zero growth”? Proposals to that end are on the table[3], with some of them implying that the termination of economic growth would not just be one among many options. It would be an unavoidable necessity, as the world would run out of resources needed for a further expansion of the global economy. Yet from the times of Malthus on, similar claims have frequently been made and have been falsified as frequently[4]. A recipe of “zero growth” thus motivated therefore lacks a solid empirical justification.

Nonetheless, some of such resources needed in the economy will have to be purchased at higher costs. Prominent among such resources are water and fertile land. Their costs will rise and will be heavy not just in monetary terms, but also in political and social ones. As if by genetic programming, people refuse to perceive of fertile land and of water as being nothing but simple inputs in the economy, distributed according to the rules of demand and supply[5]. Instead, they perceive of access to land and water as being a basic human right. In disregard of such sentiments, the further expansion of the world economy will nonetheless force the laws of supply and demand unto these quasi “sacred” realms. That will hardly be seen as progress and betterment of the human condition.

But even if all of these costs were to ultimately outweigh all of its benefits, economic growth would still have to continue. For such is the very nature of the economy. Any economy would cease to function, were growth no longer feasible and with it a process of permanent change. For even if we postulate a steady state of material wealth, the maintenance of this level of wealth would still require investments for the periodic replacement of outworn machinery, crumbling buildings and decrepit public infrastructure. The financial base for these investments are previously made profits and public and private savings. In a stagnant economy with no innovation and no new products, these profits and savings would be bound to decline and to finally disappear altogether. Even investment just for the maintenance of existing wealth could no longer be made. That would translate into an accelerating decline. We would be confronted not with pleasant, reassuring stability but with an intensifying battle for a dwindling supply of goods.

The laws of the economy therefore preclude the option of “zero growth”. Powerful sociological arguments, as well as lessons from history also stand against it. Economic growth is not linear and smooth. It happens because of unforeseen ruptures and discontinuities. It occurs on the base of what the economist Josef Schumpeter had termed ever recurring waves of “creative destruction”. This chain of small revolutions has not just the economic function of destroying the old in order to make room for the new. It also has the sociological function of keeping societies flexible. It prevents elites from imbedding themselves permanently. It facilitates the rise of new elites, replacing the old ones. Absent this chain of small revolutions, absent these waves of “creative destruction”, societies would revert to their quasi natural state of feudalism, with the ruling elites being able to retain and harden their grip on society so as to perpetuate their rule. Such a permanence and non – changeability of dominant elites is, of course, not compatible with democracy.

We do not have to rely upon such theoretical reflections, however, when asking whether we can do without further economic growth. We may draw conclusions from the vast experiment presently under way as, since the onset of the World Economic Crisis in 2008, economic growth had ceased in all three of the main wealthy regions of the world. That cessation of growth has not been greeted as relief but as a tragedy. It has not brought happiness but misery. Today, no mayor political party, nor any mainstream politician will dare to suggest that stagnation would be beneficial and therefore should become the normal state of affairs. All major political actors root for a return to an era of expanding economic activities.

If economic growth thus is to persist – how rapid should it be? Presumably, most would like it to proceed at maximum speed; and in the TRIAD (that is in Japan, Europe and the USA) some even hope that, given the proper policies, one could again grow as rapidly as in the “Glorious Sixties” of the last century when the economies of the TRIAD countries expanded at an annual rate of between three and five percent[6]. Today, such targets are out of reach. The conditions were unique which in the Fifties and Sixties had facilitated such rapid progress. Today, these conditions cannot be duplicated:

• A massive shift from agriculture to low- skilled employment in industry; and in industry from low –skilled to more qualified labor.
• Abundance of cheap raw materials
• A “demographic bonus” with the working population having to support a still small number of persons in retirement
• The effect of major technological innovations that might have occurred before, but which now affected investments and consumption in mass markets: electrification, cars, radio and television, advances in medicine and public health ( such as antibiotics ), massive expansion of secondary and tertiary education, civil aviation, etc.[7]
• At that time, the “TRIAD” countries/ regions were the only ones to be fully industrialized. They did not yet have to face the competition of newly “emergent producers” such as today’s China. Holding this monopoly of industrialized production made for very favorable “terms of trade”, allowing them to import cheap raw materials from poorer countries; and selling them industrial products at high prices.
• A stable world monetary system, with limited international mobility of capital and a still highly regulated financial sector, servicing the real economy and not yet feeding upon it.

As concerns the last point, one has to note that in the Fifties and Sixties of the last century, the then existing financial system had indeed been accommodating to, and subservient to the real economy. This was due to unique circumstances, as then the financial system then still was under the spell of echoes from the prior great word economic crisis and from the subsequent era of full mobilization for waging World War Two. In these times therefore, the world financial/ monetary system operated under conditions that were imposed upon it and that were alien to its inherent nature and inclinations. Absent these constrictions, the financial system would tend towards ceaseless expansion, and towards breaking all shackles of political control. These tendencies had prevailed throughout modern history and had always resulted in overreach, in the blow – up of financial bubbles and of their final burst, with long periods of hangover following and with much damage to the real economy

Absent these exceptional conditions after World War II, financial capital will be amassed by those able to extract it from the real economy.

Traditional economic thinking, that continues to shape actual economic policy, legitimizes the claim of capital to the full ownership of all profits resulting from any further rise in the overall productivity of the economy. This traditional economic thinking is based on lessons learned in the very early phases of the industrial age. At that time, capital was scarce, while labor and even qualified labor was abundant. In these first phases of industrialism, capital thus was the most strategic factor and therefore could claim a disproportionate share from the increase in wealth brought about in the first wave of industrialism.

We stand at the end of the age of traditional industry and when we analyze the factors that now drive the further rise in productivity, we will note that capital as such contributes very little – probably no more than ten percent. Other factors such as technological innovations are more important by far; as are the qualification of the work force (“human capital”); or social cohesion and health (“social capital”)

Yet notwithstanding this statistical evidence, the fruits of economic progress are not being distributed to the other factors of production according to their actual contribution to the further rise in wealth. Inter alia, such a more justified and just distribution of the revenues of growth would call for a rising share of wages in the overall wealth – as measured by the GDP[8]; and also for a rising share of the state. None of that has happened. On the contrary, the share of wages and has shrunk. And politicians are being applauded for reducing the share of the state, while the owners of financial capital succeed in appropriating the lion’s share of these benefits of further economic growth. Their rapacity is being sanctified the high – priests in the profession of economists, who still behave , think and write as if the world would now have changed since the onset of industrialism; and as if capital was still the most “strategic” economic factor; and so as if the other “factors of production” would still be pretty irrelevant[9]. They therefore applaud the shrinkage of the state, the disempowerment of trade unions, and with theories such as on an automatic “trickle down” from the wealthy to the poor , assuage any bad conscience that might befall the wealthy in view of the increasing gap that separates them not just from the poor but from the bulk of the population

These benefits accruing to the owners of financial capital are not fed back into the real economy via an increase in private or public consumption; or by investment in the real economy. The just widen the pool of idle financial capital the accumulation of which outpaces economic growth. Finding no outlet in investments for the production of goods and services, it streams into non – productive “bubbles” – where high returns seem possible because the speculative ardor of one participant is being reinforced by echoes from those with similar and misplaced hopes. In this cumulative biding, the price of speculative assets is being raised – be they tulip bulbs, gold, shares in railroad companies or rare real- estate. As such bubbles explode, financial capital is destroyed, with ill effects not just for the owners of financial capital, but with a strongly negative impact upon the real economy.

We now are in the midst of one of these periodic cataclysms. At present, unemployment is as high as it had been 80 years ago in the Great Depression that preceded World War II. Today as then, that bodes ill for the preservation of peace and democracy. Members in this vast army of unemployed are shown that society does not need them; that they are useless parasites. Even when being paid unemployment benefits, few can suffer such humiliation without reacting violently.

Yet the situation of the unemployed is now worse than 80 years ago because their prospects are worse, as a return to a state of full employment seems out of reach. The present big depression had been preceded by recurring smaller “recessions”. These having ended, unemployment never receded to the previous and lower level, it remained at a higher level. This is because of ceaseless cost – cutting and outsourcing by employers who are under strong pressure from international competition, and under pressure from owners of capital who seek a maximum of return on their investment. Therefore the present depression is likely to result in the largely irreversible increase in the number of the long – term unemployed. After the Great Depression of the 1930ies, mobilization for the Big War and then for the reconstruction could mop – up unemployment, and this not just by an expansion of economically effective demand, but also because the then existing structure of the economy facilitated the absorption of new members into the work force[10]. The structure of the economy is different today. One can do with fewer workers.

The present Great Depression also differs [11] from the earlier ones by draining power from the established wealthy and democratic countries. As we have noted, modern industrial production is no longer concentrated among the members of the “TRIAD”, consisting of North America, Western Europe and Japan. The club of industrialized countries has gained new members and these have been less affected by the economic/ financial crisis. That “de – synchronization” causes resources and capacities to shift from the beleaguered “TRIAD” to these new industrial or industrializing countries. Political power will shift with it.

Economic relations between the US and China offer the most prominent example. As China continues to expand its exports to the US, it expands the market for its industrial products and thus facilitates a rapid growth of its industrial base. Much of the financial returns from these exports to the US are being transferred to US, where they feed not into investment that would permit the US to regain its economic dynamism. Instead, they feed into private and public consumption. The US is de – industrializing while China is doing the opposite.

When comparing the late 19^th century with the 1970ies, we find that over this period, social tensions had abated in the wealthy countries. This lessening of social tensions had been ascribed to the rise of a middle class which filled the previous, wide gap between the rich and the poor, thus “falsifying” the prediction of Karl Marx on the inevitability of an escalating “class struggle”. By 2010 though, the middle class is being squeezed between a growing, new “underclass” and the smaller group of the super wealthy – the infamous one percent group of the population who take it as their natural right to appropriate, to the exclusion of others, all of the gains arising from increasing economic productivity[12], while the former middle class is ridden by fear of descending into the new “underclass”. Such fear is heightened by the pervasive insecurity due to unpredictable and interminable social and economic transformation; and is accentuated further by them losing status as becomes evident in their falling behind in the race of competitive consumption.

The traditional division between the wealthy and the poor thus gains renewed political, economic and social weight. But added to this cleavage are overlapping and new ones that also shred social cohesion:

• Tensions between the expanding communities of immigrants and the community of the resident population,
• Tensions between the well-educated, who bequeath their superior position to their children; and the less well-educated, whose children are likely to inherit the inferior position of their parents
• Tensions between the enlightened “gainers of modernization” and the resentful, angst – ridden losers, yearning for the return to a past that offered certainty and security
• On the labor market tensions between those with steady jobs on one hand, and those part of the growing army of temporaries, of part time workers, or of the marginally self – employed

To sum up: In countries, very wealthy already:

• further economic growth becomes much slower
• it hardly brings any greater happiness and satisfaction
• it is associated with a renewed surge of pernicious inequality
• it is being bought with a rising intensity of work and a seemingly irrepressible growth of unemployment;
• and with negative externalities such as a deterioration of the natural environment

Even in wealthy countries, economic growth becomes reversed periodically and that not just by minor “recessions” but by much more serious “depressions” such as the present one.

All of these facts prompt questions as to the future of the existing set – up, and as to feasible alternatives. Such questions are articulated most prominently among the well-educated and socially secure; by those far removed already from industrial toil and shielded from the challenge of global competition through their superior skills or by their work in protected sectors such as education. Privileged classes such as these have often spearheaded political movements and have even lead revolutions. Their sentiments are thus pointers to a possible future. It therefore is significant that such groups[13] have become instrumental in propagating the notion of a “zero growth economy”.

But as we have seen, and given the present basic parameters, a zero growth economy cannot come to exist. A modern economy cannot do without rising productivity, without recurring, destabilizing “creative destruction”, and without new investments. We seem chained to this order although what it delivers is being bought at the steep price of individual discomfort and of communal disintegration.

Such contradictions are serious enough to shatter the complacent belief in the unblemished and secure legitimacy of the present economic system. True – no alternative to this system is in sight. But even in absence of such an alternative, the system might crumble, as all highly complex system can be shattered by dramatic discontinuities and breaks. That would rupture the net of intra – national and international interdependence which, in the last 60 years, had sustained peace and material progress. Anarchy would become the anti – thesis to the existing order of market capitalism

That dire outlook runs counter to the predictions of Francis Fukuyama, who had maintained that the ideal of market capitalism would continue to gain acceptance and would emerge worldwide as the sole and uncontested principle for regulating economic affairs.

But Francis Fukuyama was extrapolating from the past that is from a period characterized by the universalization of an economic growth that still brought vast and tangible benefits. It continues to do so and to be perceived as an unmitigated good in once poor countries, now on their way to becoming wealthy – in countries such as Brazil, China or Indonesia. But in countries wealthy already, we may not assume that the future will be like the past.

Hundred years ago, John M Keynes addressed that question as to “what after the era of economic growth” in his essay on “The Economic Possibilities of Our Grandchildren – Mankind is Solving the Economic Problem”. He invited to a speculation on what would or should happen after the supply of goods has become so abundant, that all reasonable human needs would have been met; and scarcity could no longer motivate economic activity. How would all those goods and services be used? How the available, vastly expanded time of leisure? Would it be used for the pursuit of nobler aims? Or would the masses then begin to simply duplicate the vices that had befallen the idle rich in the past?

By now, we are past the point in time Keynes referred to in his essay. His predictions were made for two generations removed from the time of his writing. They thus referred to a point in time around 1990. Yet twenty years later the question he raised are still without answer as we still lack a common goal or even vague vision for our economic future. We cannot unshackle from the structures of the past that were shaped in an era of economic scarcity. Nonetheless we are under increasing pressure to do so.

An open society has to remain that. It has to remain without an ultimate, single and fixed goal. But in order to continue to exist, in order to stay flexible and “open”, agreement has to exist, nevertheless, on some basic rules of the game. In the era of economic scarcity, these rules were those of market capitalism. As Francis Fukuyama claimed, in the past these rules had been shared ever more widely across the world. But they became universal only to the extent that scarcity endured. In the wealthy parts of the world, however, abundance will increasingly substitute for scarcity while we seem unable to deal with such fundamental a change in the base of our collective existence:

• poverty in the midst of plenty;
• unemployment coexisting with a growing workload of those employed;
• irreversible environmental degradation that could be prevented with means technically available
• an abundance of financial capital while consumption and investment languish

All these are symptoms of our failure to find rules for the new era of plenty.

Francis Fukuyma had not just predicted the ultimate and uncontested victory of market capitalism; but also the victory of the ideal of democracy. In the following we will therefore investigate whether, in this political sphere at least, his optimistic predictions have better matched reality

 

II. Democracy

At first sight, much seems to give credence to Fukuyama’s prediction on the ultimate and complete victory of democracy; especially if this victory is been seen as an ideological one; with the ideal of democracy standing unopposed and accepted universally. Up to quite recently, this was indeed the case. Even those that ignored this ideal in actual practice, even those who ruled with a heavy hand and in disregard of popular will, even those proclaimed to implement the ideal, although they frequently added a qualifier in the form of an added adjective, characterizing their rule as a “national” democracy, or as a “popular” democracy” or as an “Islamic” democracy; but as a democracy nonetheless. Anything less would have delegitimized them even in their own self – perception.

But the progress of democratic rule was rapid even if we exclude such impostors, and even if we take count just of those states that actually meet the formal, minimum requirements of being “democratic”. At Mid – Twentieth Century just a mere handful of states could have been called “democratic”. The rest were under the rule of the military, of Marxist dictators, feudal lords, or of imperial powers. A mere half of a century later, the situation had changed dramatically. At the turn from the 20^th to the 21^st century, about 100 of the 200 states of the world were ruled democratically

This widening of the democratic realm had been termed the “third wave of democratization” [14] by the US political scientist Samuel Huntington. He had predicted though, that this wave too, would be followed by a wave of retraction, with some of the new democracies becoming less democratic or even ceasing to be democracies altogether – as has been the case in the two prior waves of democratization when some of the then new democracies in Central and Eastern Europe – such as Germany, Austria, Poland, Italy, etc., reverted to authoritarian and even totalitarian rule in the first half of the Twentieth Century. At the fringe of the democratic core lands – in today’s Russia or Turkey, for example; or even in Hungary[15] we now witness again such a retreat from democracy.

Regrettable and troubling as this should be, such reversals would still conform to a historic pattern as defined by Samuel Huntington. That retreat would still leave us with the hope that the sinners might be redeemed eventually and – in due time – would again join the family of democracies, as it was the case when after their lapse in the wake of the second wave of democratization in the first half of the Twentieth Century, the Central and Eastern European countries became consolidated democracies seventy years later.

We thus have to spare our deepest concern not for the unfortunate developments in newly democratic countries at the fringe of the core area of long established and consolidated democracies. The deepest concern should be raised by the development in this very core. Democracy is becoming eroded even there.

Democracy is never perfect of course. It implies and requires more than the existence and functioning of formal institutions – such as periodic elections. In order to be effective, it has to have a base in social norms such as tolerance and the readiness to trust and delegate. Taking all that into account, and taking in account also the inevitable ups and downs in such basic attitudes and in adherence to the democratic ideal, history of the past two hundred years had nonetheless led us to assume that, in essence, we all would be transported upward and forward on a trajectory towards an ever more perfect and well-functioning democracy; with franchise becoming universal; with the baggage of vote buying and of clientilism being cast away; with checks and balances actually working; and with the political system, being able to truly safeguard and promote the common – wealth.

We now have to realize that we have been misled by such belief in a quasi -automatic political/ democratic progress. In democratic core countries we are regressing backward and downward instead of moving upward and forward.

Before probing into the causes and consequence of this slide, let me substantiate such pessimistic a claim with a glance at democracy in the United States. They, after all, have been the anchor of world – wide democracy in the critical years following World War II and they continue to claim this role today. Critical outside observers will however hesitate to subscribe to that US claim. They could point to developments that would support their critical view; as for example:

• So called “gerrymandering” has made for seats in the US Congress which are securely held by either the conservative “Republicans”, or by the slightly more liberal “Democrats”. Electoral districts are aligned in such a way that voters there residing will either be overwhelmingly “Democrats” or “Republicans”, with the other party having nil chance of ever unseating the incumbent or its anointed successor. This is the case for more than 80 percent of all electoral districts and this thus implies that elections turn on the votes of less than 20 percent of voters. The remaining 80 percent are disenfranchised for all practical purposes.
• It is the more essential to establish who, which person with which agenda and world – view, will come to be the uncontested candidate in these 80 percent of electoral districts. That decision on candidates is being made in so called “primaries” and it is being made by members of either the “Republican” or the “Democratic” party[16]. Not all of these party members participate in those primaries. As a rule only those do, who are most committed and most firm in their partisanship. That way, the selection of candidates is being determined by the extreme left or right fringe of the party. Democracy thrives when politics converge on the center. In the US they no longer do.
• The dominance of the fringes is abetted by a low electoral turn – out. Even at presidential elections it hovers around 50 to 60 percent, while it is less than 40 percent at “mid – term elections” held every second year. That abstinence thus lessens the weight of the “Political Middle”; but it also is expression of a general disenchantment with, and estrangement from politics.
• The US political system is being subverted and even corrupted by money. 80 percent of the finances for the Republicans in the 20012 elections came from just 50 wealthy individuals. Though the actual outcome of these 2012 elections had shown that big money had not been able to simply buy electoral victory, big money was nonetheless successful in largely setting the agenda; as it was later on in influencing the work of the Congress and of the administration by intense lobbying. In the case of proposals on health reform, for example, money could fund six lobbyists for each of the roughly 600 Senators and Members of Congress. That makes one wonder whether the elected representatives still serve the broad public or just narrow and often economic interests instead.
• Such doubts are being reinforced by the outcome of the political process. May one truly ascribe it to a functioning democracy that the wealthiest nation on earth has fallen back so very far according to many indicators that gauge human well-being: in average life expectancy, infant mortality, absence of violence, quality of primary and secondary education, chances of social mobility; state of the public infrastructure, and – above all – in equality of income and wealth. Within the span of just one generation, inequality in the US has grown to the extent of approaching inequality in the notoriously non – egalitarian countries of Latin America. One can hardly assume these outcomes to reflect the true wishes of US citizens by being the result of political processes that are truly democratic.
• The radiance of US democracy has also been dimmed, and its function as an anchor of world – wide democracy has been weakened by its foreign policy. I remember the period immediately after World War II, when for me, as a youngster in poor and demoralized Austria, the America – House – Library opened a window to a brighter and better world. This was the time the US supported land reform and trade unions; promoted de – colonization; opposed the British/ French attempt to again wrestle control over the Suez Canal from Egypt; and gave strategic support to those multilateral institutions like the United Nations and the World Bank they had done so much to create and that were designed to function as the catalysts of global governance. Today, this era must seem remote, with the US frequently having mobilized against democratically elected governments[17]; having prioritized unilateral international action over multilateral one[18]; seeking to protect investors over workers in its international engagements; choosing military intervention over negotiations; and lagging behind other nations in providing assistance to the poor of the world. Abroad, , the “democratic regime change” it had come to promote under president George W. Bush, had been perceived not as a beacon of hope but as a cover for the furtherance of narrow US interests.
• At present, the US political system seems incapable of functioning without mobilizing against external and internal enemies; and without the cultivation and political exploitation of fear. That is not unique to the US; and not unique even to this phase of US history[19]. The wholly disproportionate reaction to the terror attack against the New York World Trade Center, with its wholesale mobilizations in a “war on terror”, has however, added a new quality and more serious consequences to this traditional attitude. Democratic institutions and core beliefs have suffered lasting damage. There is no precedent in US history for a president being able to wage war without consent of the Congress, to spy at will, thus violating most basic civil rights; to murder both US and foreign citizens by “drone” attacks; to incarcerate without due process and due review; and to seal the Southern frontier by a barrier comparable to the infamous Berlin Wall.

I dwell on these developments not in a repeat of the usual Anti – American carping of European intellectuals. I do so for two reasons: First because of the US role as the “indispensable nation”; as the nation which, in the past, had functioned as an anchor of world – wide democracy. And I do so, second, because developments in the US, while highly visible and well-analyzed, nonetheless have their counterpart and parallel in other mature democracies, such as those in Europe. Here too, symptoms of democratic decay abound.

To put it in simple terms: citizens on one hand, and their democratic political machine on the other, have become estranged. Each of these two sides has weakened the ties that should bind them together. The trend runs its course in all mature democracies; as becomes evident in symptoms such as:

• Declining turn – out at elections. Ever fewer go to the polls
• Erosion of the political center. In parliamentary democracies, the formerly dominant center right and center – left parties are losing ground to parties with a more narrow constituency, frequently at the more extreme fringe of the political spectrum
• Fracturing of the politically active community of a nation – the so called “polity” – into divergent sub groups with a limited and often conflicting agenda
• Politicians themselves have ceased to be respected or even honored. In their public image and in regard to trust invested in them, their profession ranks far below other ones – like doctors or educators. Politicians have even become object of disrespect and ridicule
• In a stance of “Anti – Politics”, those campaigning for votes do so by assuring their audience that they are not really part of the established political system, be it concentrated and symbolized by Washington, Brussels, or Vienna. Some of these “anti-politicians”[20] now have no qualms to even distance themselves from the legitimate political process as such, which they castigate as inherently inefficient and even corrupt[21].
• The ideal of mature, “Western” democracy loses some of its shine, permitting rulers in several nominally “democratic” countries, such as Turkey or Russia to disregard basic democratic principles. Even the very ideal of democracy has become contested. That had not been the case 25 years ago when even the worst dictators did not dare to oppose it. But with democracy malfunctioning , and with its being unable to effectively cope with problems such as the present world economic crisis, or with the stark rise in inequality, the ideal of democracy has now found true competitors, for example in the political systems of China or Singapore.

If these are the symptoms of a troubling development – what are its causes?

1. Representative democracy implies the conviction that people as such cannot and should not exercise power in a direct way, and directly determine every, or still every major decision in the running of a country. In general elections, voters can and should provide pointers as to the general direction they wish a country to take. But it would then be up to those elected to resolve the details. An administration empowered by those elected representatives would implement their guidelines. What voters thus would have to offer is a general engagement in politics with the willingness and capacity to provide some sense for the overall development of a country. As the rest would then be up to those elected, a functioning democracy requires that the elected politicians are endowed with the trust of the electorate. On their turn though, politician thus elected should be accountable for delivering something in return for that trust. They should be ready to actually shoulder the responsibilities heaped on them. They should be ready to make even difficult decisions, and to do so in a credible and transparent manner. Alas, and as it has turned out, this is not their central concern and priority. Staying in power is; and they have evolved strategies to that end. The responsibility entrusted to them is being shifted back to citizens. Through permanent polling and by paying heed to the message of mass – media, elected politicians follow public opinion instead of shaping it by explaining in a sober way why they have taken, or are about to take this or that grievous decision. The “political class” thus has become enslaved to public opinion even where that opinion is fickle, ill informed, illusionary and guided by wishful thinking. While knowing well, for example, the need for further investment in education, infrastructure or health services, and thus knowing fully well the need to raise taxes, politicians are nonetheless inclined to kowtow to the public and its short term interest of keeping taxes low. The public, however is not being made aware of the costs of higher budgetary deficits associated with that divergence between public income and needed public expenses. And when the problem of rising deficits finally dawns on them, they react angrily and by withdrawing trust from the democratic system. Professional politicians employ a plethora of other stratagems for the purpose of staying in power by escaping the responsibility they should shoulder. They make their position, and the decisions they take unassailable through the use of an arcane and obscuring language[22]. It is full of ambiguities and of meaningless commonplaces, destined to stir emotion and to drown out rationality. A whole army of political consultants, pollster and professional speechwriters is being employed not for the aim of defining and implementing a concrete policy. Politicians rely of this army of political manipulators not for the purpose of finding the best possible solutions in actually governing a country. They rely on this army of political manipulators exclusively for the goal of gaining power and for retaining it for as long as possible[23].
2. Fear is the most powerful emotion politicians may use and manipulate for their end of retaining power. When fully triggered, fear overpowers all other human reactions. If seen under the aspect of the evolution of the human species, this is a good thing. It saved the species from becoming extinct after it had exited from its narrow ecological niche as unreflective, instinct – driven hunters and gatherers. Under modern conditions though, the primacy of fear is less beneficial. Fear can block the rational approach to political issues. It tempts to seek the alleged security of the well-known past over the search for a potentially better but unknown future. That entices politicians to raise and to manipulate fear. The emotions thus kindled overpower the rationality required in any functioning democracy. They may thus avoid the controversies that would arise from discussions about such concrete programs. They also can expect to win easily over politicians who appeal to other human emotions such as hope and trust, because – as mentioned – the emotion of fear is more cogent as these other emotions. Politics in mature democracies offer ample proof for this tendency. In most of them, fertility per women had declined below “replacement level “, and immigration had come to fill the nascent demographic vacuum. As a consequence, foreigners – the foreign – intruded into the quarters of formerly rather closed societies. Inevitably, the foreign – the unknown – causes apprehension and fear. This fear has come to be exploited politically – first by parties at the radical right fringes. Later on, a good part of this play with xenophobia has become “mainstreamed”, as it entered the agenda of center – right parties. But the political “Left” too, has made use of fear. It did s, for example, in its campaign against nuclear power. The actual experience with nuclear power has shown it to be among the methods of generating electricity which are least damaging to the environment ; and among the least damaging too, when such damage is counted in terms of human lives lost due to the production of electricity. But unlike coal, oil, or water, the energy imbedded in nuclear fission is invisible, and the whole process of using it is still mysterious to most citizens. This insecurity triggers fear and this fear has also been exploited politically – this time by the political “Left”.
3. Politics has failed to deliver on its task of a rational guidance into the future because minorities have been able to block political process even though their agenda had little support with the majority of citizens. A fitting example is offered by the US legislation (or lack of legislation) on the purchase and ownership of high – grade weapons, such as assault rifles. According to opinion polls, the majority of US citizens would actually be in favor of setting stricter limits to the private purchase and possession of such arms[24]. But proposals for such limitations to the alleged right “to bear arms” meet the determined resistance of the US Gun – Lobby, such as the National Rifle Association. Supporters of unrestricted access to even highly dangerous weapons are willing to base their political choice exclusively on that issue. They will never vote for a candidate who would heed the wishes of the majority of US citizens for a more restrictive legislation on gun – ownership. However, for this majority that issue is just one among many. It rarely will be decisive in their decision at the voting booth. When seeking to maximize the number of votes cast in his or her favor, a US politician is thus well counseled to bow to the wishes of the gun lobby. The majority of US voters will not sanction him for that, notwithstanding their aversion to wide spread availability of dangerous weapons. The mechanisms demonstrated by using the example of US legislation on gun ownership, is, not just an exotic exception. It is more of a general rule; with extreme British nationalists blocking a rational policy towards the UK membership in the European Union; with trade unions of teachers impeding reforms of the educational system; with all sorts of “Not In My Backyard – NIMBY” groups halting the building and maintenance of essential infrastructure; etc. That way, politics become blocked and politicians fail in their mission to deliver rational solutions which take account of the wishes of the majority.
4. The wishes and interests of the majority are also distorted and thwarted by the pressure of economic interests and of “big money”. Politics and the economy are just part of one inseparable social continuum. Small wonder then that economic questions frequently come to dominate the political agenda. But that is not the issue. The problem arises when economic interests disable politics in their function to regulate markets; or when they arrogate themselves a function in a realm that has to be reserved for politics exclusively – as in many instances, the mechanism of markets will simply not be able to deliver the “common good”[25]. The failure of European politicians to deal with the banking crisis offers a trenchant example. The crisis would have never reached its present, difficult to manage proportions, had European politician decided earlier on, to let banks fully suffer the losses resulting from the Greek failure to honor its debt. Big European banks, such as the German and French ones, wanted to avoid such a massive write – off of their Greek assets. Their narrow interests prevailed and the ensuing costs had instead to be carried by the public. That was one of the reasons for the financial crisis spreading beyond Greece. That spreading of the financial crisis was accelerated by a general, creditor imposed policy which effectively shifted all costs of financial failure upon the taxpayers; with owners of financial capital being firmly and successfully opposed to any raising of the inflation – target. Such a higher inflation would have encouraged investment and growth, but it would have diminished the value of the “assets”, that is the value of debts held by banks, pensions funds and wealthy individuals. In the US and again in Europe, banks have also been largely successful in weakening legislations that would have placed them under tighter control and would have limited their capacity to speculate with money that was not their own[26] .
5. In parliamentary democracies, mass political parties have served as the main bridge for connecting citizens with the elite of elected representatives. Parties did so by serving several important functions. They bundled an array of political issues and demands into one coherent program. They facilitated political engagement and provided a sense of orientation, identity and belonging. And they “peer reviewed”, so to say, the rise of candidates to the political top, thus ensuring quality in these top positions. By now though, the old mass parties have been weakened seriously. They have lost members (in the case of the Austrian Social democrats fully two thirds of their former members) and they have been weakened by the emergence of smaller parties with a more narrow agenda. Yet they have been diminished not just in this merely quantitative sense. They also have lost much of their prior function in the selection and further screening of candidates; and they are no longer in a position to define a long – term and constraining political program, as the actual political agenda is now being set by professional political counselors, who rely on focus groups and opinion polls and not on any formal and rigid party program that would reflect the enduring interests and values of a certain segment of the population. The political elites at the top are no longer replenished by candidates rising through party ranks, where their progress would be assessed by their peers. The political elites now replenish themselves through co – option that is in a top – down way instead of a bottom up one[27]. They have become unassailable

Politics has thus become a game of this political elite; a game not about divergent political programs with their divergent impact on society; but a game organized for its own sake – just like a soccer game or boxing match. The echo in media provides the proof. Competing politicians are grade by a score on where they stand in polls; on how clever they were in the employ of tactics; on who would join forces with whom; on whether they very more or less witty in a television debate. All that provides the main course in the reporting of media. The substantive, the nature and consequence of political choices enters at the margins at best.

These deficits of democracy come from the supply side of politics, so to say. Political elites fail to deliver what they are supposed to deliver – namely such rational responses to emerging tasks and problems that are considered legitimate by the electorate. As we have seen, the failure to provide these decisions has become imbedded deeply in the political machinery of modern democracies. To a certain extent, some drastic reforms might compensate for that malfunctioning[28]. But even such only partial reforms would prove difficult, as they would run up against the strong opposition of entrenched ways and interests.

Yet these problems of the “supply side” of democratic politics are minor if compared to those problems that arise on the “demand side”; that arise from a changing attitude of citizens and voters. Politics fail to deliver rational solutions to emerging tasks and problems because there is a lack of demand for such solutions. That failure is not a passing one. It is due to developments that are centennial and that seem irreversible, given the very nature of modern societies.

Humans are “social animals”. That genetic/ cultural conditioning was essential for the survival of the species. A person standing isolated alone and relying on its own efforts exclusively would perish soon. Survival and the gradual betterment in the human condition were possible, because individuals had been able to join in common efforts[29] . That calls for institutions that facilitate such common efforts. In a modern democracy public administration, government, parliament and elections are such institutions. But these institutions asphyxiate where individuals become oblivious of their being so very dependent on others; when they have lost the sense of social responsibility and reciprocity; and are no longer able or willing to trust the working of common, mutually supported arrangements.

Yet it is exactly this what has happened in mature and wealthy democracies. The base of communality is eroding and that at times when the realm of the common had expanded and with it the need to depend on others. Three hundred years ago, a European subsistence farmer would have to rely on reciprocity in a smallish circle of an extended family or of village neighbors mainly; though even in those times already, he would have come to also depend on an exchange with more remote suppliers of goods he could not do without – such as iron, salt, or textiles. Since then, the dependency on others has increased dramatically both in scope and intensity.

To drive in that point, imagine the consequences of a modern country being cut off from electricity for the extended period of several weeks; or of satellites failing to operate; of rare earth becoming unavailable for the electronic industry, or of countries dependent on the massive import of food being deprived of such imports, or global agriculture having suddenly to do without phosphates or fertilizers.

This then is the true, even existential dilemma: in order to avoid the shocks of such disasters, the heightened mutual dependency would need to be sustained by a common resolve, to gird it by generally accepted norms and institutions, with everyone chipping in with efforts to sustain the system. This presupposes that citizens would be fully aware of the extent to which they need a functioning community of effective mutual solidarity. It calls for them being ready to trust and to actively support political institutions that safeguard this solidarity.

But the developments are not going into that direction but into an opposite one. Take the ever smaller percentage of citizens willing to cast their vote at elections. Yes – that is also due to the triviality of modern politics, enacted as if it were a game played for its own sake with little impact on the daily life of voters. And, Yes again, such a disenchantment of voters could also be explained by some other malfunctioning of the “supply side” of politics. But the refusal of citizens to participate in elections is also due to failures on the “demand side”. These are the more serious ones. Citizens simply fail to feel concerned. They no longer care. They suffice for themselves. Computer games offer them a fare more exciting than the ritual of discussions by competing politicians, as it is beamed into the living rooms via television.

By the ceaseless roar of advertising, they have been brainwashed into an imagined identity of wholly autonomous consumers, so as if what they are would come to depend exclusively on a decision to buy or not to buy a certain product. And when citizens nonetheless still identify with politics and with a distinct political current, their decision to do so is a superficial one on the life style they opt for. One might decide to be branded conservative by such a political choice, like one would decide to be so branded by purchasing a suit instead of jeans.

Consumption has turned competitive. The search for status through consumption sets everyone against everyone else and makes impatient with the claims of the community for an appropriate share of wealth, so as to maintain the necessary common base a society cannot do without: physical infrastructure, courts, public education, the arts; etc. As seen from the perspective of all those involved in the rat – race of competitive consumption that turns the common political institution – that is the state – into the enemy depriving consumers of money they would prefer to spend in the race to stay ahead of others. In the words of the US lobbyist Grover Norquist, the state becomes “the beast to kill” or, alternatively, something to be “shrunk to a size that can be drowned in a bathtub”.

This is no US specialty. The preference for the individual and private over the common and public has been “mainstreamed “far into the political center. European Conservatives have come out solidly in favor of “less state – more private”: That view became even shared – for a time at least – by the “Third Way” European Social Democrats around Tony Blair and German Chancellor Gerhard Schröder.

One should assume that, as any competition, competitive consumption too, would keep citizens focused and energized. To a certain extent, that has been the case, making them willing to work more intensely and for longer hours than they would have to were they content with their station in the social order. Nonetheless, this stress of staying ahead in competitive consumption had not added to the building or maintenance of the “republican virtue” of adult responsibility and of a rational engagement in the arena of democratic politics. Such an engagement must have been perceived as necessary and logic at time when the economy was still to deliver the bare essentials for a decent human existence; and politics were still to deliver the guarantees for fundamental freedoms of life and liberty. These needs having been met, the economy and politics are about less basic things and even trivial ones. Yet politics and the markets have been ready to deliver on such trivials. They even have persuaded citizens into the belief that they would be obliged to do so. As a consequence, citizens, workers, consumers have reverted to a stance of spoilt children; expecting every of their whims being attended to; blowing up any mild discomfort into a personal and collective disaster. More than average snowfall turns into “a white hell”; and snowplows coming late turn into an abject failure of democracy; a batch of vegetables still tainted with insecticides triggers a veritable “food crisis”; public television with too little entertainment and too heavy on information becomes a scandal to be corrected by abolishing public television. Consumer/ citizens come to expect all these shortcomings to be corrected without them having any input in that process, or having any charges to bear. Such responsibilities, such republican virtues waning, democracy is deprived of inputs required to keep it lively and effective. .

Democracy suffers because citizens no longer care about it. Much would be gained were the ardor devoted to animal rights or in the obsession with food devoted to questions such as reforms needed to keep democracy functioning.

 

Conclusion: A Troubling Suspicion

Might it be that in the long span of human history, the era of competitive democracy and of competitive market capitalism has not been the ultimate end – point of an evolutionary development which had brought humankind to an ideal arrangement of political and economic affairs, which henceforth was destined to endure forever, as no feasible alternative could be imagined that would better suit human nature and desire?

Might it be that this era of competitive democracy and competitive capitalism had been but a short interlude, which had brought much real material and cultural progress, but which was destined come to an end because it became victim to its very success and finally ran afoul of human nature which abhors the prospect of endless change and which, prefers security over freedom and predictability over the further amassment of possessions?

In a book, on “Capitalism; Socialism and Democracy” still written in time of World War II, Josef Schumpeter had considered that possibility. And he had answered the above questions to the affirmative. Yes – the era of competitive capitalism will ultimately come to an end. Ever bigger firms will tend to internalize and make routine the process of innovation. They will make innovation predictable thus terminating the recurrence of the waves of destabilizing “creative destruction”. The ups and downs of profit and loss will cease, as will the periodic exchange of economic elites. Those finally on top will entrench themselves as a permanent and irreplaceable, non-productive feudal class, living of rent income that they can extract due to their unassailable position.

Josef Schumpeter had applied his model of the creative entrepreneur, of the “creative destruction”, of the exchange of elites also to democracy. Just as the economic entrepreneurs would seek to maximize their profits, in democracy a “political entrepreneur” would aim to maximize the numbers of citizens voting for him (or her). And just as economic entrepreneurs, the political entrepreneurs too, would aim to stay on top as long as they can; and they would develop techniques to help them in their quest.

As we have seen, the wheels of political change are turning slower. It gets more onerous to truly replace the ruling political elite. In all mature democracies, a distinct “political class” has come to rule, set apart from the rest of the population; not regarded as really representative of that population; and even despised by it. Nonetheless, this political class is not about to be swept aside by disenchanted citizens, as these have become politically passive, self – seeking, ego- centric, and no longer engaged in the workings of the institutions of representative democracy.

A similar development runs its course in the realm of the economy. Increasingly, consumers seem to become disenchanted with the prospect of further marginal increases in wealth as these are bought at an ever stiffer price of insecurity and estrangement. Both those on the left and those on the right of the political spectrum seem to yearn for a return back to what they imagine to be a more natural state of affairs; namely to an era of enduring stability. Both the Right and the New Left abhor globalization and promote “localization” instead. As it seems, they wish to go back in history to a time when everyone had been content with, and had found its place in the prevailing order, or had at least accepted it as a situation that could not be changed. Not further growth now seems enticing; but an end to that growth which had been associated with so much incessant upheaval and displacement. This sentiment on part of the consumers has its counterpart in the behavior of the economic elites. Where they can, they substitute rent – income they may reap due to their powerful position (eg. in the financial sector or in real – estate) to profits generated by – destabilizing innovation. As feudal classes[30] before, they rely on this rent income to support their elevated style of life.

At present and in the economic realm, things are still being kept moving and flexible due to the catching up and the competition of still poorer countries. But this is temporary too. This phase too, would have come to an end in a hundred years or so. Politically and economically we will then have entered again into the era of that feudalism which has been the quasi natural socio / economic order throughout human history.

 

© Author / Transit 2013

Thomas Nowotny teaches Political Science at the University of Vienna. He has been Austrian diplomat, private secretary to Austrian Chancellor Bruno Kreisky, senior political counselor to the European Bank for Reconstruction and Development, and consultant to the OECD. He is author of numerous articles and of several books including Strawberries in Winter: On Global Trends and Global Governance (2005),  Diplomacy and Global Governance (2011). Further details see: http://tnowotny.wordpress.com)