Thirty years ago this week, the whole world watched as thousands brought down the Berlin wall, marking an end to the communist ideology and the end of the Cold War. Despite the ensuing peace dividend, today, democracy is in crisis, unfettered free markets has only provided for the few and authoritarianism is once again on the rise.
At the end of the Cold War, political scientist Francis Fukuyama in his celebrated essay “The End of History”, argued that communism’s collapse would clear the last obstacle separating the entire world from its destiny of liberal democracy and market economies. The 1990s saw the spread of capitalism via globalisation, national borders could be replaced with a global market where everyone would live in prosperity.
The world’s leading economies promised that neoliberal policies would lead to faster economic growth and that the benefits would trickle down so that everyone, including the poorest, would be better off. Global liberal institutions claimed that their promises were based on scientific economic models and “evidence-based research.”
But just a mere 20 years on, capitalism is turning into a disaster. Despite no challenge to capitalism, despite the presence of no challenger to the values born from the enlightenment today liberals have fallen back to their last stand: there is no alternative.
So what went wrong?
When the Berlin wall came down, it signalled the failure of authoritarian regimes and the centrally planned economy. Liberals argued that a system that wasn’t for the people and by the people was destined to fail. But today authoritarianism is on the rise even in the West which for long prided itself on democracy.
A system of the people, for the people and by the people was the ideal in the rubble of the Berlin wall in 1989, but in practice it’s been extremely difficult to implement. The reality is in much of the developed world a select group of people have come to dominate the political systems: it has become a system for the oligarchs and by the oligarchs. Democracy has today become a system which systematically rewards its elites through tax cuts, regulation and security at the expense of the majority, even when it has meant debts and deficits. It’s no wonder Nobel laureate economist Joseph Stiglitz now says: “For 40 years, elites in rich and poor countries alike promised that neoliberal policies would lead to faster economic growth, and that the benefits would trickle down so that everyone, including the poorest, would be better off Now that the evidence is in, is it any wonder that trust in elites and confidence in democracy have plummeted.”
The global economic crisis in 2008 was an inflection point where the bankers were rewarded with bailouts, whilst the majority were imposed with austerity. Rather than dealing with the economic challenges the political system scapegoated immigrants, the poor and foreigners. Many can now see that elected officials represent the tiny rich elite and corporations rather than the majority. This is why many turned to reality TV stars, comedians and unorthodox parties in the hope of receiving some representation.
Democracy has reached a point where legislative sovereignty means laws are made for the benefit of the few irrespective of politicians being from the right or the left. Man-made laws have finally revealed their inadequacy.
We are constantly reminded of how many people capitalism has taken from poverty to prosperity. Whilst liberals like to claim credit, they also need to take responsibility for their other achievements. Tonight, half of the world, 3.8 billion people, will not be having dinner as they are too poor. More people have access to mobile phones than toilets. Shockingly, a mere 1% of the world’s population now captures 82% of global wealth.
It’s no wonder Unilever’s former boss said capitalism is a damaged ideology. “Capitalism, which has been responsible for the growth and prosperity that has done so much to enhance our lives, is a damaged ideology and needs to be reinvented for the 21st century.”
The problems globally today are not just in the third world, wealth inequality is even worse in the developed world. Thomas Piketty’s book – Capital in the Twenty-First Century (published in 2013), exposed how bad wealth inequality is in the US and Europe. Piketty’s conclusions were stark in that inequality is not an accident but rather a feature of capitalism that can be reversed only through state intervention. Unless capitalism is reformed, the very democratic order will be threatened. Joseph Stiglitz also confirmed: “Well, after 40 years, the numbers are in: growth has slowed, and the fruits of that growth went overwhelmingly to a very few at the top. As wages stagnated and the stock market soared, income and wealth flowed up, rather than trickling down.”
What has taken place since the end of history in 1989 is plunder has become a way of life for a tiny elite, who over the course of two decades have created for themselves a legal system that authorises it and a morality that glorifies it. For them the world is full of cheap labour and is to be used to make profit, irrespective of the consequences. This elite create products which pollute the air and seas. They speculate into financial products which have no real existence but give them exorbitant profits, whilst the vast majority struggle to make ends meet. In 2008 this tiny elite brought the world to its knees. The truth is the free market is really a licence for a small elite to plunder the rest of humanity.
After three decades of proclaiming the end of history Francis Fukuyama has been forced to eat his words, in an interview he admits now:
“At this juncture, it seems to me that certain things Karl Marx said are turning out to be true. He talked about the crisis of overproduction… that workers would be impoverished and there would be insufficient demand… The Chinese are arguing openly that it [economic model] is a superior one because they can guarantee stability and economic growth over the long run in a way that democracy can ‘t…l would say they’ve got a real argument.”
After three decades of dominating the world, capitalism and democracy has come to be seen as working only for the few. Such ideas have turned the world into one tearing itself apart between ‘haves’ and ‘have-nots,’ where greed, corruption and disdain for the poor and vulnerable are seen as perfectly normal. This is why globally much of the world’s population lives in apathy and despair, regardless of the government they live under and the appetite for change has never been this high.
The frustration of the people is growing faster than capitalism’s hegemony. The uprisings in Chile, Iraq, Lebanon, Algeria, Sudan and Egypt; the yellow vests protests in France, the Occupy Wall Street movement in the US: they are all manifestations of the demand for change. As the economic and political situations get worse the appetite for change will only grow in scope.
The victory of capitalism was premature as the Berlin wall was being torn down in 1989.
Today its capitalism that is in a battle for survival.