Demoralising democracy: Role of economic competition

Imtiaz A Hussain | Published: April 15, 2019 21:20:49 | Updated: April 16, 2019 21:12:06

Roman Krznaric is not the only one worried about democracy today (BBC, "Future . . . viewing humanity," March 19, 2019). The most representative governmental form, it is fraying at the seams for more than endogenous reasons. Krznaric mentions three of them: the electoral cycle, interest group dynamics, and the neglect of future interests. Beneath all three, he finds a "short-term" mindset not at all helpful to any sustainable project. He is spot-on.

Yet, there are also overlapping exogenous forces unwittingly drawing democracy down. One has been the advent of neo-liberalism, another the tussle between neo-liberal countries and their non-liberal challengers, and a third, the growing infiltration of secular dynamics. Grappling with these is necessary to get a sense of the future shadow of democracy.

Neo-liberalism began in fits and starts during the 1980s. Many scholars narrow that start to John Williamson's 1989 prescription about evolving market behaviour, but free-trade agreements, especially the one Canada and the United States began negotiating from March 1985 (Shamrock Summit), also chipped in. Private enterprise under neo-liberalism was very consistent with democracy, and amply justified as such. The most significant neo-liberal surge, during the 1990s, saw democracy flourish in more countries than ever before. Unprecedented numbers of free-trade agreements laced the world, and economic growth peaked across much of the neo-liberal world (the longest 20th Century U.S. streak was in the 1990s). On the contrary, Asia's emerging countries, behind "crony capitalism," plunged financially by adulterating neo-liberalism precepts. Neo-liberalism scored yet again.

The costly 2008-11 "Great Recession" forced us to face neo-liberal flaws, all endogenous: deregulation opened the door to sub-prime mortgage and pyramidal borrowings; privatising welfare boosted the impoverished population; and likewise for liberalising trade, widening domestic and international gaps.

Exogenously, the growth of the underclass fed fringe groups. Populist ranks splurged with the displaced and laid-off workers, and as traditional supports (like unemployment benefits, even pension) faced privatisation threats, the anger thickened. These were not the only causes, but when one surveys the length, breadth, and depth of the populist map today, one cannot help but kick one's foot for not reeling in neo-liberal excesses before: their spillovers have now overtaken the purer neo-liberal intent, at least for a generation longer, and particularly in places where neo-liberalism flourished the most, that is, the Atlantic seaboard and Europe's hinterland.

Even more damaging has been a structural gap. The eventual neo-liberal world, let's say of the 1990s, already had aging institutions and infrastructures when the movement began in the 1980s: from highways and ports to educational curricula, they belonged to the mid-20th century recovery era, in some cases spawned by the Depression-driven New Deal in the United States, in others post-World War II reconstruction. Nothing major was done to fix them up; and even as the cry grew louder, neo-liberalism slipped into the "war against terrorism" from 9/11, shifting expenditures to the military rather than overdue rebuilding. The net effects were to demoralise the unemployed people into thinking their community was falling behind, give populist movements an agenda and the target to win pre-eminence back, and help their leaders hide behind a safe infrastructure-rebuilding campaign agenda. Their only problem was the lack of money: the public sector had been whittled away for it to mobilise the necessary resources; and private controls would be costly. Problems that could have been nipped in the 1970s/1980s haunt societies like ghosts even today.

To add to this intra-neo-liberal malaise was the rise of external competition, particularly China's game-changing role. Quite frankly, China began doing from the 1980s what Japan was doing selectively from the 1950s: shielding certain economic sectors from foreign competition, while unfairly promoting others abroad. Just getting China to return to the international market was giddy enough for western countries and businesses that they did not press this point at the outset. When they did, mostly in the 21st Century, it was too late: China had climbed into the second largest economy from unprecedented trade surpluses, enabling it to begin fixing global infrastructures so magnetically as to make the World Bank an outcast in its own game.

Here the net effects on neo-liberalism were more pervasive and pernicious. China has helped re-legitimise authoritarian controls of the economy as the "bureaucratic authoritarians" had hitherto done in the many Asian (Japan, South Korea, Thailand, and others), European (Greece, Spain, Portugal, Turkey, and so forth), and Latin countries (Argentina, Brazil, Chile, Mexico, and others), practising import-substitution industrialisation during the 1950s/1960s. As other countries model China's strategies, restoring the 1990s neo-liberal appeal, size, and glow in the foreseeable future becomes a tough call. Even the springboard neo-liberal institutions, like the World Bank, International Monetary Fund, and so forth, have themselves been rocked by their own closeted approach and decision-making roles. Brexit symbolises collective institutions falling apart, facing external competition and internal populism pulling the rugs away.

Why the rugs may be pulled away faster than usual takes the essay to its third component: secular developments infringing the neo-liberal armour. If it is not technology sapping away the labour force with artificial intelligence or shifting cutting-edge production away from manufacturing to a variety of services (without the employees having the training), then there are still those other sectors neo-liberal philosophy neglects: the environment tops this list with an array of threatening consequences from mass-production, carbon-releasing energy, and ecological encroachments; education, welfare, and all other entitlements programmes sturdily nestle in the public sector; and, of course, the growing dispute settlement industry. The list goes on, but the uncertain future shadow goes longer still, weakening neo-liberal philosophical premises.

These forces do not mesh with neo-liberalism: environmental protection clearly challenges freedom of private enterprise. Whereas neo-liberalism is premised upon mass-production as the vehicle to growth, thus demanding a manufacturing fulcrum, several secular forces take a service sector slant. Blue-collar imperatives face white-collar intrusions.

Security priorities trump both. With 9/11 they were back in the saddle, opening doorways for one authoritarian leadership after another. Though many surfaced in the previous "Third World" bloc (including Bangladesh of the 1980s), the democratic governments acted more authoritarian: India turning to "emergency rule," for instance, in the mid-1970s.

With East European countries entering the European Community after the 1980s, the "Third democratic wave" did not stumble. Yet, Soviet successor states across Central Asia arrogantly booted any "Fourth wave" prospects in that part of the world during the 1990s, while thoughts of an Islamic "Fifth wave" also fizzled when the "Arab Spring" failed in this century.

With neither neo-liberalism nor democracy sturdy enough, even managing to inspire others, the global setting faces a murky future. Technological innovations demand a neo-liberal setting to be consummated, but too much dirty water has flown under governance bridges to permit democracy to return in full form. It will be a long time coming before the twain can do the tango again.

Dr. Imtiaz A. Hussain is Professor & Head of the Department of Global Studies & Governance at Independent University, Bangladesh.



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