Can Democracy Survive Global Capitalism?

The triumph of neo-fascists like Viktor Orban in Hungary, the rise of far-right parties elsewhere in Europe, increasing trade conflicts with China, and the appeal of our own President Trump have one thing in common: the failure of a naive faith that deeper globalization would spread both liberal capitalism and liberal democracy.

Clearly, globalization has done neither. Instead, it has incited profound backlash.

It's a mistake to view that reaction as mainly a rejection of refugees or immigrants, though that factor plays a role. Mostly, the backlash is against an extreme brand of globalism that put ordinary people at greater risk and destroyed the balanced economy that the West enjoyed after World War II.

For 30 years, the postwar system tightly regulated banks. It empowered trade unions. It used the state to sponsor great public works. It broadened democracy, both as an end in itself, and as a check on the political power of great wealth. And it delivered stunning prosperity.

The leaders of that era understood the immense destructive power of raw capitalism. They had lived through the instability of the 1920s, the Crash of 1929, the pain of the Great Depression, and the rise of Mussolini and Hitler leading directly to World War II.

They were determined that speculative economic collapse and mass unemployment must never again lead to fascism and war. The postwar system was unique in the history of capitalism. The economy on both sides of the Atlantic grew at record rates, even as it became more equal.

Before you conclude that this remarkable record was just the normal result of recovery from World War II, consider this. Recovery from World War I was a mess. There was no Marshall Plan, no system to stabilize currencies, and no debt relief. Instead, the allies punished Germany with un-payable reparations; they let speculative finance run wild and punished themselves with austerity policies. Wars do not automatically generate balanced recoveries.

The 1920s, and our current era, demonstrate one truth: When the economy deserts the people, eventually people rebel. They even choose fascists over perverse policies delivered by democracies.

Today's globalist class blends self-enrichment, and disdain for regular working people as globalism's losers, with compassionate outreach to new claimants for social justice. It is folly to extend a hand of welcome to refugees at a time when the local unemployment rate is north of 10 percent. Yet the leaders of the European Union have combined perverse austerity policies convenient to bankers with relatively liberal policies for refugees and unlimited immigration within the EU.

Not surprisingly, voters objected. The prime culprit was not the refugees; it was the austerity.

Here in the United States, Hillary Clinton supported a Wall Street brand of globalism, offered little to a stressed working class, took a lot of money from Goldman Sachs, and added a bold embrace of identity politics. It took a lot of courage to reach out to marginalized groups, but at a time when ordinary Americans are hurting economically, the risk is that they harden their hearts and opt for a figure like Donald Trump.

And before you blame the anti-Clinton vote on simple sexism or racism, consider that Barack Obama won a larger share of the white working class vote and that Clinton lost the white female vote by ten points.

Our failed China policy is the result of the same naive faith in globalism. The United States invited China into the World Trade Organization in 2001, supremely confident that China would evolve into a more open society and economy. But China's economy is as state-led as ever, and its political system is even more of an autocracy.

Whether China ever becomes a democracy is not something America can control, but we can control how its subsidized products affect our own economy. The antidote is a positive form of nationalism that rebuilds America, and limits imports of Chinese products that violate norms of trade and treatment of labor.

China's economy is as state-led as ever, and its political system is even more of an autocracy.

When politics fails to serve working people, the far right fills the vacuum. When politics delivers broad prosperity, ugly nativism recedes. Can democracy survive global capitalism? I hope so, but that will take less capitalism and more democracy.