At the end of the Cold War, political scientist Francis Fukuyama wrote a celebrated essay called “The End of History?”
Communism’s collapse would clear the last obstacle separating the entire world from its destiny of liberal democracy and market economies, he said.
Many people agreed.
Today, as we face a retreat from the rules-based, liberal global order, with autocratic rulers and demagogues leading countries that contain more than half of the world’s population, Fukuyama’s idea seems quaint and naive. However, it reinforced the neoliberal economic doctrine that has prevailed for the past 40 years.
The credibility of neoliberalism’s faith in unfettered markets as the surest road to shared prosperity is on life-support these days — and well it should be. The simultaneous waning of confidence in neoliberalism and in democracy is no coincidence or mere correlation. Neoliberalism has undermined democracy for 40 years.
The form of globalization prescribed by neoliberalism left individuals and entire societies unable to control an important part of their own destiny, as Dani Rodrik of Harvard University has explained so clearly, and as I argue in my recent books Globalization and Its Discontents Revisited: Anti-Globalization in the Era of Trump and People, Power, and Profits: Progressive Capitalism for an Age of Discontent.
The effects of capital-market liberalization were particularly odious: If a leading presidential candidate in an emerging market lost favor with Wall Street, the banks would pull their money out of the country. Voters then faced a stark choice: Give in to Wall Street or face a severe financial crisis. It was as if Wall Street had more political power than the country’s citizens.
Even in rich countries, ordinary citizens were told: “You can’t pursue the policies you want” — whether adequate social protection, decent wages, progressive taxation or a well-regulated financial system — “because the country will lose competitiveness, jobs will disappear and you will suffer.”
In rich and poor countries alike, elites 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. To get there, though, workers would have to accept lower wages and all citizens would have to accept cutbacks in important government programs.
The elites claimed that their promises were based on scientific economic models and “evidence-based research.”
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.
How can wage restraint — to attain or maintain competitiveness — and reduced government programs possibly add up to higher standards of living?
Ordinary citizens felt like they had been sold a bill of goods. They were right to feel conned.
We are now experiencing the political consequences of this grand deception: distrust of the elites, of the economic “science” on which neoliberalism was based and of the money-corrupted political system that made it all possible.
The reality is that, despite its name, the era of neoliberalism was far from liberal. It imposed an intellectual orthodoxy whose guardians were utterly intolerant of dissent. Economists with heterodox views were treated as heretics to be shunned, or at best shunted off to a few isolated institutions.
Neoliberalism bore little resemblance to the “open society” that Karl Popper had advocated. As George Soros has said, Popper recognized that our society is a complex, ever-evolving system in which the more we learn, the more our knowledge changes the behavior of the system.
Nowhere was this intolerance greater than in macroeconomics, where the prevailing models ruled out the possibility of a crisis like the one we experienced in 2008.
When the impossible happened, it was treated as if it were a 500-year flood — a freak occurrence that no model could have predicted.
Even today, advocates of these theories refuse to accept that their belief in self-regulating markets and their dismissal of externalities as either nonexistent or unimportant led to the deregulation that was pivotal in fueling the crisis.
The theory continues to survive, with Ptolemaic attempts to make it fit the facts, which attests to the reality that bad ideas, once established, often have a slow death.
If the 2008 financial crisis failed to make us realize that unfettered markets do not work, the climate crisis certainly should: Neoliberalism will literally bring an end to our civilization.
However, it is also clear that demagogues who would have us turn our back on science and tolerance will only make matters worse.
The only way forward, the only way to save our planet and our civilization, is a rebirth of history. We must revitalize the Enlightenment and recommit to honoring its values of freedom, respect for knowledge and democracy.
Joseph Stiglitz, a Nobel laureate in economics, is University Professor at Columbia University and chief economist at the Roosevelt Institute, a New York City-based think tank.
Saudi Arabian largesse is flooding Egypt’s cultural scene, but the reception is mixed. Some welcome new “cooperation” between two regional powerhouses, while others fear a hostile takeover by Riyadh. In Cairo, historically the cultural capital of the Arab world, Egyptian Minister of Culture Nevine al-Kilany recently hosted Saudi Arabian General Entertainment Authority chairman Turki al-Sheikh. The deep-pocketed al-Sheikh has emerged as a Medici-like patron for Egypt’s cultural elite, courted by Cairo’s top talent to produce a slew of forthcoming films. A new three-way agreement between al-Sheikh, Kilany and United Media Services — a multi-media conglomerate linked to state intelligence that owns much of
The US and other countries should take concrete steps to confront the threats from Beijing to avoid war, US Representative Mario Diaz-Balart said in an interview with Voice of America on March 13. The US should use “every diplomatic economic tool at our disposal to treat China as what it is... to avoid war,” Diaz-Balart said. Giving an example of what the US could do, he said that it has to be more aggressive in its military sales to Taiwan. Actions by cross-party US lawmakers in the past few years such as meeting with Taiwanese officials in Washington and Taipei, and
Denmark’s “one China” policy more and more resembles Beijing’s “one China” principle. At least, this is how things appear. In recent interactions with the Danish state, such as applying for residency permits, a Taiwanese’s nationality would be listed as “China.” That designation occurs for a Taiwanese student coming to Denmark or a Danish citizen arriving in Denmark with, for example, their Taiwanese partner. Details of this were published on Sunday in an article in the Danish daily Berlingske written by Alexander Sjoberg and Tobias Reinwald. The pretext for this new practice is that Denmark does not recognize Taiwan as a state under
The Republic of China (ROC) on Taiwan has no official diplomatic allies in the EU. With the exception of the Vatican, it has no official allies in Europe at all. This does not prevent the ROC — Taiwan — from having close relations with EU member states and other European countries. The exact nature of the relationship does bear revisiting, if only to clarify what is a very complicated and sensitive idea, the details of which leave considerable room for misunderstanding, misrepresentation and disagreement. Only this week, President Tsai Ing-wen (蔡英文) received members of the European Parliament’s Delegation for Relations