The Captured Economy: How the Powerful Enrich Themselves, Slow Down Growth, and Increase Inequality
by Brink Lindsey and Steven M. Teles
Oxford University Press, 2017, 232 pp.
Go Back to Where You Came From: The Backlash Against Immigration and the Fate of Western Democracy
by Sasha Polakow-Suransky
Nation Books, 2017, 368 pp.
Counter-Revolution: Liberal Europe in Retreat
by Jan Zielonka
Oxford University Press, 2018, 176 pp.
Today, the West is probably facing its greatest crisis since the end of the Second World War. Liberal democracy has faltered in Eastern Europe, is threatened by populists in Western Europe and the United States, and is being challenged by resurgent authoritarianism in Russia, China, and elsewhere. Reflecting these trends, scholarship and commentary has become consumed by debates about “illiberal democracy,” “global authoritarianism,” and democratic “deconsolidation.” Summing up what has become a widespread view, Viktor Orbán, Hungary’s current prime minister, recently proclaimed: “The era of liberal democracy is over.”
A massive amount of ink has already been spilled trying to figure out what has gone wrong, but two narratives can be plucked from the confusion. The first focuses on economic change. Over the past few decades growth has slowed, inequality has risen, and social mobility has declined, particularly in the United States. This has made life more insecure for the working and middle classes by privileging highly educated and urban dwellers over less-educated and rural ones, and spreading economic risk, fear of the future, and social divisions throughout Western societies. The second narrative focuses on social change. During this same period, traditional norms and attitudes about religion, sexuality, family life, and more have been challenged by the emergence of feminist, LGBTI, and other social movements. Meanwhile, massive immigration and (especially in the United States) the mobilization of hitherto oppressed minority groups like African Americans has disrupted existing status and political hierarchies, making many white citizens in particular uncomfortable, resentful, and angry.
Most analysis stops here, at viewing economic or social change or some combination of the two as leading inevitably to dissatisfaction with liberal democracy and a readiness to embrace populist, illiberal, or even undemocratic alternatives. The issue, of course, is that social, economic, and technological change alone are not the problem—they only become so if politicians and governments don’t help citizens adjust to them. If we want, therefore, to understand liberal democracy’s current problems, we need to examine not only such changes, but also how elites and governments have responded to them.
A good place to start is with The Captured Economy, in which a libertarian, Brink Lindsey, and a liberal, Steven M. Teles, explain why we ended up with a version of capitalism inimical to healthy democracy, particularly in the United States, where its downsides are clear. The standard explanation focuses on how the growth of information technology and globalization have “given rise to winner-take-all markets with huge windfalls for economic superstars.” While Lindsey and Teles do not entirely reject this narrative, they argue that government has played a large and underappreciated role in creating or exacerbating these problems. They describe how the misregulation of the financial sector enriched the financial elite and introduced unnecessary risks and distortions into the economy; how the expansion of copyright and patent protection has created “monopolies,” limited innovation, and showered “riches on a favored few”; how occupational licensing protects incumbent firms and favored professions and obstructs competition, entrepreneurship, and consumer interests; and how land-use regulations and zoning distort markets, hamper Americans’ ability to move where opportunity is, and instead redistribute wealth to “higher-income homeowners and the bankers who provide mortgage finance” to them.
Why has government acted in socially counterproductive and economically inefficient ways? Because it has been “captured” by plutocrats who use economic resources to influence government policy in ways that rig the game even further. Lindsey and Teles stress that our “captured” economy has had not only deleterious economic but also political consequences: the inability of leaders and institutions to deliver prosperity to most people has undermined the latter’s confidence in democracy and contributed to growing intolerance: “When people feel economically insecure,” Lindsey and Teles note, “they grow more defensive, less open and generous, and more suspicious of ‘the Other.’ When life seems like a zero-sum struggle, gains by other groups are interpreted as losses by one’s own group.”
The left will disagree with parts of this analysis—in particular, how Lindsey and Teles prioritize economic efficiency over justice or equality when evaluating policies, and their skepticism that government intervention can be a force for good. But The Captured Economy is nonetheless invaluable in highlighting the myriad ways government has been “captured” by the powerful, thereby disfiguring our economy, society, and democracy.
Sasha Polakow-Suransky’s Go Back to Where You Came From examines how immigration has roiled Western democracies. Polakow-Suransky’s focus is on Europe, where a backlash against immigration has led to a widespread embrace of xenophobic policies and fed the rise of nationalism and populism. In Western Europe, anti-immigrant parties are in power in Italy and Austria, and threaten existing governments and political stability in Germany, France, Sweden, and elsewhere. The situation is even worse in Eastern Europe, where xenophobes rule in Hungary and Poland. He argues that debate in many European countries has become dominated by fear—of an Islamic “tsunami,” terrorism, crime, and the decline of Western civilization. Such fears over the years have led to a willingness to consider policies that not long ago would have been rejected as too anti-liberal or reactionary, including restricting the right to asylum and restraining the free movement of people across Europe’s borders.
However, perhaps the most disturbing section of Go Back to Where You Came From focuses not on Europe but Australia, where even without the presence of an openly far-right populist party, immigration policy came to involve dragooning refugees and asylum seekers on an island in Papua New Guinea where conditions are dismal and human rights abuses rife. This policy is nonetheless broadly supported by Australian politicians since it keeps immigrants far from the country’s shores and beyond the reach of the rule of law. It has become a model for Europe’s far right for precisely these reasons—and a version of it was recently considered by the EU with so-called “reception” centers to be set up in Libya and other parts of North Africa for the purpose of detaining potential migrants.
But Go Back to Where You Came From makes clear that it is not merely the existence of social change or immigration that has caused problems, but the liberal establishment’s response—or lack thereof—to it. (Polakow-Suransky also considers the backlash against immigration in South Africa, where there have been riots and even violence against African immigrants—not merely by white but also black South Africans, with whom these immigrants live and economically compete.) Over the past few decades the number of foreign-born citizens has risen to historically unprecedented levels in Europe, yet mainstream politicians and parties seem to have given little consideration to ensuring that the policies and institutional capacities (for example, the huge expansion in education services and retraining programs for adults) necessary to manage such change were in place. How would welfare states be protected? Could asylum and immigration applications be quickly and fairly processed? How would labor-market and other forms of integration be accomplished? How could the social cohesion necessary for healthy democracy be maintained? Of course, in Europe the situation was made even worse since layered on to national-level deficiencies was a lack of planning and institutional capacity at the EU level. Recent clashes over immigration between Angela Merkel and Horst Seehofer, her interior minister, and between Germany and the Southern European countries (which are typically first points of entry) illustrate these conflicts over responsibility for immigrants and asylum seekers.
Polakow-Suransky argues that liberals’ “failure to confront the real tensions and failures of integration, by pretending violent extremism and attacks on free speech were not problems, infuriated many voters and left them feeling abandoned by mainstream parties.” He is also particularly critical of the left for refusing to acknowledge problems within immigrant communities such as crime, unemployment, and radicalization and for believing that national sentiment should be “purged” and replaced by cosmopolitanism. These missteps helped create a political opening for the populist right, which took over, albeit in warped ways, positions that used to be the provenance of the left, including a defense of the welfare state, activist government, and secular values, while also reaching out to workers and other alienated voters who in a previous era would have voted for social democratic or communist parties.
An even more damning and direct indictment of the liberal establishment’s culpability for democracy’s contemporary problems is provided by Jan Zielonka’s Counter-Revolution: Liberal Europe in Retreat. Counter-Revolution is written as a letter to Zielonka’s mentor and predecessor at Oxford, Ralf Dahrendorf, who, after the collapse of the Berlin Wall, wrote a short book called Reflections on the Revolution in Europe (also ostensibly written as a letter) pondering where Europe was headed after 1989. Many, of course, believed that after communism’s collapse in 1989 liberal democracy’s triumph and European unity was assured. But Zielonka, like Dahrendorf, grew up under tyranny (communist Poland and Nazi Germany, respectively) and is particularly aware of how fragile both democracy and peace can be. Zielonka believes that we are currently in the midst of nothing less than a “concerted effort to dismantle” liberal democracy, open societies and economies, cultural tolerance, religious neutrality, the European Union—all the elements upon which Western success was built after 1945. Zielonka’s disappointment, sometimes anger, at liberal democratic elites and intellectuals for not protecting against this onslaught suffuses every page of Counter-Revolution. “[L]iberals,” he states, “proved better at finger-pointing than at self-reflection. They spend more time explaining the rise of populism than the fall of liberalism. They refuse to look in the mirror and recognize their own shortcomings, which led to the populist surge across the continent.” For Zielonka these shortcomings involve facilitating the trends currently menacing liberal democracy including rising inequality, a backlash against globalization, and nativism.
Zielonka takes liberals to task for their denigration of communal links and identities. Most people, he notes, “feel ‘at home’ with like-minded and like-looking people, they trust those whom they know.” Wishing these realities away is unhelpful. If liberals want to defend liberal values, particularly pluralism and tolerance, they need to figure out how to “create harmony, solidarity and communal spirit, which are needed for any serious collective endeavors.” These arguments are not, Zielonka insists, populist demagoguery—progressive communitarian critiques of liberal ideas have been made by thinkers like Michael Walzer, Michael Sandel, and Charles Taylor. Liberals ignored the challenges posed by cultural and demographic changes and failed to envision how to make them compatible with social stability. This provided an opening for populists and other anti-liberal and anti-democratic figures to insist that homogeneity was the only way to protect national harmony and traditions.
Zielonka is equally scathing about liberal elites’ acceptance of (or at least acquiescence in) unregulated markets, austerity, and the disproportionate accumulation of wealth by the rich. Quoting George Soros, he notes that liberals should have recognized the danger of a version of capitalism that “holds that the common good is best served by the uninhibited pursuit of self-interest. Unless tempered by the recognition of a common interest that ought to take presence over particular interests, our present system is liable to break down.” Zielonka argues neoliberal capitalism has created deep economic and geographical divisions. (He notes, for example, that in his home country of Poland, although growth rates have been high over the past decades, their rewards have been very unequally spread and precarious jobs lacking social benefits have become commonplace.) Neoliberal capitalism raises the question of whether democratic elites are able to control markets and protect societies. If they are not, is it any surprise voters have grown dissatisfied and disillusioned with them?
This brings Zielonka to the European Union, which was supposed to be the “transnational public authority capable of regulating transnational markets.” But, like national governments, the EU turned out to be unable or unwilling to play this role. Zielonka argues that the EU’s support for economic liberalization and austerity and its inability to mitigate their painful effects or provide mechanisms for Europeans to voice their opposition to them has eroded its legitimacy.
The undermining of national power by the EU insulated democratic politicians and institutions from the “voice of the people” by turning decision-making over to regulatory bodies, central banks, and technocrats. Zielonka again charges liberals with the rise of technocracy: as “public pressure [came to be] considered irresponsible if not dangerous,” “professional politicians . . . bankers and jet-set experts” told “majorities what is best for them,” and the electorate was increasingly “deprived . . . of a say on politics.” If the defenders of liberal democracy can’t convince citizens that their voices count, then they should not be surprised when populism wins.
After many decades of relative stability, Western elites forgot how precious and precarious liberal democracy actually is. And perhaps because the collapse of communism further blinded many to the tensions and vulnerabilities inherent in capitalist liberal democracy, elites seem to have forgotten that stability must be grounded in an equitable economy that supports diverse communities. Our task today is figuring out how to recreate such conditions.
Sheri Berman is a professor of political science at Barnard College, Columbia University. Her book, Democracy and Dictatorship in Europe: From the Ancien Régime to the Present Day is forthcoming (Oxford University Press, 2019).