America and Europe, and, indeed, other parts of the world are going through major political, economic and cultural crises. In the U.S., some social critics consider the likely Democratic and Republican candidates for president to be among the most corrupt, power lusting and personally offensive that have ever run for that high office.
In Europe, the Social Democratic and moderately Conservative political parties that have ruled over the countries of Western and Central Europe for decades now seem to be under attack by nationalist and explicitly anti-freedom parties whose leaders have growing popular support.
In other parts of the world, governments are increasingly restricting or limiting freedom of speech, freedom of the press, arresting real and potential political opponents, including those who are peacefully going about the business of dissent, and centralizing power and control even further in hands of ruling politicians and bureaucrats.
Supposed Reasons for Political Anger and Resentment
These crises, especially in the United States and Europe are disturbing for the reason that there has not been any major or dramatic social or economic cataclysm to explain why it is happening. Many point to the severity of the 2008-2009 financial crisis and recession. Others emphasize the disruptive effects of globalization over the last few decades. And particularly in Europe, the recent wave of mass migration from the Middle East and North Africa is argued to be the source of these “reactionary” political currents.
But the fact is, no matter how negative the affects of the 2008-2009 economic downturn and its lingering residues in the form of high unemployment (in Europe) and sluggish economic growth (in both the U.S. and in the European Union), its impact and severity in no way matches the depth or duration or trauma of the Great Depression of the 1930s on the people of the industrial world of that time.
Globalization has, no doubt, put pressure on a number of existing industries and occupations in America and the EU as countries that were long defined as the underdeveloped “Third World” have been rising out of poverty and finding their market niches in the post-Soviet world economy of the last quarter century. But at the same time, the growth and intensification of the global division of labor has expanded world production, widened the variety and availability of a large number of goods and services, and made many goods and services far less expensive to buy while at the same time significantly improving their qualities and features.
Americans, certainly, are far more used to waves of immigration than their European counterparts. But the anti-immigrant sentiments often seem equally pronounced in both these parts of the world. However, the fact also is that when markets have been generally open and competitive, including the market for labor, immigrants have not only merged into the host populations within one or two generations, but have noticeably assisted in raising the standards of living for all in these societies, as they provide more hands to do more productive work, again, to the benefit of the large majority.
The Selling of the Interventionist-Welfare State
What, then, accounts for this anger, hostility and rejection of the existing order of things on both sides of the Atlantic? And why the appeal and attractiveness of leaders and political movements that are often classified as xenophobic, protectionist, authoritarian, and nationalistic?
I would like to suggest that what we are witnessing is the failure and crisis of the interventionist-welfare state – the regulating and redistributing political system – in the widest meaning of this concept and its public policy manifestations.
The interventionist-welfare state was “sold” to the citizens of the United States and the people of Europe based on the idea that it represented a “middle way” between unrestricted and unbridled capitalism and the alternative of rigid and potentially dictatorial comprehensive socialist central planning. The interventionist-welfare state would combine the best and most desirable features of both “capitalism” and “socialism,” without the unwanted characteristics of either.
The unhampered free market economy, it was argued, leads to exploitation of workers and consumers for the benefit of a handful of wealthy members of society. That is, the socialist critique of free market capitalism was accepted and endorsed. On the other hand, experience seemed to suggest, especially after the observed of “excesses” in the Soviet Union and other communist regimes, that a fully socialist system of government control and central planning led to loss of personal freedom and sluggish economic growth and opportunity. That is, the pro-market criticisms of economic collectivism were partly, if grudgingly, accepted as a potential danger.
Thus, the case was made for that “third way” that would bridle and harness the “excesses” of the market economy through networks of government regulations and prohibitions on private enterprise, and with fiscal policies to redistribute wealth that would narrow egregious inequalities in wealth and opportunity while also funding the costs of the government supplied “social safety nets.” At the same time, civil liberties would be secured through preservation of “democratic” politics to assure continuing accountability of elected officials to the wishes and will of the citizenry.
This conception of the politically managed market combined with democratic decision-making became not only the ideal and practical institutional setting in which human everyday life now was confined and carried on, it slowly came to be accepted and defined as the meaning and definition of a free society and a capitalist economic system.
As a consequence, if doubts, fears, disagreements or anger about the outcomes of this system emerged among the citizenry they now identified the system’s failures with “capitalism” and “democracy.” Thus, there are those on the political “the left” whose frustrations take the form of beliefs and demands that “capitalism” must be controlled and taxed even more because clearly “free markets” have “failed.” And there are those on the political “the right,” with resentments against representative government as a rigged system benefitting the “insiders” at the expense of the rest of society. And there are shared elements of both these frustrations and resentments – angers at exploiting “capitalism” and resentments with rigged “democracy” – among people all along this traditional notion of the political spectrum.
But whether citizens view themselves as being politically on “the left” or “the right,” the source of their angers and resentments all really have their origin and cause, as I’ve suggested, in the failures in the “third way” of the interventionist-welfare state.
The Meaning and Working of a Real Free Market
On a real or truly free market, “exploitation” or “injustices” are prevented by the nature of competitive capitalism. Members of society are recognized as possessing and protected in their individual rights to life, liberty and honestly acquired property. Human relationships are based on peaceful agreement and voluntary consent.
In the free market economy, people are mutually interdependent in production and exchange based on participation in a system of division of labor. Each individual is at liberty to pursue his life in his own way, guided by his own beliefs, desires and values. But to acquire the financial means and material resources to further and fulfill his life as he wishes, he must apply himself, in his own self-interest in his role as a specialized producer, to using his talents and abilities to satisfy his fellow societal neighbors’ (which today increasingly encompasses the world’s) particular consumer demands if he is to earn the income or profits that enable him to have the means to satisfying his own ends as a consumer of the goods and services offered by others to him.
On the supply-side of the market, entrepreneurs and other private enterprisers must compete for the services of those who may assist them, respectively, in producing the products from which they hope to earn profits offered to the buying public. In this competitive process, the free market tends to see, therefore, that each receives the judged full value of their contribution to the processes of production (in the case of workers, the value of their “marginal product” in the lingo of the economist).
On the demand-side of the market, entrepreneurs and other private enterprisers must compete for the business of the consuming public, whose purchases of their respective goods and services determines whether they earn net profits over their costs or suffer losses that threaten the sustainability of their private enterprises in the marketplace. In this competitive drive for consumer business, the free market creates and fosters the incentives to constantly improve the qualities of existing and new products and to devise ways to offer them at more attractive prices.
Of course, in a world of constant and never-ending change, discovery and innovation, supplies and demands are never in perfect balance, and profit opportunities constantly reemerge and loss situations always have to be avoided. The free market is in continuous movement and adjustment. But, nonetheless, the incentives and interactions among the participants in the marketplace are always tending and pulling the system toward such a conceivable coordination and “equilibrium” of the competitive economic order.
Government Intervention the Cause of Injustice, Corruption and Abuse
But once the free market, competitive process is interfered with through forms and layers of government regulation, restriction, prohibition, and favoritism the economic system not only no longer has the full capacity to effectively and successfully adapt to the changing circumstances of everyday life, but the outcomes experienced in the marketplace are now, increasingly, politically manipulated results.
A private enterprise’s market share and profit margin may be due to the entrepreneur’s greater success in making that better mousetrap offered at a more attractive price. But there is a growing frequency that the profits made and the market share captured is partly and in some cases maybe almost entirely due to the favors and privileges that special interest groups have received through the types and patterns of government intervention that benefit the recipients at the expense of the consumers who have less choice and pay higher prices and potential rival producers who are locked out of markets or find it more costly and difficult to compete against the fortunate private enterprises closest to the political powers-that-be.
The market economy appears to many as a rigged game that some are able to benefit from at the expense of the rest of society. But rather than conclude that the heart of the problem is the growing and ever-more intrusive spider’s web of government-bestowed regulations, restrictions, favors and privileges that prevent or twist the more reasonable and just outcomes of a freer market, too many people’s short-sightedness and the ideological interpretations offered by intellectuals and policy advocates on “the left” proclaim that it is the greed of the profit motive, or the selfishness of the enterpriser, or the inherent perversities within a market economy that inescapably results in “social injustice,” “exploitation,” and inequity in the society as a whole.
Economic Intervention Breeds Democratic Corruption and Abuse
In the mad rush for economic favors and privileges from those in political power, the democratic process necessarily becomes corrupted. In the eighteenth and nineteenth centuries, the friends and defenders of human liberty called for representative government as a desirable replacement for the prevailing political system of absolute monarchy. Political rulers should be restrained from committing abuses against their subjects long experienced in human history.
Representative government was meant to offer a political mechanism under which and through which those in government would be answerable to the citizenry over whom they ruled in the enforced of the laws of the land. Constitutional government was also meant to limit the powers of any government by specifying its limited powers and responsibilities to secure the individual rights of the citizens from abuse and overreach by both the government and other citizens who might try to use government to their own gain at the expense of the rest of society.
But once governments came to be seen not merely as the protector of each individual’s rights, but the political avenue by which favors and privileges might be obtained through campaign contributions and election day votes for those running for government office who promise such special benefits in exchange for helping them achieve political office, it was, also, inevitable that democratic politics would become a corrupted and vulgar and unprincipled competition for power and position to tax, redistribute and regulate the market and other social settings of human association to successfully impose a regime of political plunder and paternalism.
Thus, the modern plunder land of the contemporary democratic process is viewed by a growing number of people in society as the domain of the “establishment,” the “elite,” the “insiders” who know how to manipulate and massage the system for themselves and their “friends,” all of whom who come to dominate and control the political regime that was meant to secure people from abuse and exploitation.
The Coming of the “Outsider” and “Strong Man”
It is not surprising, therefore, to see a new turn toward the “strong man” and the political “outsider” who will overcome the abuses and misuses of the corrupted democratic process with “radical” change and interventionist protections for those who have been the seeming losers in the prevailing political game in the United States and throughout the European Union.
The outsiders and strong men do not suggest or offer the end to privileges, favors, redistributions and safety nets. No, instead, they promise to redirect the power of government – if only “the people” give them more concentrated and less restricted political authority – to set things right for the victims of unjust “capitalism” and corrupted democratic politics through redirected uses of the interventionist-welfare state.
On the political left, the appeal and support for Bernie Sanders reflects this sentiment. Hillary Clinton epitomizes the Democratic Party “inside” player and manipulator. Her personal corruption and her chameleon-like changes in policy positions are precisely what the Party’s “establishment” wants and likes in her. She can be all things to all Democratic Party-related interest groups, so to gain their support and votes to maintain and regain the party’s power in Washington, D.C.
The Sander’s supporters angered by the corruption of “the system,” and uninformed and deluded about what their candidate’s call for “democratic socialism” really means other than the false promises of “free” everything, they want the “outsider” who offers the dream of transformative change that will give them a costless land of milk and honey.
On the conservative side, the Republican Party has frustrated and alienated segments of their supporters. Election-after-election, the appeal was made to give them the political position and power to rein in “big government” through lowered taxes, reduced regulation and a smaller welfare state. But whether in the majority or minority position in the Congress and whether or not they held the White House, the Republican Party establishment, their “insiders,” have wanted to misuse and abuse the political process for their power lusting and plundering, just like the Democrats, only to serve different coalitions of special interest groups to stay in office at the expense of taxpayers, consumers, and potential market competitors.
As a consequence, a sufficiently large enough plurality of Republican primary voters could successfully demonstrate their frustration and anger by supporting a self-proclaimed “outsider,” Donald Trump, not beholden to interest groups, who refuses to play the mainstream rhetorical games on the campaign trail, and who promises to “make the deals” on his own, with or without the Republican establishment, to set the American ship of state back on the course to “greatness.”
At the same time, Trump has promised to fulfill the mixed bag of inconsistent and contradictory policies that many Republicans have run on for years. He will get America out of the Middle East, but he will crush the Islamic State. He will get government spending and debt under control, but Social Security and Medicare will be basically untouched. He will make America respected and loved around the world again, but he will threaten a trade war with China, a new conflict with Iran over nuclear weapons, and antagonize Mexico and other parts of Latin America by building a “beautiful” and big wall along the southern border. He will get American free enterprise growing again, but he will punish American firms that try to move abroad and ones that have already shifted some of their production facilities to other countries. He says that American intelligence agencies has gone too far in intruding into people’s privacy, but he wants companies like Apple to give up their security secrets so the U.S. government can more easily spy into our private lives.
In Europe, these trends have been showing themselves in France, Germany, Hungary, Poland, and a number of other countries in which nationalist, anti-immigration, anti-capitalist parties and movements have been gaining support in public opinion polls or winning larger electoral shares in the political process. Leaders in these political parties and movements want more centralized government, less freedom of the press, more controls over the market, and less opportunity for dissent or opposition to authoritarian power in their hands.
Wanted: Free Markets, Not More Interventionism
What they all are calling for are more powerful interventionist-welfare states to “correct” the disappointments with the prevailing and corrupt interventionist-welfare states, but which are labeled “capitalism” and “democracy” to justify more power in the hands of those wanting control of their governments.
Lost in all this is any reasonable understanding among most of the electorate that the only way out, in the long run, from the disappointments and frustrations with the current political system to realize that it has nothing to do with a real free market, capitalist economy, or a properly constitutionally limited representative government that has as its purpose the securing and protection of each individual’s rights, and not their violation and abuse.
Personal freedom and economic liberty, therefore, continue to be the victims in a political contest between competing collectivisms and statisms that battle over who shall control the reins of governmental power and for what special interest purposes its use of regulatory and redistributive coercive authority shall be applied.
