Since the advent of neoliberal capitalism under Thatcher and Reagan, many countries worldwide have dismantled many of the redistributive policies of the welfare state. Almost fourty years later, the West seems increasingly disenchanted with democracy. What is the relationship between these two trends? And, can liberal democracy truly co-exist with austerity politics?
The guest of the latest episode of our podcast Democracy in Question?, hosted by Shalini Randeria, is the renowned British economist Robert Skidelsky. Citing economist John Maynard Keynes, Skidelsky argues that an “irreligious” system such as modern capitalism, centred uniquely around consumption, must be “immensely, not merely moderately, successful to survive.” “Today, it is only moderately successful”, Skidelsky affirms. And, if it faulters in offering material gains to the many rather than the few, then the system becomes vulnerable to other creeds which may offer “spiritual nourishment as well”.
A combination of unemployment, increasing inequalities in wealth and income, and reduction in welfare provisions has created a “toxic mix” of economic and cultural resentment. “Globalisation should not be considered to be a system of economic transformation. It is the philosophy of liberal democracies: economic and political integration across frontiers – and cultural integration, i.e. universal values. It forms a package. If the economic bit goes wrong, resistance to all the other things start to grow".
With other macro challenges looming large, such as climate change, the question of whether liberal democracies are up to the task becomes all the more urgent. What constraints are we able to put on the operations of a global financial system? For Skidelsky, a “tight nexus in our thinking” stands in the way: profit maximization and short-term thinking still prevail. “Capitalism”, he suggests, “has to be reconstructed very fundamentally if we were to get the ideas of efficiency over time, of sustainability, of precautionary principles, embedded in our thinking and policies”.
Listen to the episode
Download the podcast's transcript HERE
Shalini Randeria is the Director of the Albert Hirschman Centre on Democracy at the Graduate Institute in Geneva, Rector of the Institute of Human Sciences (IWM) in Vienna and Excellence Chair, University of Bremen (Research Group: Soft Authoritarianism).
Robert Skidelsky is the author of a three-volume biography of John Maynard Keynes and Emeritus Professor of Political Economy at the University of Warwick. His most recent book is “Money and Government: The Past and Future of Economics”.