Why Modern Life Makes Us Crazy
Without any counter on the left, unregulated markets have run rampant and made us insecure, frightened, and ripe for reactionary populism
In what seems like the blink of an eye, the world has taken a sharp turn for the worse. Deep verities about the strength of liberal democracy, the weakening of nationalism, the self-evident value of open borders and trade, have been thrown into doubt—not in some far corners of the world, but right here. The inhabitants of Western Europe and the United States seem suddenly fed up with their governments, their leaders, their underlying operating systems. Theories and speculations abound about why this should be so.
Towards the beginning of the modern age, when technology and capitalism were joining forces to drive rapid economic growth, two seminal figures, Adam Smith and Karl Marx, agreed on what capitalism was all about. They agreed that it was both the most productive and most disruptive force ever invented. “All that is solid melts into air, all that is holy is profaned,” Marx wrote. Smith described in detail the accelerating processes of change and specialization that threatened to create an impoverished, imbecilic population.
Ever since, modern societies have struggled to enjoy the tremendous wealth produced by capitalism while keeping in check its destructive tendencies. Unregulated free markets uproot established communities, subvert long-held identities, and subordinate individuals to impersonal and far-away masters. Today’s cutting edge capitalists trumpet the glories of ‘disruption’ and ‘change,’ which all too often are corporate euphemisms for sending jobs abroad, or downsizing, or throwing workers on the scrap heap and telling them it is their responsibility to go back to school and retool themselves so they can earn a place at the shrinking trough. Even for the winners, accelerating cycles of automation and globalization are reducing the room at the top. Competition to ensure that your children succeed—buying a house in the best neighborhood with the right schools that feed into a top college that gets you key internships and on and on—gets more and more cut-throat.
The battles between the acolytes of unregulated free markets and those trying to temper their disruptive effects have been going on for 200 years. Nineteenth-century market liberalism was met with socialism, communism, trade unions, new democratic political movements and new ideas for social safety nets and progressive government. In the United States the extremely rough edges of global industrial capitalism were sanded off by the Progressive movement, good government reforms, and ultimately by New Deal programs to cushion people from the vagaries of unregulated markets. Communal and family support systems that were no longer adequate were supplemented and replaced by public programs. European states often went further but the general direction of change and reform was the same.
But the seeming consensus around these changes began to erode in the 1970s, especially in the United States and Great Britain. Business interests were alarmed by the anti-capitalist, anti-consumerist ethos of the 60s; when economic growth hit some speed bumps caused by the need to adjust to new global actors and rising oil prices, staunch and well-financed opponents of government intervention in the economy struck back. In a strategic campaign at the level of ideas, politics, and popular culture they succeeded in changing the terms of the debate. It became less and less legitimate to worry about raising up the poor and unfortunate, and more au courant to wring our hands about entrepreneurs and businessmen who were being hampered by taxes and regulations. Unions were no longer heroic defenders of the average Joe against the rich and powerful, but corrupt obstacles to private enterprise. Americans who had supported huge post-war public programs to help white men buy homes and go to college and start businesses were encouraged to reject them when they began to include blacks and women and immigrants.
As new thinking was translated into more conservative, market-friendly policies in the 1980s and 90s, however, it turned out that no change was ever enough. Criticism of government, unions, and ‘liberalism’ accelerated with every electoral cycle. What had begun as a corrective to moderate the growth of the welfare state turned into a determination to destroy it root and branch. Ideas at the margins of libertarian and conservative thought, such as privatizing schools and eliminating inheritance taxes, quickly migrated to the center and became dogma, not just for Republicans but across the political spectrum. Networks of rich activists created an industry of talk-show hosts, political consultants, and ‘think-tanks’ to push more and more radical ideas. Instead of a conservative swing of the pendulum, the United States incubated a full-blown reactionary movement based on anger, fear, and outlandish conspiracy theories.
The results have been far-reaching. Trust in government and politicians has plummeted. Tax cuts, deregulation, and anti-worker policies have shifted massive wealth to the very rich. Economic inequality has skyrocketed. Programs to support the poor and cushion workers from the impact of deregulated capitalism are opposed not only on fiscal but moral grounds, as contrary to American values of freedom and individual rights.
Internationally, the same neoliberal ideology manifested itself in an embrace of ‘globalization’—free trade, free flows of capital, of ideas, of people—and an eagerness to use economic power and international financial institutions to impose these values around the world. Abstract theories about ‘comparative advantage’ glossed over the reality that back in the US some groups were big winners—largely the investor class—and others, like industrial workers, were big losers. Consistent with the new ‘tough love’ attitude to people in distress, not enough was done to help people whose lives were upended by the outsourcing of jobs and the rise of China. Instead of bringing their growing wealth home to benefit everyone, the rich took advantage of globalization to move it offshore and become ‘citizens of the world’ with fewer and fewer ties to their home countries.
An in-depth analysis of global economic trends (Branco Milanovic, Global Inequality) since 1988 shows that the big winners have been the global poor, mostly in China and other parts of Asia; and the very rich, especially in the US. The losers have been the lower-middle classes—the working class–in the industrialized West, whose incomes have barely budged for 30 years.
Things have now come to a breaking point. The Great Recession pulled the rug from under an already precarious middle class and exposed the inadequacy of a blind faith in markets. Open borders and immigration seem to many Americans a plot to steal their jobs, erode their culture, and leave us vulnerable to random terrorist attacks. There is no slowdown in the pace of technological and financial change that guarantees a never-ending stream of economic and cultural disruption. In much of Europe the economic distress is far worse, home-grown terrorism has blossomed, and absorbing immigrants seems an insurmountable challenge.
The threat to capitalism from an organized, dangerous Left disappeared with the collapse of the Soviet Union and China’s embrace of a market economy. The Leninist alternative was a cure far worse than the disease, but embodied in powerful states it succeeded in scaring capitalists into concessions to humanity. Since then there has not been an effective voice to counter the corrosive effects of markets on human communities. Arguments that rely on economic rationality and maximizing efficiency continue to carry the day with so-called conservatives who have forgotten that conservatism is meant to safeguard families and communities. An existence fully exposed to unbuffered economic forces lacks the security, predictability and dignity needed for a decent life. After enough battering people will push back, often in ugly ways. Societies that become unmoored are open to finding scapegoats and to embracing demagogues promising salvation.
Market fundamentalists have now created the conditions for a tidal wave of reaction. While the success of Bernie Sanders suggests that many are ready for a renewed progressive populism (though Bernie’s ‘socialist’ identity was usually seen as the vestige of a bygone era), the reaction has so far been captured by nativists and nationalists. People see a few at the top making off with more and more of society’s wealth, and using that wealth to shape the political system in their favor. They resent immigrants and minorities asking for a piece of the pie. They have contempt for new educated elites who seem preoccupied with identity and gender issues but oblivious to their problems.
Capitalism has always been too important to leave to capitalists. Plenty of today’s capitalists know better, but as Warren Buffett warned us: “There has been a class war going on for twenty years, and my class has won.” Winning has meant making life worse for too many fellow citizens. We are reaping the whirlwind.