Economic boom times over. Democracy next?

The argument for liberalism and democracy has rested on economic success. More wealth for more people has been generated in societies calling themselves liberal, democratic, and capitalist, notes Zachary Karabell, head of global strategies at Envestnet and author of “The Leading Indicators: A Short History of the Numbers that Rule Our World.” The fusion of economic prowess and national strength seemed to make an iron-clad case for the unique virtue of democracy, liberalism, and capitalism,” he notes.

“For much of the past decades, the United States has touted the fusion of democracy, liberalism, and capitalism as the most robust formula ever known to generate prosperity, security, and innovation. It is hard to argue against the success of that cocktail in the 20th century, Today, however, not only is measured economic output slowing, but so is population growth in the West, he writes for Foreign Policy:

This raises a question that should have been asked more pointedly years ago: Is the West’s economic success simply a product of the massive demographic explosion the world has seen in the past two centuries? In short, more bodies demanded more stuff. Since democratic societies loosely organized around the fuzzy idea of liberalism practicing what came to be known as market capitalism were actually pretty good at making more stuff (food, clothing, shelter), the idea crystalized that history had reached its apogee. In other words, it doesn’t get any better than this; no system is better at providing for basic needs and wants the Western liberal democracy. And thus all countries should inevitably move toward this form of governance.

RTWT

Economists are having to grapple with big issues that have led to the rise of the populists in the post-crisis economy, The Economist recently observed, adding that “as yet, no new Keynes or Friedman has come along to rethink economic theory in a way that answers all, or even the majority, of these questions.”

Unfortunately, the crisis facing liberal democracy and market economies is too urgent and too profound for us to sit patiently waiting for the emergence of a new Keynes or Friedman.