The Political Economy of Neoliberalism and Illiberal Democracy

Abstract

The unprecedented opportunities missed at the end of the Cold War have come back to haunt and taunt us in the form of misshapen ideologies and misconceived policies. Discredited notions discarded by history once again raise their heads to be finally buried or bury us. Despite the rhetoric of the Washington Consensus, the fall of the Berlin Wall, the collapse of communism and dissolution of Soviet authoritarianism did not mark a final vindication and victory for Western democratic neoliberalism. They only removed the antagonist who had compelled Western ideologues to moderate their actions to counterbalance the obvious humanistic appeal of socialism. Blinded by their own propaganda, theorists, politicians and the general public have embraced a course that threatens the stability and sustainability of Western society. Globalization, financialization, global mergers and acquisitions, shadow banking, international tax havens, the policy bias favoring energy-intensive automation, maximizing share-holder value, state capture, oligarchy and plutocracy have fueled soaring levels of economic inequality and insecurity. More importantly, they have shaken the roots of the social consensus that is the foundation of modern liberal democracies: polarizing and destabilizing society and throwing political processes into chaos. The notion that economics can be divorced and insulated from politics is an illusion. There is no economy without politics and law. A return to unbridled capitalism is threatening the culture of liberal values and the functioning of democratic institutions. Even mature democracies show signs of degenerating into their illiberal namesakes. The historical record confirms that peaceful, prosperous, free and harmonious societies can best be nurtured by the widest possible distribution of all forms of power—political, economic, educational, scientific, technological and social—to the greatest extent to the greatest number. The aspiration for individual freedom can only be realized and preserved when it is married with the right to social equality. The mutual interdependence of the individual and the collective is the key to their reconciliation and humanity’s future.