Few days ago, “The Editorial Board” of Financial Times published an article calling for “radical reforms”.
The article says:
Radical reforms — reversing the prevailing policy direction of the last four decades — will need to be put on the table. Governments will have to accept a more active role in the economy. They must see public services as investments rather than liabilities, and look for ways to make labour markets less insecure. Redistribution will again be on the agenda; the privileges of the elderly and wealthy in question. Policies until recently considered eccentric, such as basic income and wealth taxes, will have to be in the mix.
…
The leaders who won the war did not wait for victory to plan for what would follow. Franklin D Roosevelt and Winston Churchill issued the Atlantic Charter, setting the course for the United Nations, in 1941. The UK published the Beveridge Report, its commitment to a universal welfare state, in 1942. In 1944, the Bretton Woods conference forged the postwar financial architecture. That same kind of foresight is needed today. Beyond the public health war, true leaders will mobilise now to win the peace.
So what explains this shift?
The important point is that FT which just speaks for the ruling class hasn’t become left-wing, it’s just adopting a left-wing policy. The number one point of liberalism—the ruling class ideology—is to prevent a left-wing rise. Anything for that, including the use of left-lite politics, temporarily.
There’s a new episode, of the Citations Needed podcast titled Episode 98: The Refined Sociopathy of The Economist and featuring Alexander Zevin on his book Liberalism At Large—The World According To The Economist.
The episode is about The Economist and also about the word “liberalism”.
From the transcript:
AlexanderZevin: One of the things that book tries to do is to bring the history of imperialism into the history of liberalism, and usually they’re not spoken about together. In fact, in many histories of liberalism you’ll get the impression that liberals were anti-imperialists, they were against the empire, but The Economist, and what I argue is the dominant strand of liberalism, isn’t. It’s consistently pro-imperial from the 1850s at the time of the Crimean War, and the Opium War in China, and the Indian mutiny, and many other conflicts all the way through to the present.
In the last post, I linked to John J. Mearsheimer’s paper Bound To Fail: The Rise And Fall Of The Liberal International Order. The paper was more from a political perspective than from a perspective of political economy, although it did go into the economics of it.
There’s a Post-Keynesian paper by Thomas Palley published last year, I thought I should recommend reading, since it goes into the political economy aspect of it. Also it is rooted more in the heterodox Keynesian perspective, unlike Mearsheimer who although criticises the US establishment, seems to want to propose an order which benefits the United States the most, not a new economic order which benefits the whole world.
The liberal international economic order benefited the United States, or at least the “top 1” but because of countries gaming the system, started to backfire. The US has large current account deficits as a consequence of which its negative net international investment position grew larger and larger as this BEA chart indicates:
The solution is to dismantle the liberal international economic order in favour of new rules of the game which benefit everyone, not just oligarchs.
I came across this fantastic article by John J. Mearsheimer, from earlier this year, on how the liberal international order is failing. It’s written more from a political perspective (and mainstream too) than from a heterodox political economy perspective but it’s worth a read.
From the introduction:
Abstract
The liberal international order, erected after the Cold War, was crumbling by 2019. It was flawed from the start and thus destined to fail. The spread of liberal democracy around the globe—essential for building that order—faced strong resistance because of nationalism, which emphasizes self-determination. Some targeted states also resisted U.S. efforts to promote liberal democracy for security-related reasons. Additionally, problems arose because a liberal order calls for states to delegate substantial decisionmaking authority to international institutions and to allow refugees and immigrants to move easily across borders. Modern nation-states privilege sovereignty and national identity, however, which guarantees trouble when institutions become powerful and borders porous. Furthermore, the hyperglobalization that is integral to the liberal order creates economic problems among the lower and middle classes within the liberal democracies, fueling a backlash against that order. Finally, the liberal order accelerated China’s rise, which helped transform the system from unipolar to multipolar. A liberal international order is possible only in unipolarity. The new multipolar world will feature three realist orders: a thin international order that facilitates cooperation, and two bounded orders—one dominated by China, the other by the United States—poised for waging security competition between them.
Introduction
By 2019, it was clear that the liberal international order was in deep trouble. The tectonic plates that underpin it are shifting, and little can be done to repair and rescue it. Indeed, that order was destined to fail from the start, as it contained the seeds of its own destruction.
The fall of the liberal international order horrifies the Western elites who built it and who have benefited from it in many ways. These elites fervently believe that this order was and remains an important force for promoting peace and prosperity around the globe. Many of them blame President Donald Trump for its demise. After all, he expressed contempt for the liberal order when campaigning for president in 2016; and since taking office, he has pursued policies that seem designed to tear it down.
It would be a mistake, however, to think that the liberal international order is in trouble solely because of Trump’s rhetoric or policies. In fact, more fundamental problems are at play, which account for why Trump has been able to successfully challenge an order that enjoys almost universal support among the foreign policy elites in the West. The aim of this article is to determine why the liberal world order is in big trouble and to identify the kind of international order that will replace it.
Visiting Africa and Asia in the 1960s, Conor Cruise O’Brien discovered that many people in former colonies were ‘sickened by the word “liberalism”’. They saw it as an ‘ingratiating moral mask which a toughly acquisitive society wears before the world it robs’. O’Brien – ‘incurably liberal’ himself (at least in this early phase of his career) – was dismayed. He couldn’t understand why liberalism had come to be seen as an ‘ideology of the rich, the elevation into universal values of the codes which favoured the emergence, and favour the continuance, of capitalist society’. This seemed to him too harsh a verdict on a set of ideas and dispositions that appeared to promote democratic government, constitutionalism, the rule of law, a minimal state, property rights, self-regulating markets and the empowerment of the autonomous rational individual.
Liberal ideas in the West had emerged in a variety of political and economic settings, in both Europe and North America. They originated in the Reformation’s stress on individual responsibility, and were shaped to fit the mould of the market freedoms that capitalism would need if it was to thrive (the right to private property and free labour, freedom from state regulation and taxation). They did not seem particularly liberal to the peoples subjugated by British, French and American imperialism in the 18th and 19th centuries. Contradictions and elisions haunted the rhetoric of liberalism from the beginning. ‘How is it,’ Samuel Johnson asked about secession-minded American colonists, ‘that we hear the loudest yelps for liberty among the drivers of negroes?’ John Stuart Mill credited India’s free-trading British overlords with benign liberal intentions towards a people self-evidently incapable of self-rule. ‘Despotism,’ he wrote, ‘is a legitimate mode of government in dealing with barbarians, provided the end be their improvement.’ Alexis de Tocqueville, by contrast, felt no need of the ingratiating moral mask; the French colonial project in Algeria was a glorious enterprise, a vital part of French nation-building after decades of political turmoil.
It wasn’t only the entwined history of liberalism and imperialism that in the 1960s made many Asians and Africans suspect American and European liberals of being ‘false friends’ …
