System Demise, and What Happens Next
“Democratic capitalism no longer works well enough to keep together a country of 325 million people and to guarantee domestic peace,” the German journalist Holger Stark declared in the news weekly Der Spiegel, trying to explain Donald Trump’s America to his German readers. I think Mr. Stark is right; our way of governance is under deep systemic stress from both sides of the money/power equation.
The disrobing of the financial Emperors began with the financial collapse of 2008. As the elite who run the financial world stood naked amid their misdeeds, we glimpsed how, among many other things, they had packaged and sold bad real estate loans under false pretenses, for profit, with the complicity of the ratings agencies. (Iceland suffered mightily. See deeper coverage in my book Out in the Cold.)
The moment lasted no longer than it took their Maitre d’s to sweep the crumbs from the Emperors’ Michelin-rated dinner tables. The systems of financial governance they support patched things up, bailed them out and dispatched that nasty little business, and fast.
But the markets were left in turmoil. The elite’s solution was austerity, which resulted in rising unemployment. This led to mass protests and the Occupy Wall Street movement. Occupy seized on rising inequality as a rallying device, calling themselves “the 99 percent,” pointing out that the top one percent of income earners, who are less affected by austerity measures, are generally the decision makers who caused the problem in the first place.
I think to watch the nascent Obama administration repair the Emperors’ balance sheets was a revelation for middle America. The former party of the working man, made up of all those out-of-work cadres to whom Donald Trump would later appeal, showed flyover country that whichever flag of political leadership flies over the land, the infestation of money has rotted the system clear through.
In a Maslow’s hierarchy, the Financial Times columnist Martin Wolf ranks capitalism as more fundamental than democracy. He writes, “Democracy cannot function without a market economy.”
“In today’s world, it is not capitalism that is in imminent danger, but rather democracy. A predatory form of post-democratic capitalism, not the end of capitalism, is the threat.” By this Mr. Wolf means we should fear authoritarianism.
Mr. Wolf works for a newspaper whose focus is money, so it is not surprising that he might overlook flaws in the workings of the money part of the money/power question. But there are glaring flaws, and they give rise to alienation.
An alienated center’s loss of faith in institutions invites the rise of the fringes, the peripheral haters and dividers that always rise at times when the disillusioned are too crestfallen to keep up their guard. Opportunist would-be leaders are always ready to exploit such an electoral mood, and this is what we call the rise of populism, an affliction from which we currently suffer.
The post-post-Cold War world is well and truly in flux. Conflicting signals are everywhere. Vladimir Putin’s unapologetic Russian nationalism has brought along bits of east Europe, notably Victor Orban’s Hungary and a grudge-wielding conspiracy theorist whose destructive policies seem driven by personal vendetta, the power behind the throne in Poland, PiS chairman Jarosław Kaczyński.
Brexit deflated proponents of the European project. Donald Trump has NATO rightly alarmed. Mr. Putin’s loans to Marine Le Pen’s Front Nationale seek and may attain influence over a Europe teetering on terminal division.
We all see the challenges facing the German chancellor, who looks more tired by the day, after her fateful acceptance of 1.1 million refugees (or was that 890,000?) in the summer of 2015. A narrative is emerging that she “represents what many voters consider the failings of the past.” Her painful audience with the U.S. president could scarcely have bucked her up before the September electoral challenge from the SDP head Martin Schulz, who has the clear and canny benefit of having been away in Brussels and untainted by the immigration wars.
Still, for every Orban in Hungary there is an Austria, where 73-year old Alexander Van der Bellen ultimately won the presidency last December with 53.8 percent over Norbert Hofer, heir to Jörg Haider’s anti-Muslim, anti-immigration Freedom Party. In Bulgaria the center-right has held, with the pro-E.U.-integration (and corruption-plagued) Boyko Borissov likely to retain his premiership after elections at the end of March. Then too there is the Dutch rejection of the nasty, isolated Geert Wilders. It appears the power side of the money/power question could go either way.
An epic, scene-setting battle is being fought right now, before our eyes, and it is historic. After the 25 year lull we called the “post-Cold War,” this is the world-defining struggle for what comes next. It is history on fast-forward. For now, it is hard to see the emerging landscape for the early spring fog. The 7 May runoff in France and September elections in Germany will help to illuminate the path forward.
The potentially good news on this side of the Atlantic is that Donald Trump’s act wears thin as fast a Wal-Mart t-shirt. We have fast come to know him as a slight-of-hand president, a purveyor of diversion, and there is every chance that his dissipation of the common trust will in time bring the country to a crisis that will not end well. In the context of the times we live in, if there could be a worse time for my country to have installed an ignorant, self-involved unsteady hand on the presidential tiller, I can not think of when it would be.
His rank dissimulation may — just may — prevent our president from being trusted long enough to cause physical harm. How we get from here to there is plenty fraught. But surviving the Trump threat won’t be the end of our woes, for they are systemic. We will still be left to repair our system’s corrupted relationship between money and government. A subject for future consideration.