Anyone paying close attention at the turn of the 21st century could
foresee the impending failure of the social-democratic consensus
throughout the developed world.
The exalted experts who rose to power in the postwar period built
gigantic state-based systems of social management and control and took
over vast swaths of private society, imposing planning schemes across
many sectors of economic life. They imagined themselves to be permanent
fixtures of the socio-economic system. After all, this approach won the
war (so they said), so why couldn’t it win the peace?
But there was a problem: over time nothing worked as it was supposed
to. There were massive internal contradictions within the model, as
Amity Shlaes shows in her new book on the Great Society. The new systems relied on bureaucratic command,
not market signals. There was another problem: they were hugely imposing
on people’s lives and property, and people don’t like that. Or rather:
they will put up with it so long as they perceive that the benefits
exceed or at least match the costs.
Building that apparatus – the efforts really began about a century
ago, extended through the New Deal, but became a full model of social
control in the postwar period – depended fundamentally on its successful
sales pitch: these were programs built by workers for the sake of
social justice, for the poor, for the marginalized, against plutocratic
But as F.A. Hayek had long demonstrated about socialism, the movement
was in fact nothing of the sort. It was originated by elites and
largely served elites: intellectuals, the people who knew better than
the masses, the people in power or wanting power, the winners in the
game of political manipulation.
These systems reached their breaking point by the late 1970s. For the
following three decades we observed piecemeal reform efforts such as
those that would re-incentivize investment and work, privatize labor
relations, control rates of money printing, deregulate, bring back
market forces, cut taxes, and re-empower society.
By the time socialism in China, the Soviet Union, and Eastern Europe
were abruptly swept off the map – a devastating blow to the whole model
of top-down control – there arose an inconvenient problem. Many
institutions constructed in developed capitalist societies were of the
same mode: centralized, managed by elites, vastly more expensive than
the benefit, ill-managed, and ultimately unworkable.
The dramatic events abroad further humbled the left in the developed
world. In the 1990s, the socialist left mostly went into hiding, as even
the Democrats in the U.S. and the Labour Party in the U.K. pursued real
reforms to welfare systems. It seemed like everyone had made his or her
peace with markets and free enterprise as the only system that truly
provides the goods.
As always with politics, the reform efforts were too little too late.
Public anger at the status quo built until the end of the century even
as private enterprise effectively constructed a completely new system
based on information and decentralized control. Ten years later, we had
the app economy, the ubiquitous cell phone, and globalized commerce to
the point that more than 60% of the GNP of the world was attributable to
imports and exports. It seemed like there was no going back.
Looking at this sweep of events led liberals like me to conclude that
history was on the right path. The state was failing in every area and
less popular than ever. There were too many anomalies to be sustained.
Social consensus was breaking down for a simple reason: the ethos of
social democracy presumes that society should operate like a large clan,
an impossibility in the context of a modernized globalized economy with
mass migration. Politicians came to be loathed alongside the
bureaucrats that managed the systems that political forces created. In
the course of a half century, public confidence in government had
slipped from two-thirds to one-tenth of the public.
The experts we put in charge of the state apparatus to rule us
through compulsion and coercion had proven to be an enormous flop. Their
wars on everything from poverty to drugs to illiteracy to terrorism had
made each of the targetted areas actually worse, while market forces
themselves – mercifully neglected by the state – were creating vast new
technologies in the newly dawned digital age and creating glorious new
opportunities for everyone. It was markets, not welfare, that lifted
billions out of poverty, opened up information economies, created
dazzling new modes of communicating and living, and blasted open the
possibilities for progress like we’ve never seen in human history.
But we liberals proved naive in our belief that history would march
along a linear path toward the light. We had presumed some or another
version of the “end of history” thesis that the next stage of history
was moving us toward human liberty and that the state would realize its
obsolescence and die a merciful death.
Looking back, we can see that the very same naive confidence in the
capacity of human beings to learn from experience also afflicted the
liberals of the late 19th century. Surrounded by the products of
liberty, innovations that were dramatically changing the world and
leading humanity to a new level of prosperity and peace – flight,
internal combustion, the commercialization of steel – they rested on
their laurels with a sense that their victory was somehow baked into the
narrative story of human evolution. Then came World War I. They had
clearly grown overconfident.
The equivalent happened to us in the last half decade. My own
opinions had previously trended in the direction of believing that
everyone would see the obvious failures of the state as an institution
and thus would the progress toward liberty continue in the right
direction. Instead, something remarkable and unexpected happened (though
it is all perfectly obvious in retrospect): the reaction to the failure
of leftist-style social democracy was not to embrace liberty but rather
to rally around the emergence of a new form of authoritarianism that
sought to govern with rightist-style rhetoric.
Which is to say: the state reinvented itself to live another day,
forestalling the hoped-for push to emancipate humanity from the
constructed oppressions of the last one hundred years.
The new movements came to power under a global surge of populist
agitation. Trump in the US is the most obvious case but a deeper look
shows that he was only one player among many in countries all over the
world. Rightist movements that were against the old order but for a new
form of state-imposed order rose up in Europe, Russia, and Latin America
I’ve called this new form of populism (which is a method of rhetoric
and a means of retaining power) “right-wing collectivism.” It feeds off
public resentment of the previous type of elite management of the social
order. It rejects the universalism (globalism) of the social-democratic
way and embraces instead a new form of nationalism that bleeds into
every application of reactionary statism: racism, religious bigotry,
misogyny, intolerance. It is invariably restrictionist on immigration
and protectionist on trade. It celebrates all the things the left puts
down such as faith and family but demands that these institutions serve
the common national project under a Carlyle-style great leader. It
brings back the leadership principle and executive rule. It is as
ill-liberal as that which it replaces but not obviously so since this
style of governance is more tolerant toward finance capital and
nominally capitalistic production, though also celebratory of industrial
Its champions called the model the “politics of human nature” without
noting that there are both lower and higher angels of nature: the
rightist brand of collectivism was all about tapping into the lowest
The problem was not only the right. What happens on the right somehow
always finds its mirror image on the left. The rise of this new form of
rightist extremism further fed the resurgence of the same on the left,
which similarly tried an experiment with the populist style. Down with
the rich. Pillage the millionaires and billionaires. Impose new global
plans of economic management. A green new deal. Punitive taxation. The
return of socialism itself!
The whole thing has been incredible to watch, but this is what
happens: one form of extremist paradigm shift creates an appetite for
another form, which is precisely why several astute observers have noted
the strange overlap in the proposed policies of Trump/Warren/Sanders:
statism becomes a kind of echo chamber of voices that seeks control by
seizing the machinery of power for their own purposes.
In the end, every form of state planning uses the same methods with
the same collectivist goal even if the details change depending on the
constituency being served.
The question that has been on my mind constantly for these last five
years has been: when does this all end? At what point does the populist
model die the death too?
I must give credit to David Brooks for drawing my attention to a trend this year that I had missed. His
column came and went in the flurry of minute-by-minute information flows
but, to my mind, this is one of the most important writings I’ve seen
on politics in years. His prescience here could define the look of the
next half decade.
Have you noticed that the world is on fire?…
The populist/authoritarian regimes are losing legitimacy. The members of the urban middle class in places like Hong Kong and Indonesia are rising up to protect the political and social freedoms.
These days, it doesn’t take much to set off a giant wave of anger. In Lebanon it was a proposed tax on WhatsApp. In Saudi Arabia the government raised taxes on hookah restaurants. In France, Zimbabwe, Ecuador and Iran it was rising fuel prices. In Chile it was a proposed 4 percent rise in subway fares.
The world is unsteady and ready to blow. The overall message is that the flaws of liberal globalization are real, but the populist alternative is not working.
Bingo! Here’s the problem. The populist must rely on exactly the same
means of control as their managerial elite predecessors from the
social-democratic project. The state is the state and there is no other
kind. Control is control and force is force, and they breed as much
popular resentment as the other managerial type from which populism
emerged as a reaction.
State control does not work. It never has. It can’t because, as it
turns out, the people who manage state programs are no smarter than the
people they manage; in fact, it is worse because the managers lack
access to reliable signals of market forces. Also, a revolution on this
scale is bigger than another person who purports to lead it. Rise to
power in a revolt and prepare to be the next scapegoat.
That is precisely what is happening right now. The new movements of
protest are only nominally about left and right, despite the media
attempt to make them fit those categories. As Brooks says, “the protests
in all these places are leaderless, so it’s unrealistic to expect them
to have policy agendas. But the big question is, what’s next? What comes
after the failure of populism?”
He doesn’t dare point to the actual answer because he can’t come
around to facing it, because doing so would amount to admitting that a
century-long intellectual project is an enormous failure. There is an
answer to the question of which paradigm best suits the needs of a
modern, progressing, global, diverse world order powered by
technological innovation that enshrines human choice as a first
principle. The answer is now what it has always been: a free society
protected from the wiles of political machines through extreme
restraints on the state, any state of any flavor, whether managerial or
The next paradigm of history – once we stop experimenting with mad ideologies, populist reactions, fake paths to manufactured progress, and top-down means of enforcement – needs to be human liberty itself.
THIS ARTICLE ORIGINALLY POSTED HERE.