By the beginning of the twenty-first century, it had become universally accepted that capitalism was the best economic system the world has known and, along with some form of representative democracy, was the hallmark of a modern society. It was as if history had come to a halt and there could not be any alternative to the prevailing order of things. This system was prone to troubles though. The most frequent ones were economic — the periodic ups and downs and the uncertainty of employment, incomes and prices. Whenever there were economic troubles — whether it was a mild recessionary dip or a more severe, global financial crisis — the diagnosis invariably turned to deficiencies in policies. Hence, the remedy sought pertained to the realms of politics and governance. It was taboo to question the logic of the underlying economic system of capitalism. This was akin to treating a chronic belly ache in a person by altering the diet rather than examining the root cause of the pain.
One could argue that democracy (with its many subtle variants) is a strategic ploy to keep the focus away from the structures of the capitalist economy. Democracy has many safety valves; it allows for dissent and the venting of frustrations by nurturing a pluralist polity and the possibility of a peaceful transfer of power through the ballot box. Democracy seemingly allows for the freedom to do many things: participate in government and pursue material goals as well as non-material objectives. The democratic State’s raison d’etre is to perpetuate the economic structure of capitalism. To attain this goal, on behalf of the economically powerful, the State uses both coercive methods as well as persuasive techniques to attain effective control. There are many instruments available to the State to achieve its goals, from the military and the police force to elements of culture such as education, media, theatre and films: in other words, the options range from brute force to subtle propaganda. The State chooses its actions depending on the nature of the crisis at hand and an understanding of what might work best in a given situation.
There are, however, many tensions between capitalism and democracy. The economic system works on the basis of private property, the profit motive, and the institution of the market. Markets are notoriously fickle and the macroeconomic order is fraught with chronic unemployment, inflationary pressures and cyclical ups and downs. The system also allows for amassing property and it invariably creates massive doses of income and wealth inequalities. Those who become rich ensure their progenies also remain rich. They enter the market with more power to influence and sway outcomes — the rich vote with their dollars in the marketplace. On the other hand, to countervail this situation, as it were, the political system has a one-person-one-vote rule. Hence, the richest and the poorest persons are deemed equal as voters. This, of course, is only an illusion. Anybody voting in a democracy knows that the rich influence electoral outcomes through their donations, lobbies, the outright bribing of politicians as well as by using the media and a sophisticated propaganda machinery to ensure that the outcomes are within their comfort zone. Even if governments change, the economic system is hardly ever put under stress. While this best describes the daily grind of managing capitalism, there are times when the magnitude of the crisis can call for more direct methods of control using fear, violence.
Capitalism has its own logic of continuous expansion — growth in size, adoption of new technologies, creation of new products, and the emergence of new markets. The whole world is its domain. But as changes in the economic apparatus take place, people get affected. Some lose their jobs and livelihoods, others go bankrupt, cities decay, whole industries disappear, new products appear in the market, and unfamiliar neighbours appear out of nowhere. Occasionally, these changes happen on a very extensive scale. This is when frustrations and anger reach a boiling point. Soothing balms do not suffice. Social and political re-setting become inevitable.
During periods of fundamental change, the State’s soft powers of persuasion and subtle propaganda do not work. Global capitalism is going through one such transformative phase. The core of capitalist production of value has moved away from commodities — the old-fashioned, brick-and-mortar industries of the twentieth century. High-end services, data science, information, and Artificial Intelligence are the new areas of knowledge and domination. These changes are obviously most visible in the United States of America. Two things are happening there and in many other parts of the developed capitalist world. The first is that the disruptions caused by the disappearance of the twentieth-century economic apparatus have been so obvious and widespread that anger and frustration have mounted sharply with the soft State being considered the enemy of the people. On the other hand, the oligarchs who have emerged as the new ‘masters of the universe’ need new resources, new competences, a new order, new control over people’s thoughts and actions and, above all, obedience to power. To retain its hegemony, the State must be more coercive in its methods of controlling not only American society but also the global order. There is some logic underlying the various unrelated demands of the Donald Trump administration— from creating a Riviera in Gaza to the purchasing of Greenland, from owning the Panama Canal to the annexation of Canada. It has to show the rest of the world that capital must get what it wants in its own terms. The rest of the world will have to change according to the new set of requirements — trading patterns, payment systems, military alignments, geopolitics, and labour markets. We are possibly heading to a era of Colonialism Mark 2.
Whatever may be the outcomes in the long run, the short-run effects are clearer. The US will end up with new friends and new enemies. Global economic growth rates will be falling due to the emerging trade war. Geopolitically, the world will be a more dangerous place to live in. Add to these the heightened existential threats like nuclear war and climate change. Opposition to the forces of change in the US and in other parts of the world is likely to be muted. Indeed, similar changes and a rise of authoritarian governments have been seen in many other countries during the past decade.
The inclination to reconcile with their immediate surroundings is a noticeable characteristic of societies and of nations too. We are witnessing the vulnerabilities of democracy’s freedoms, including political rights and civil liberties. Even more so, we are witnessing a lack of resilience on the part of the institutions of civil society — the media, courts of law, and academic institutions — to weather the storm. An important lesson in this connection is that the fragility of freedom and liberties in the US is as brittle as that seen in any Third World nation.
In the past, even during generally peaceful times, wars have occurred, oligarchies risen to power, genocides have taken place, racial inequities deepened, and economic and social inequalities exploded. There have been other forces too — debates on ethics and public policy, a search for political alternatives, the courage to speak out, the tolerance for diversity, and care about the future of the world we live in. The former changes are disturbing trends. The latter discussions are pregnant with possibilities. Outcomes are always a matter of our choice. However, giving up on the possibility of even the existence of feasible alternatives is like giving up on life itself.
Anup Sinha is former Professor of Economics, IIM Calcutta
