The Retreat of Western Liberalism

by Edward Luce

John Kerry, the US Secretary of State under Obama, had condemned Russia’s annexation of Crimea from the now-independent Ukraine as a violation of history: ‘You just don’t in the twenty-first century behave in nineteenth-century fashion by invading another country on [a] completely trumped-up pretext,’ he said. But that is how the world often works. The US had done that to Iraq in the twenty-first century. In Moscow’s view, history is back and nothing is inevitable, least of all liberal democracy.

liberalism. As Dan Jones, an historian of the Magna Carta, describes it, the year 1215 is today seen as the ‘year zero’ of Western liberalism.

Belief in an authoritarian version of national destiny is staging a powerful comeback. Western liberalism is under siege.

History does not end. It is a timeless repetition of human folly and correction. It follows that there is no single model of how to organise society. Who, barring those of religious faith, can say that view is wrong?

We are living in an age of convergence no less dramatic than the age of divergence brought about by European colonialism and the Industrial Revolution. The downward pressure on the incomes of the West’s middle classes in the coming years will be relentless.

The debate about the West’s moral debt to its former colonies is often too one-sided. Those who point to Britain’s extraction of wealth from India, for example, tend to overlook the impact of social reforms that for the first time gave benighted lower-caste Indians the chance to read and write, or that protected upper-caste widows from sati, where they were expected to throw themselves onto their husband’s funeral pyre. There is no moral abacus that can settle the pros and cons of each instance of colonialism. In the case of slavery, no debate is necessary. The African slave trade was a crime against humanity in which Britain and America played starring roles. But Europe’s economic success was chiefly driven by technological superiority rather than by a fit of immoral looting.

But China’s politburo clearly dreads the domestic backlash a recession might trigger. It has thus opted for slower growth – preferring to let the air out of the balloon rather than pop it.

At some point during the 2008 global financial crisis, the Washington Consensus died. In truth, that economic model had been declared a ‘damaged brand’ back in 2003 by John Williamson, the man who coined the term in the late 1980s.13 The Washington Consensus prescribed open trading systems, free movement of capital and central bank monetary discipline. Countries that swallowed the prescription suffered terribly during the 1995 Mexican tesobono crisis, the 1997 Asian flu crisis, and in Russia, Brazil and elsewhere during the later 1990s. The Organization for Economic Cooperation and Development, the prestigious Western club that was set up to distribute America’s Marshall Plan aid to shattered post-war Europe, made capital account liberalisation a precondition of its membership. Everyone wanted to join the OECD for its prestige and higher credit ratings. South Korea and Mexico duly liberalised their capital accounts to join in the early 1990s. The destabilising effects of the hot money that flooded into those economies and then out again was almost instant. Most of the world has since chosen China’s more pragmatic path of opening slowly and on its own terms. China’s unorthodox route to development exposed the limits of the Washington Consensus. It had assumed that there was one way to do things, and that the rest of the world would have little choice but to adopt it. China is simply too big, and too important to the world’s bottom line, to push around. Other developing coun...

Today we still reflexively call the meltdown that followed the bankruptcy of Lehman Brothers a global recession. But that is quite wrong. It was an Atlantic recession. In 2009, China’s economy grew by almost 10 per cent, and India’s by almost 8 per cent.

GDP numbers insist we are doing well, at a time when half the country is suffering from personal recessions.

To be clear: the West’s souring mood is about the psychology of dashed expectations rather than the decline in material comforts.

Adam Smith, the great theorist of free trade economics, is revered for his The Wealth of Nations. His companion work, The Theory of Moral Sentiments, is mostly forgotten. Yet it is the more important of the two. In it, Smith sets out why capitalism works best in societies where there are high levels of trust between its participants. When social trust falls, the cost of doing business rises.

‘We are using the acceleration of information transmission to decelerate changes in our physical world,’ writes Cowen.

America, in particular, which had traditionally shown the highest class mobility of any Western country, now has the lowest. Today it is rarer for a poor American to become rich than a poor Briton, which means the American dream is less likely to be realised in America.

The meritocratic society has given way to a hereditary meritocracy. The children of the rich are overwhelmingly likely to stay rich. In place of churning, we have stasis. To a large extent, your life chances have been set by the time you are five. ‘[If] you want to be smart and highly energetic, the most important single step you could take is to choose the right parents,’ says Robert Frank.32 Alas, in today’s West, too many people are choosing the wrong parents.

About one in four of the richest Americans attended an elite university, compared with less than half of 1 per cent of the bottom fifth. By far the biggest determinant is the bed in which you were born. Why wouldn’t the losers be angry? There are more of them than

The West’s metropolises are in the midst of a grand renaissance. These are the knowledge hubs and global cities that have more in common with their international counterparts than with their national hinterlands. Anyone who doubted this was disabused in 2016. Almost two-thirds of London voted to stay in the European Union. The rest of England and Wales disagreed. In spite of being home to fewer than one in seven people in Britain, London accounts for almost a third of its gross domestic product. Similarly, every single one of America’s 493 wealthiest counties, almost all of them urban, voted for Hillary Clinton.43 The remaining 2623 counties, most of them suburban or small-town, went for Donald Trump.

As the most educated people move to global cities, those with fewer qualifications find themselves shut out.

To the West’s economic losers, cities like London and Chicago are not so much magnets as death stars.

In the US, the more liberal a city’s politics, the higher the rate of inequality.45 The most glaring examples, such as San Francisco and New York, are demonised by conservatives as citadels of far-left politics.

New York has 116 billionaires. London has fifty-one. Los Angeles has fifty.48 Many of them only live there part-time. As the city’s essential workers, its senior police officers and school heads are priced out of town, they are replaced by wealthy cosmopolitans who divide their lives between different locations. The number of unoccupied apartments in New York rose by almost three-quarters at the turn of the century to thirty-four thousand in 2011.49 London has witnessed similar growth. The new residents then lock in their gains by restricting land use, which keeps values high.

The West’s global cities are like tropical islands surrounded by oceans of resentment. Florida’s latest book is called The New Urban Crisis. Rather than being shaped by those who live there full-time, the characters of our biggest cities are increasingly driven by the global super-rich as a place to park their money.

In the West we spend half our time fretting about low-skilled immigrants. We should be worrying at least as much about high-skilled offshoring.

According to the World Values Survey, people identify far more strongly with their nation than with a global identity. The two exceptions were Colombia, which has been racked by a brutal civil war for more than a generation, and Andorra, which has fewer than eighty thousand people. The more we cede power to global bodies, the more virulent the backlash against globalisation.

They were companion volumes: you could not develop your economy unless you were a democracy, or so we claimed. The two also shared an unapologetic ignorance of history, which meant they were seriously misleading. In reality, economies have often developed behind protectionist walls – that is what almost every Western country did in the nineteenth century. Had we forgotten that Alexander Hamilton’s ‘infant industry’ protections carried through into the twentieth century? Hamilton took this mercantilist approach directly from England’s Tudor monarchs, who used protections to shield English wool manufacturers from their Flemish competitors. Likewise, plenty of countries have industrialised under authoritarian conditions. Otto von Bismarck took Germany on the blood and iron road to prosperity in the late nineteenth century. Japan’s Meiji Restoration was a paragon of top-down development. What about China over the last generation – and today? But the West was on a proselytising mission. The big questions had been settled.

It was on Obama’s watch that the tally of global democracies fell most sharply. The world now has twenty-five fewer democracies than it did at the turn of the century. In addition to Russia and Venezuela, Turkey, Thailand, Botswana and now Hungary are deemed to have crossed the threshold.

Once China’s economy visibly decoupled from the West in 2008, the tide began to turn. ‘By demonstrating that advanced modernization can be combined with authoritarian rule, the Chinese regime has given hope to authoritarian rulers everywhere,’ says Andrew Nathan, a leading Sinologist.

The Communist Party’s traditional view on US democracy is that America’s moneyed classes engineer the victory of the candidate who can best defend the interests of capital. The process is always a sham. The view of China’s pro-democracy groups, on the other hand, is that the American people freely choose the best person after a vigorous and fair debate. Both schools have been turned inside out by the 2016 outcome: China’s conservatives because Trump won against the wishes of Wall Street, which is not meant to happen in a capitalist democracy; China’s liberals because charlatans like Trump are not supposed to win. The process should be foolproof. ‘China’s liberals are in a bind,’ says Eric Li, a Chinese venture capitalist in Shanghai, who runs his own thinktank. ‘They despise Trump. But they can’t quite bring themselves to say . . . the people are wrong. Such an admission would not help them make the case for Western-style democracy in China. After all, if the people can be so wrong, how can you give them the vote?’

It is no accident that the heyday of stable Western party politics coincided with the post-war golden decades of the rising middle and working classes.

It means that many of those who are defined as Hispanic are no likelier to be natural Democrats than ‘white’ people (another contestable designation). It explains why many Hispanics reacted no differently during the election than most whites to Donald Trump’s promised border wall. Mexican-Americans felt viscerally targeted by Trump. But there is little evidence to show that legal immigrants from other Spanish-speaking countries were any more outraged than any other voter. Why would the Democratic establishment bank more on their loyalty than it does on whites’? Resistance to such ethnic shoehorning might explain why a higher share of Hispanics voted for Donald

The same might be said of the latest ethnic category, Middle East and North Africans (MENAs), which the Obama administration pushed through just before it left office.26 At the stroke of a pen, the White House had conjured up ten million new non-whites. Again, the move betrayed a technocratic itch to channel people into corrals. Lebanese Christians and secular Turks may have less in common with Sudanese Muslims than with whites. Yet overnight they could benefit from the same affirmative action to enter university as other minorities.

Fascism is based on group rights. Liberal democracy is founded on individual rights.

The future of Western democracy looks bleak if American politics hardens into two racially hostile camps. Donald Trump consciously stokes racist sentiment, and has given a rocket boost to the ‘alt-right’ fringe of neo-Nazis and white nationalists. But to write off all those who voted for him as bigoted will only make his job easier. It is also inaccurate. Millions who backed Trump in 2016 had voted for Barack Obama in 2008. Did they suddenly become deplorable? A better explanation is that many kinds of Americans have long felt alienated from an establishment that has routinely sidelined their economic complaints. In 2008 America went for the outsider, an African-American with barely any experience in federal politics. Obama offered hope. In 2016 it went for another outsider with no background in any kind of politics. Trump channelled rage. To be clear: Trump poses a mortal threat to all America’s most precious qualities. But by giving a higher priority to the politics of ethnic identity than people’s common interests, the American left helped to create what it feared. The clash of economic interests is about relative trade-offs. Ethnic politics is a game of absolutes. In 1992, Bill Clinton won the overwhelming majority of non-college whites. By 2016, most of them had defected. Having branded their defection as racially motivated, liberals are signalling that they do not want them back. ‘Liberals should bear in mind that the first identity movement in American politics was ...

today blue-collar whites on both sides of the Atlantic are speaking in the same idiom. They yearn for the security of a lost age.

Successive US administrations have promised to enforce America’s borders. They rarely do. Britain’s record is little different. Sooner or later the established parties were likely to pay a price for writing off whole chunks of their electorates as bigoted.

In 2016, for the first time in US history, a majority of those who voted for a Republican candidate did not have college degrees.37 Not all of them were white.

Instead of the workers versus the bourgeois, it was now the French against the foreigners. ‘Right or left, there’s no difference,’ said Eribon’s mother when he reproved her for her new voting habit.

He despises French neo-fascism. But he understands more about why people like his mother have strayed into its orbit: ‘I am convinced that voting for the National Front must be interpreted, at least in part, as the final recourse of people of the working classes attempting to defend their collective identity, or to defend, in any case, a dignity that was being trampled on – even now by those who had once been their representatives and defenders.’

Here, then, is the crux of the West’s crisis: our societies are split between the will of the people and the rule of the experts – the tyranny of the majority versus the club of self-serving insiders; Britain versus Brussels; West Virginia versus Washington. It follows that the election of Trump, and Britain’s exit from Europe, is a reassertion of the popular will. In the words of one Dutch scholar, Western populism is an ‘illiberal democratic response to undemocratic liberalism’.

The poor are now democracy’s strongest fans, the rich its biggest sceptics.

If today’s rich young are tomorrow’s thought leaders, democracy has a shaky future.

The more unequal societies become, the more likely we are to hear from the demophobes. This would strike a chord with my great-grandparents’ generation. It would also sound familiar to America’s Founding Fathers. ‘The newfound aversion to democratic institutions among rich citizens in the West may be no more than a return to the historical norm,’ write Yascha Mounk and Roberto Stefan Foa.53 To put it more bluntly: when inequality is high, the rich fear the mob.

Science fiction likes to depict a dystopia in which the robots have taken over. A less fantastical idea is that the robots will indeed take over. But it will be at the behest of a narrow elite of human masters.54

But the internet has given us something far closer to Aldous Huxley’s Brave New World than Nineteen Eighty-Four.

The] new Kremlin won’t make the same mistake the old Soviet Union did: it will never let TV become dull,’ writes Peter Pomerantsev. ‘Most [Russians] are happy with the trade-off: complete freedom for complete silence.’

When Steve Bannon, Trump’s senior White House adviser, who helped pioneer much of the fake news that helped Trump to win, told Washington’s journalists to shut up, he was met with derision.64 Yet he was echoing a popular view in the heartland about an industry that has suffered an even steeper fall in its credibility than the political classes. If the US media is now the opposition party, as Bannon put it, where will the people stand? Again, Russia offers troubling signposts. When Putin won his thumping presidential victory in 2012 with more than two-thirds of the vote, he had little need of ballot-stuffing. Much like London’s vote against Brexit, or Washington’s endorsement of Hillary Clinton, more than half of Moscow voted against Putin. The gulf between America’s metropolitan elites and those outside of the cities is no less wide than that between Moscow and its vast hinterlands. Putin’s mastery of reality TV, an industry that is scripted by the Kremlin, and by its business acolytes, outweighs whatever cynicism he generates in the cities. Whether it is taking his shirt off to go hunting, or zooming onto the stage on a Harley and in Ray-Bans at the opening of the Winter Olympics, Putin’s shape-shifting appearances are calibrated for the Russian left-behinds. They call the Kremlin’s PR managers political technologists. Before taking office, Mr Trump was already America’s celebrity apprentice-in-chief. Political technology is as much his friend as his enemy. The counter-re...

There is no way of knowing how many Felts, Throwers and Walterses are lurking in Trump’s Washington. But their stories remind us that it is character, rather than laws, which upholds a system.

During the campaign, one journalist summarised the gap between the heartland view of Trump, and that of the liberal elites as follows: ‘the press take him literally, but not seriously; his supporters take him seriously, but not literally’.70 It turns out that both were wrong.

Who will be Trump’s Deep Throat? Where will we find his Mark Felt? The future of the world’s largest democracy – and of global democracy in general – lies in the hands of people whose names we probably do not know.

As Keynes told the Bloomsbury circle almost twenty years later, ‘We were not aware that civilization was a thin and precarious crust erected by the personality and the will of a very few, and only maintained by rules and conventions skilfully put across and guilefully preserved.