In 1944 Karl Polanyi wrote The Great Transformation: The Political and Economic Origins of Our Time. Polanyi was born into a well-heeled Jewish family in Austria and grew up in Hungary, where for a brief while, he was a local political leader active in the Radical Citizens’ Party. He is best known for his work as an economic historian. Troubled by the collapse of European peace twice in a quarter of a century, Polanyi sought an explanation in his unique, yet intuitive, understanding of the co-dependency between market and society. Although his work found much purchase only when The Great Transformation found its way into the syllabi of political economy courses in American universities, it is one of those strange facts of historical coincidence that at the time Polanyi was writing this work, representatives of 44 countries came together in Bretton Woods to sign into existence international institutions that would, in later decades, herald neoliberalism across the world as the economic system most commensurate with liberal democracy.
I begin my review of Yascha Mounk’s book, The People vs. Democracy: Why Our Freedom Is In Danger And How To Save It, with this historic irony—while the Bretton Woods system was being crafted to champion the free market, the gravest warning about its dangers was being crafted by Polanyi’s pen. There is a powerful connection between neoliberal economic policies and the rise of populism or illiberal democracies in many parts of the world—in the US, UK, Poland, Hungary, India, Turkey, France, Austria, Italy. Yasha Mounk, a political theorist at Harvard begins his book by trying to explain what has happened in the contemporary West, i.e., democracy and its institutions are under suspicion by a popular mass of people. This lack of trust in democratic institutions has led, in his argument, the ‘rise of illiberal democracy, or democracy without rights, and undemocratic liberalism, or rights without democracy’ (p. 14). Mounk locates this crisis of democracy and liberalism in recent historical events, namely, increased levels of migration of people from the global south into western countries, the strain on European welfarism and the idea that immigrants are free-loading off citizens’ tax monies, distrust of immigrants that are racially and
culturally dissimilar from the group that originally constituted the mono-ethnic
bases of European nation-states, and the
general idea of protecting the ‘nation’ from ‘outsiders’.
Mounk also finds that in all countries where populist leaders have emerged—Greece, Poland, Austria, Hungary, the US, Sweden and so on—common traits are found in the choice of leader. Donald Trump in the US, Narendra Modi in India, Erdogan in Turkey, the young Sebastian Kurz in Austria, Le Penn in France, Alexis Tsipras in Greece, are all cut from the same fabric in as much that they are self-styled strongmen vowing to protect the nation from its economic, cultural and economic enemies, vowing to revive the nation’s greatness, and articulating the cultural anxieties of non-elite voters. In an excellent review of the literature, well-crafted country case studies, and convincing data work on the increasing vote shares of Right-Wing parties in Europe, Mounk successfully demonstrates this de-consolidation of democracy. He also dedicates an entire chapter to social media and its polarizing effect on democratic discourse and how instrumental social media has been in the Right’s political campaigning across the world.
While Mounk does point out that the lack of trust in democracy is linked to its failure to deliver on promises of economic equality and social mobility, his perceived solutions are problematic. He wants civic education for young people, a commitment from the political class to change the status quo and work towards genuine economic equality. He advocates controlled immigration and raises the idea of inclusiveness as the basis for new forms of nationalism. He also wants the rich to be taxed more. In short, he wants to see more welfare measures to protect people.
However, upon setting the book down one is left with an overwhelming sense of disquiet. Something is not right in the state of democracy and Mounk’s prescriptions for its preservation seem insufficient. Why is this so? While Mounk’s book is a clear and gripping (and engagingly written) account of democratic de-consolidation in some countries, it does not seem to zealously prosecute the neoliberal market for its role in creating the conditions that dragged many countries to this point. And this is the book’s biggest problem. Even while claiming the mantle of criticism, the book essentially props up the very same system of democracy combined with neoliberalism that has led to widespread discontent to begin with.
Let me go back to Karl Polanyi now, for there was a point to be made by dwelling on the historical irony stated at the beginning of this review. Had The Great Transformation been the kind of book we read to babies in cradles (a scary tale of ‘satanic mills’ and the misadventures of a hurricane called the free market), there may perhaps have been mainstream economists that were not enthralled by the beauty of abstract economic models. One of Polanyi’s biggest contributions was to suggest that changing economic relations in society from those based on ‘reciprocity and redistribution’ to those based on competitive markets, fundamentally rewrote human relations in society. In short, economic transformation also meant societal transformation in ways that were (and are) unpredictable. This is what Polanyi was chiefly concerned about. He argued that during the time of the English Industrial Revolution in the early 19th century, certain economic thought evolved that chose to place the market above all other social relations. The myth of the rational economic actor was created, even while the process of industrialization led to severe deprivation, poverty, ghettoization of former serfs as industrial labour in cities like Manchester and London where ‘satanic mills’ existed and humans were sacrificed on the altar of industrialization and economic growth. He wrote, ‘Nowhere has liberal philosophy failed so conspicuously as in its understanding of the problem of change. Fired by an emotional faith in spontaneity, the common-sense attitude toward change was discarded in favour of a mystical readiness to accept the social consequences of economic improvement, whatever they might be’ (p. 35).
The frequency of global economic crises in recent decades, the vulnerability of countries in the face of international capital flows, the interventionism of western powers in the Middle East, Africa, and South America, the shift from manufacturing regimes to currency regimes, the roll back of state welfare have led to the unravelling of labour power, of controlled migration systems, and of the consensus surrounding capitalism first and liberal democracy second. The trick of the strongmen has been to blame the hardship faced by the working classes by the sudden removal of welfare on outsiders, thereby redirecting the rage away from the political system and somewhere else so that the consensus of capitalism is not undermined.
This is why Polanyi is relevant to this discussion. He argued that markets in human history have always been ‘embedded’ in social relations. The curious thing about the free market, according to Polanyi is that it is ‘disembedded’ or suspended over society. In doing so the market destabilizes social relations especially in late developing countries and gives rise to counter movements that arise because people instinctively know and find the need to be protected from the excesses of the free market. The mistake made by economic theorists has been to underestimate the extent of this countermovement or societal backlash against the neoliberal market. The expansion of the market has been constantly checked by societies over time—seen in the rise of labour unions, by the call for state provision of welfare, yet, as Polanyi puts it, ‘Vital though such a counter movement was for the protection of society, in the last analysis it was incompatible
with the self-regulation of the market,
and thus with the market system itself’
So while Mounk, to his credit, does locate much of the current troubles on how democracy and neoliberalism have failed to deliver on their promises of economic equality, the crucial analysis that he has missed is this—there is a basic incompatibility between the neoliberal market and attempts to regulate it. He also fails to bring attention to how control over politics and state institutions by the same elites that also control the economy, instead of helping society arrive at a consensus, has led to a deadlock between vested interests out of which the new wave of illiberalism has emerged.
Mounk’s prescriptions are for managing discontent by developing an almost uncritical appreciation of liberalism and democracy. He does not advocate an alternative system where financial capitalism is not destroying labour, the environment, or the very institutions that keep it afloat. He does not demonstrate that liberalism while advocating for individual rights for ethnic, racial and sexual minorities also advocates for a deeply unequal and economically polarizing economic structure, that Nancy Fraser calls ‘progressive neoliberalism’. Mounk’s book while greatly useful, errs in shifting the blame for the rise of illiberalism from the shoulders of the free market to the shoulders of immigrant-hating, illiberal voters saturated on a social media diet and reared on racist and economic resentment against outsiders.
However, one has to concede that ascriptive identities that were once seen as secularized in many democracies, came back with immense force after neoliberalization in virtually all countries that underwent economic transitions. This resurgence was not coincidental or happenstance. Ideologies of religion, ideologies of nationalism, and caste (in India) for instance, were also deployed to discipline industrial labour. Corporations began to stand for ‘values’—both liberal and illiberal depending on where they were located—and this in turn created a relationship between ascription and economy. So migrant workers from Bihar became unwelcome in Maharashtra, or Polish workers in Northern Ireland came to be seen as job-robbers. The cohesion of class that was supposed to unite workers of the world, crashed and burned when it was bombarded with nationalism and religious identity, because the ‘other’ was not seen as someone that should benefit from social mobility.
These are ideas and themes that one does not find traced in Mounk’s work because the work is dedicated to preserving the structure it criticizes. No doubt, we need some form of democracy—there is no disagreement on that. But there also needs to be unrelenting critique of the companionship between democracy and neoliberalism.
Vasundhara Sirnate Drennan, Chief Coordinator of Research at The Hindu Centre for Politics and Public Policy, Chennai, is a Ph.D Candidate at Barrows Hall, University of California, Berkeley, USA.