Saturday 17 August 2019

Empire of Democracy: How the money markets eroded liberal democracy

Politics: Empire of Democracy by Simon Reid-Henry

John Murray, hardback, 880 pages, €35.99

Seeing red: even Bill Clinton in the mid-90s was aware that his re-election was in the hands of bond traders
Seeing red: even Bill Clinton in the mid-90s was aware that his re-election was in the hands of bond traders
Empire of Democracy by Simon Reid-Henry

JP O'Malley

Hard-hitting book argues that globalisation has caused the most radical disruption to nation state sovereignty in almost four centuries.

The rise of mass democracy in the early 20th century was largely a tribal affair where prominent lines marked left from right. As the century progressed, that tribal conflict turned global - polarising the world between east and west. By the time the Cold War finally concluded in the early 1990s, however, the political map of the globe seemed less a wall divided by barbed wire, and more a networked spiderweb, always veering towards the centre ground.

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In this new neutral political milieu, the tone and language of western leaders began to closely resemble the corporate speak of middle-management boardroom bores. Democracy thus began to identify itself with the three fundamental principles of capitalism: globalisation, efficiency and competitiveness.

About half way through Empire of Democracy, academic Simon Reid-Henry fleshes out this tumultuous shift with spot-on analysis. "Something had changed," the left-leaning historical and political geographer writes: "The old model of economic growth, in which workers provided the value for capitalist growth and were compensated by the state, which met their basic needs, was now replaced by a laissez-faire model of growth based on finance, technology and efficiency savings."

Back in the mid-19th century Karl Marx predicted - incorrectly it turns out - that a workers' revolution would bring about the end of capitalism. As the new millennium loomed, the neocons and Thatcherites were now turning that argument on its head: the market would now perpetually govern all aspects of human life. Politics was no longer about struggles, principles and ideals, they explained, but choice, consumption, and products.

And individuals, not governments, would now choose their own destiny. The message was without nuance and simplified in its celebratory tone: since the battle for liberal democracy had been won, the time was nigh to reap the rewards. 9/11 would quickly silence those liberal optimists declaring the so-called "end of history". But economic stagnation, not culture or religion, would help explain why the post-Cold War honeymoon was a utopian dream built on foundations of sand.

Reid-Henry consistently points out two factors that ensured the neoliberalisation of politics was doomed from the get-go. The first was the thorny issue of raising taxes at a national level: this became increasingly difficult as global trade barriers were lifted, the global economy became more interconnected, and corporations began moving their operations to the global south for cheaper labour. And secondly, the fundamental principles of democracy had changed. Like a random algorithm, it now began taking its instructions from a ubiquitous transnational force: the international money markets. A move, this book argues, that was the most radical disruption to nation state sovereignty since the Westphalian system arose in 1648 following the conclusion of The Thirty Years' War.

President Bill Clinton used more colourful language to describe how the social contract his baby-boomer generation securely grew up in suddenly disintegrated without warning: "You mean to tell me that the success of my re-election hinges on a bunch of f**king bond traders," the US president barked to his team of economic advisers in a private meeting during the mid-1990s.

Ironically, it was the Democrats who facilitated the circumstances for the far right to walk in unopposed to power nearly two decades later. The major sea change was Clinton signing into law the Financial Services Modernisation Act of 1999: it peeled back the cautious legal architecture that Franklin D Roosevelt had implemented with the Depression-era Glass-Steagall regulations which had aimed to prevent another 1929-type crash.

Everybody knows how this script then unfolds: a new millennium and wild-west era on Wall Street, where commercial banks, security houses and insurers consolidated in the name of profit; the rise of debt across the western world; household mortgages becoming more like chips on a roulette table in Las Vegas; and the collapse of Lehman Brothers, which became the catalyst for the worst global financial crisis since the Great Depression.

The simplified version of this tale is to see the global credit crisis as the work of a few reckless greedy traders and bankers; and the election of Donald Trump and the rise of the Brexiteers as some kind of sick joke. History, of course, is always much more complex. Still, Reid-Henry summarises it succinctly, claiming this recent rightward global shift is "the result of the very structures by which capitalist democracy had come to organise itself since the 1970s".

Much of this ground has already been covered by authors like David Graeber and Joseph Stiglitz: both document in their work how the speeding up of Moore's Law, along with the financialisation of politics, has led to the hollowing out of nation state democracy. Nevertheless, Empire of Democracy takes those two crucial ideals and explores five main topics as it goes: the rise of global inequality; social alienation; the empty promise of consumerism, and the demise of the collective egalitarian public sphere, which in turn has seen politics transform itself into a never-ending ugly contest of celebratory death match in real time. I implore you to get off Twitter right away and buy this magnificent book. It may well be the most valuable political education and history lesson you receive in 2019.

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