Rigged Capitalism

Jonathan Kirshner, in the LA Review of Books, reviews Martin Wolf's The Crisis of Democratic Capitalism. Wolf is, to his credit, a lapsed neoliberal who has come to see that the Free Market™ is a myth, and that the capture of the polity by plutocrats threatens to doom democracy. Kirshner's essay is difficult to summarize, as it makes several important, interlocking points. I do think the argument is inadequate to fully explain the devolution of the Republican party into a reality denying cult, but it does at least contribute to our understanding:

Economic inequality, on the rise for 50 years, has soared to ever greater extremes in recent decades. As Wolf reports, from 1993 to 2015, the real income of the top 1 percent of the population in the United States nearly doubled; for everybody else, over those same years, aggregate real income grew by 14 percent. More pointedly, as the very rich got much, much richer from 2005 to 2014, 81 percent of US households had flat or falling real income—a weighty reminder that we continue to live in a world defined by the Global Financial Crisis and its aftermath. . . . Wolf observes that the Wall Street titans who caused the crisis “mostly walked off with large fortunes, while tens of millions of innocent people’s lives were ruined”—a catastrophe exacerbated by the swift, misguided application of austerity measures as soon as it became clear that a complete financial meltdown would be avoided.

The role of the Global Financial Crisis (and the dismal political management of its aftermath) in exacerbating trends in inequality—and, at least as important, further fueling perceptions that the system was corrupt and fundamentally unfair—ought not be underestimated. . . .  Wolf shows that the 1931 international financial crisis served as a tipping point in public support for the Nazi party in Germany, which won 2.6 percent of the vote in 1928 and 37.3 percent in 1932. . . . [A]s Adam Tooze argued in Crashed: How a Decade of Financial Crises Changed the World (2018), the norm-shattering American presidential election campaign of 2016 can only be understood in the context of the widespread revulsion at the 2008 crisis and that which followed. The emergence of new, powerful, populist movements from both the left and the right (and the inconceivable nomination of an inexperienced, ignorant reality-TV celebrity to be the Grand Old Party’s standard-bearer), is directly attributable to those societally backbreaking events.

 

Again, I think that's far from the full explanation -- racism, xenophobia, misogyny -- the threatened privileges of caste and gender -- have a bigger role to play. In fact, Republicans have above average incomes. Those very plutocrats fund the Republican party and they use those cultural resentments to marshall people to vote against their own interests. But liberals need to make the case more forcefully for addressing economic inequality and reining in the excesses of capitalism. Unless they can do that, we do indeed need to fear the end of democracy in the U.S.