The Democrisis: Part One – Everybody Knows

by | 23 Jan 2024

Democracy is in crisis and there is a very good reason for that. Why is it happening, what does it mean for Scotland - and what can we do about it?

The full series: Part Two | Part Three


According to everyone, Europe (and beyond) faces a crisis of democracy this year as a series of important elections look like they may result in a sharp shift to the authoritarian right and a host of economic and social factors look set to shake up the continent.

Scotland is at the fringe of this, but not as fringe as we might like to think. It isn’t that there is any chance of Scotland taking a sharp turn to the authoritarian right in the forthcoming election but the factors which are shaking up Europe are shaking up Scotland as well. To understand what is going to happen here it is worth understanding why we are where we are.

This will be a series in three parts. In the first part I’ll try to explain the source of this ‘democrisis’. In the second I’ll try to show how all avenues out of this underlying crisis were blocked leaving us where we are in 2023. And in the last I’ll show that all of the same problems are at risk of leading to a seismic shift in Scottish politics too – and what to do about it.

So why are we here? What is causing this unprecedented shift in public attitudes, often away from support for democracy? The easy answer to that is that ‘it isn’t one thing, it’s complicated’. Yes, sure, but that doesn’t help. If we look for underlying conditions which made these possible we can start to see the real shape of the problem.

For that, we need to return to the mid-1990s. In many ways the 1990s was the mirror image of where we are now. Back then we had just come out of the brutal early stages of the economic revolution which shapes our lives today and were in a period of (generally) unprecedented global stability and, in Europe, comparative prosperity. The Cold War was over and peace reigned.

Now this is reversed; at the mid-2020s we are at the end of a long, brutal transformation of the world economy and exist in a world where conflict is endemic and prosperity hard to come by for many. The path from one to the other is defined by what the side who didn’t support the economic shock treatment of the 1980s did back in the 1990s.

Because what it did was triangulate – which is another way to say ‘surrender’. This was the era of the ‘Third Way Democrats’, a philosophical grouping in the Democratic Party in the US which concluded that the Regan revolution was basically a good thing we just needed to manage better.

This meant that the heart of economic-political debate disappeared. In the post-war period voters were generally presented with an ideological choice between different ways of running a country. Francis Fukushima (he of ‘The End of History’ fame) was among a group of theorists who argued that the fall of the Soviet Union mean the ideological battle was over for good.

In the shape of the Clinton administration, this idea of the end of ideological economic debate meant that economic surrender to the right became official policy of the centre left in the US. We ended up only with what Thomas Frank called ‘One Market Under God’ in his seminal book on this shift (still the best thing to read on the subject) with the only debate left being what to do with the spoils of this unimprovable economic model.

The doctrine which stated that we must prioritise neoliberal economics because the ordinary voter responds most to economic conditions ended up leaving most voters feeling like the economy was rigged against them

You can call this model various things – free market economics, globalisation, neoliberalism. It’s internal demands are the same; you don’t mess with the market. Light touch economic governance would lead to a permanent boom. The role of government was no longer to manage the national economy but to work out what to do with its outputs.

Neither side proposed any ‘market correction’ approach to economic management. The debate was much more limited, an argument between ‘let them make money and tax them more’ and ‘tax them less and they’ll make even more money’. Of course in Britain this is adopted as New Labourism and Blair copies the approach line by line.

But despite the now-unanimous support for this economic experiment, it contained within it one fatal flaw – it didn’t work. Or more accurately it only half worked and it was the wrong half. And that is because of the different between abstraction and reality.

The half that worked, worked brilliantly. On paper the indicators created by the advocates of neoliberalism showed enormous gains in economic growth. The rich got a lot richer and for a period of time the not-very-rich felt like they shared in this, almost wholly from house prices rises and because the economic ‘boom’ produced cheap consumer goods, cheap credit and generous tax receipts.

That’s largely the selfish, venal part of the promise though. It’s the other half that didn’t work, the social half. This promised two things. The first was stability in a perpetually self-regulating system and the second was that prosperity would trickle down to everyone from the top.

None of that happened. We’ve had enormous economic volatility at the all-economy level (most obviously in the financial crisis and the recent supply chain disasters) but also at the local level (as the ‘creative destruction’ of the market felt much more destructive than creative for most workers).

It turns out that markets aren’t self regulating because big business leaders cheat. The idea was that free markets would create perfect competition, but what a lack of regulation actually creates was a free-for-all of competition avoidance. There are damn few if any spheres of the economy in which competition didn’t decrease and monopoly increase, to the detriment of workers and consumers.

This was articulated best by that advocate of far-end neoliberal worship, mad libertarian Peter Thiel who wrote a whole article in the Wall Street Journal arguing that “competition is for losers” and that the goal of neoliberalism was really to create monopolies.

Monopolism and light touch regulation has created everything from a number of housing crashes to the banking crisis to the current cost of living crisis, not stability. But it was the trickle down part which really failed. Even as all the indicators got better and better, people’s real income stagnated or declined.

This is politically ironic, as the very group of people who perhaps did most to cause this situation by removing any alternative vision (the New Democrats) did so with the mantra that ‘it’s the economy, stupid’. This view states that everything else in a democracy stems from people’s experience of the economy (and particularly the labour market).

The doctrine which stated that we must prioritise neoliberal economics because the ordinary voter responds most to economic conditions ended up leaving most voters feeling like the economy was rigged against them – and they were right.

In a very literal sense, everybody does indeed know that the dice are loaded

Because the Clintonites and Blairites got something else incredibly wrong too – the role of money in politics and its influence on public delivery. In theory the neoliberal free-for-all was limited to the economy, but that’s not what happened. It worked its way into the public sector with great ease.

The state has been systematically hollowed out over the last 40 years. Massively powerful global consulting firms are a semi-privatised civil service, writing policy on almost everything as part of government process. Public services are crawling with managers and external consultants. Public procurement turns into a corporate blank cheque, for example via PFI for school building which ripped off taxpayers and enriched financiers.

What this all meant was that the other half of the socially-democratic neoliberal offer went wrong too, because deregulation touched everything. As these disruptive monopolists got into government in a big way, what we got was… the Post Office Horizon scandal.

Market discipling absolutely did not make public services better and policymaking allowed the ‘titans of industry’ to stray well beyond their supposed economy remit. This distorted the public sector offer; the Blair/Clinton ‘let the industrialists create the wealth and we’ll spread the benefit’ fails if you let the industrialists shape how the benefit is shared.

And it turns out that if you have an economic model which causes 30 years of wage stagnation even as the very rich become stupendously more rich and a political model in which promises never come true because, well meaning or not, they’re being delivered by a public sector which is there to work for its suppliers, not its voters, people get pissed off.

And they are pissed off. Monumentally pissed off. The song of our era must surely be Leonard Cohen’s Everybody Knows. Because, in a very literal sense, everybody does indeed know that the dice are loaded. Everyone knows the war is over and the good guys lost. Everyone knows the fight was fixed, that the poor stay poor and the rich get rich.

Everyone knows the boat is leaking and everyone knows the captain lied. Everybody does indeed have this broken feeling. It is that broken feeling with which liberal politicians are now wrestling.

Sadly, they don’t get it at all. They don’t understand. They believe in their ideology so completely they genuinely believe that we should be grateful for what we’ve got, that if it wasn’t for them managing things it would be even worse. Why aren’t we thanking them?

So they make more promises and, since they know everyone knows they won’t deliver, they don’t really need to pretend anymore. They can put the Brexit dividends on the side of a bus or announce that they’re starting a National Energy Company and, since everyone knows they’re at it, it doesn’t really matter if they deliver. Just that they say it. Because everybody knows.

And then they get very agitated in an op-ed in the New York Times because, even though the population of the US overwhelmingly and unmistakably says they don’t want Joe Biden to run for election again, it is the elite which decides what is good for people so why can’t people see that. After all, it’s only Trump, so it isn’t like anyone has any option other than to just go with this and do as they’re told. Again.

They don’t have an option, do they? Or do they?

The full series: Part Two | Part Three


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