Western Modes of Functioning – “Liberal” and “Democratic”?
The West as a Contemporary Entity (Excerpts from "We and the West" – 10/11)
What is “the West”? And how do we relate to it? Over the coming weeks, I will be pre-publishing excerpts from my book Wir und der Westen (und die Welt), ahead of the full English edition’s release under the title We and the West (and the World) later this year. The full list of excerpts is at the end of this post.
What defines “Western societies”? The answer we consistently hear – from the self-image of Western elites to the more critical take of an Emmanuel Todd – is freedom and democracy. Western societies have been taken to be “liberal democracies”. It is therefore worth examining more closely to what extent this is really the case in the contemporary world.
During the decades of the unipolar moment – and perhaps especially for my generation, which came of age at the dawn of unipolarity and never knew anything else – it was not uncommon to believe in the vision of a single, integrated global civilization, one that was both liberal and democratic. This implied both that we, the West, were embodying this ideal and that this ideal was to be applied to everybody else. All the others were therefore considered, in what was perceived here to be a backwardness on their part, to merely be lagging behind: they had simply not yet managed to attain the same civilizational development.
It was the worldview of the unipolar moment of Western hegemony. Unfortunately, this worldview was founded more on our own wishful thinking, or perhaps rather our delusions, than on reality. Many of us clung to the ideal and ended up believing our own propaganda. In the meantime, a deep unease has emerged, yet with little clarity about its cause. To what extent was the problem the ideal itself, the implementation of the ideal, or the intended scope of application for the implementation of the ideal?
As argued above, I still consider the ideal itself to be noble and worth pursuing, most certainly for Switzerland and quite probably for the West as a whole. Whether this is so for the rest of the world, and in what ways, should be up to the rest of the world. Regrettably, the real-world West has proven inept to live up to the task of responsibly promoting our ideals, both at home and abroad. Hegemonic-imperial democracy maintenance is a fallacy, an oxymoron, a self-serving concept that combines missionary zeal with power-political self-interest, and has, amid constant self-congratulation, lulled Western populations into complicity and complacency.
In light of the many transgressions of recent decades, we should strictly adhere to the framework of international law and respect the sovereignty of each country and its people, foregoing unilateral sanction regimes not ratified by the UN and similar actions. Preferably, the West would do this while a shred of moral authority still remains in parts of the world, and not only once the last remnants of that authority have been lost and a multipolar world order has become an imposed reality.
The ideal of freedom and democracy itself, the ideal’s implementation, and the scope of its application are all worthy of discussion. The ideal’s implementation within the West itself has been deeply flawed and requires tackling. And – crucially for the world – the scope of its application must be rethought: moving away from global proselytizing and toward a self-aware rediscovery of a genuinely liberal-democratic identity. Such an identity might well inspire the world, but it would impose itself on no one, neither through sermons nor through armed force.
I would urge us Westerners to focus on implementing the liberal-democratic ideal within our own societies, to withdraw from global missionary work, and to find our place as one among many, integrated into the world accordingly. Once we have restored our moral integrity as a civilization, we may well – with the consent of the global majority – take more proactive initiatives again.
So what then defines today’s Western societies? I shall attempt to shed light on some of what I see as their most central socio-economic and socio-political aspects. In doing so, I believe a critical perspective is of more use and interest than a fawningly laudatory one. Nevertheless, I have no intention of suppressing positive aspects or making them seem smaller than they are.
Let us first consider the economy, and later on politics. Economy, in its most fundamental sense, concerns the material foundation of livelihood for all members of a society. Any society, in any era of history, has had to arrange for the production and distribution – respectively the provision – of food, clothing, shelter, and similar necessities. How this is accomplished differs profoundly from society to society and from era to era.
In today’s Western societies, a portion of these tasks is orchestrated, regulated, and carried out by the public sector – the state – while the majority are handled by private, profit-oriented enterprises. A part of the infrastructure, such as water supply and roads, is typically built and maintained by the state, which in turn finances itself through tax revenue. In contrast, the production and distribution of goods is largely left to the so-called “free market” actors, that is to small and large firms that sell these goods to people as consumers for money.
Countries differ considerably in how much economic activity they retain in the public sector and how much they transfer into the hands of private actors. From the education system and railway infrastructure to energy, some countries have predominantly public systems, while others have predominantly private ones. While the public sector pursues politically – and potentially democratically – determined guidelines and goals alongside efficiency, the profit motive is central in the private sector, though this does not necessarily preclude the pursuit of other objectives. In any case, what seems even more important than the ratio of private to public economic activity is the manner in which it is conducted. What is crucial is the underlying logic by which a society and its economy function, and which principles, values, norms, and goals hold sway within them. How all this should be balanced lies at the very heart of most everyday political debates.
From the perspective of the individual, the reality is that people are responsible for themselves – whether as a family unit or alone. This is the very core of economic liberalism. More concretely, however, the economic existence of the vast majority of families and individuals depends on at least one person being a salaried employee by an organisation, mostly a private company. The people in question get hired, work several dozen hours per week, and receive a wage in return. With this money, they purchase life’s necessities and whatever else it may cover. This necessity of – or dependence on – gainful employment seems to me the single most fundamental element of our societies. It is questioned just as little as the centrality of the profit motive, the importance of private firms, and the functioning of the financial system (to which we will have to return).
Exceptions to this fundamental situation include some wealthy individuals for whom there is no such existential necessity, as well as those who cannot thrive in the “free labor market”, for whom society, respectively the state, has established certain social safety nets. In post-war France, these ranged from the promise of comprehensive social security and the political priority of full employment to more or less extensive support for people struggling to find their way within this system. Finally, a minority of people manages to become self-employed and thus “independent” instead of being dependent salaried employees.
While concrete working conditions and benefits have evolved, for instance through paid holidays and weekends, the employment relationship itself is often accepted as a simple fact. In reality, salaried employment or the “wage-labor-nexus” – “rapport salarial” in the original French technical concept – represents perhaps the most fundamental structuring force in all our lives. However rosy one might describe this, be it as a necessity or a lack of alternative, it is equally logical to question how it relates to phenomena such as abuse, alienation, exploitation, and meaninglessness.
It seems reasonable to view work and effort in themselves as obviously necessary and even an ethical obligation for every person, be it for their own survival or as a contribution to the community. However, carrying out work and effort for starvation wages in a context of meaninglessness is surely not something one can, in good conscience, fundamentally impose upon a human being.
In the final analysis, does all this amount to a reasonably good state of affairs, or at least not so bad, or should and could everything be much better? Is the extent and distribution of societal and economic anxieties acceptable as it is? Opinions on today’s socio-economic situation range from one of affluent complacency to one of fundamental indignity. Once again, what are we to make of the way things are, when we consider how they should be and how they could be? For both imagination and social theory, there are no limits.
Again, organizing society with the employment relationship and the division into specialized fields at its core may well be efficient for firms and functionally useful for society at large. Yet it is not certain that, even from these perspectives, it represents the most desirable model. From the standpoint of liberal values such as self-fulfillment and intrinsic motivation, our societal model is certainly not optimal for everyone. For some it offers opportunities, for others less so. While for some, the decisive tracks are laid by the age of fifteen – sometimes even twelve – others remain undecided about which paths to take at twice that age. All in all, one can find just about every conceivable scenario.
In the German-speaking world, for instance, the expected trajectory of a person is to acquire a “Beruf” – a profession, with the implied meaning of a vocation. From childhood, an omnipresent question is what one wants to “become”, meaning which profession to pursue. This refers to a specific occupation, a trade, a specialty that one learns through an apprenticeship and then, as a rule, practices as a salaried employee for a company. This model is most prevalent in Switzerland, where three-quarters of young people complete a vocational training program; they are employees of a company, working three to four days per week while acquiring practical skills, and attend school for the remaining one or two days. In many countries, the path of purely academic or school-based education is more common, and diverse models for developing skills – such as company-internal training in Japan – also exist.
Once again, learning a skill and acquiring expertise in order to provide for oneself and contribute to society’s well-being is a comprehensible principle. What is contentious though is whether the type of relationship between employers and employees within the current economic model implements this in an appropriate way. At the very least, it seems relevant to me that we cultivate an awareness that one does not practice a profession in a harmless social vacuum, but rather within defined relational patterns and modes of dependency. In any case, the foundational pillars of the economic order are essential, and they should be named, as I shall now attempt to do.
Much more could be said about the details of both the similarities and differences among Western societies regarding their socio-economic arrangements. For instance, all these countries, with the exception of the United States, have a universal healthcare system – whether it is organized like Switzerland’s, via a legal mandate for private insurers to provide a state-defined basic coverage catalog, or, like many European countries, through a general public, tax-funded system. Higher education is in some countries entirely or almost entirely publicly funded, while in others it is systematically linked to high fees and often to loans that must be repaid over many years. Employment contracts are sometimes easily terminated, sometimes protected from dismissal by strong legislation; and unemployment is sometimes covered by generous, and sometimes by minimal, unemployment insurance.
Perhaps the most important shared phenomenon of Western societies is that a broad middle class emerged during the “glorious” decades of the post-war era (les trente glorieuses). A somewhat bourgeois lifestyle, with access to a certain level of prosperity, vacations, leisure time, and leisure activities, expanded to encompass a fairly large part of the population. Rising prosperity, accompanied by universal health insurance, pension systems, and social safety nets, ensured that certain basic standards became less frequently compromised.
With the “neoliberal policy turn” beginning roughly in the 1980s, the tendency has been towards increased deregulation and “liberalization” of the economy. This has meant the privatization of public services and public enterprises, the deregulation of “labor markets” and other “markets”, and the general introduction of more “market rationality” – that is, a more immediate profit orientation and the commodification of goods that previously stood outside profit-based economic logic. Similarly, “labor” itself has been further commodified through increased discretion in decision-making for management and owners at the expense of employee participation rights within firms, through generally higher conditionality and less universality in access to unemployment insurance and other social safety nets, and through an overall tendency to transfer risks from collective responsibility to that of the individual.
Here, too, a multitude of views are conceivable, ranging from desires for greater solidarity on one hand to dissatisfaction with perceived excessive burdens on the general public on the other. Whether, for example, poor people find themselves in precarious situations due to their own fault and laziness, with no one obligated to assist, or whether economic systems and policies systematically create disparities and social hardships – making such outcomes unacceptable and consequently a collective responsibility – represents divergent assessments of the situation. In reality, we find ourselves in a compromise, with political coalitions pulling now in one direction, now in the other. What should be undisputed, however, is that Western societies since the post-war era, with their hybrid system of liberal, social-democratic, and conservative elements, have, over recent decades, become more liberal, or, more precisely, more neoliberal.
The earliest manifestations of this neoliberalization originate in the Anglo-American world. Roughly under American President Ronald Reagan and British Prime Minister Margaret Thatcher in the 1980s, the tendencies described above gained momentum and began to expand into the rest of the Western world and beyond. They were accompanied by, among other things, the deregulation of the financial sector and a general process of “financialization”.
The industrial capitalism of the post-war era transformed into financial capitalism, and economic activity became “financialized”. Companies like General Electric in the US, for instance, began generating larger profits from financial activities than from the production of goods. Core production and industrial activities gave way to a new focus on lending and loan operations, insurance and asset management, securitization, and financial instruments of all kinds.
Originating in the United States and Great Britain, namely the City of London and Wall Street in New York, the FIRE sectors (Finance, Insurance, Real Estate) became the most lucrative areas of the economy. Investments respectively speculations in real estate along with corporate mergers and acquisitions and practices like share buybacks, as well as complex financial instruments known as derivatives (such as options, futures, or swaps – originally for hedging investments but which themselves became tools for speculation) transformed Western economies into a veritable financial casino, with consequences for the economy and society as a whole. All of this led to an increased focus on short-term profits, for instance through rising share prices or cost-cutting, but also to more pressure on employees and the “labor market”, diverting focus away from longer-term, productive investments that lie outside the financial bubble.
Overarching all this as the driving ideological force was the dogma of the “free market”. This market fundamentalism asserted that unregulated markets – serving as a mechanism for allocating resources and as a universal formula for solving problems – would be the best solution for nearly all economic and societal matters.
The problem with this line of thinking, however, is that it is fundamentally flawed: it is based on faulty assumptions, it has and can have nothing to do with the real world, and it therefore amounts to a tendentious political ideology. Free-market ideology imagines the economic sphere as neither politically nor socially constituted, but rather as a collection of individuals who are driven by one-dimensional motivations, act in a one-dimensional manner, and, moreover, are well-informed and fully rational.
However, all of this has little to do with the real world. At its core, it is an ideology that purports to justify deregulation and similar measures, yet proves, upon closer inspection, to be entirely devoid of substance. It fails to do even the basic work to deserve to be elevated to the status of a valid and potentially sound theory. Contrary to the core prescription of this “market religion” – namely, removing all obstacles to “free markets” – the only thing that truly matters in the real world is what norms, what logics of coordination, and what power relations govern actual economic activity and behavior.
To pretend that any such logics and norms would disappear the closer one supposedly gets to the utopia of free markets, while simultaneously claiming that the imagined “free market” itself constitutes such a logic and norm, is intellectually fallacious and dishonest. All of this therefore represents nothing but a propaganda tool for those who benefit from the measures described above.
It is sobering to consider that these doctrines and axioms form part of the core curriculum drummed into generations of economists to this day. Critical minds among them have questioned parts of the many layers of untenable assumptions, but quite rare are those who have completely abandoned them and gone beyond. By cloaking itself in the mantle of “liberal” – that is, “pro-freedom” – and thereby laying claim to one of the most revered values in the entire West, this form of false, ideological version of economic liberalism has been able to prevail for decades.
With the caricature of the evil state pitted against the good free market, all too many thinkers have become stuck in false dichotomies. Yet neither “the state” nor “the market” is inherently good or evil; what matters, decisively, is solely which norms and values are upheld within the economic and social fabric.
Driven by the “Washington Consensus”, countries in the 1980s and 1990s were urged to implement “market-oriented policies”. Actors based in Washington, including the International Monetary Fund (IMF), the World Bank, and the U.S. Treasury, specifically called upon Latin American states to liberalize interest rates and trade, open up to foreign direct investment, and privatize state-owned enterprises. During the 1997 “Asian Crisis”, volatile capital flows, for example in Thailand, led to a collapse of the local currency, the build-up and bursting of speculative bubbles, and thus to massive economic disruptions.
Globalized financial capital – though predominantly based in the West, or, more specifically, the Anglosphere – is the central actor in so-called free markets. Its interests are overwhelmingly the maximization of profit and returns, and to that end, it seeks to achieve market power by restricting competition and fostering monopolization, and to secure favorable legislation, jurisprudence, and media coverage.
As far as distortions are concerned, in addition to the bias mentioned above for today’s geopolitical landscape, we should clearly expect an analogous geo-economic bias – one that reflects the interests of these groups and actors. Constituting the force known as “the markets”, the owners and controllers of globalised financial capital represent a power that – as Noam Chomsky once called it – amounts to an actual “virtual senate”, constantly looming over everything and representing a force whose interests it is a major challenge to go against.
The main groups are so-called “institutional investors” such as investment funds, pension funds, hedge funds, and insurance companies; then further, multinational corporations, large private and investment banks, asset managers like BlackRock, Vanguard, and State Street; as well as ultra-wealthy individuals, but also central banks and financial regulatory authorities.
The reach and influence of the aforementioned asset managers is worth considering in some more detail. Blackrock and Vanguard each manage approximately ten trillion US dollars and are often the largest shareholders in many of the world’s leading companies, typically holding a combined 15-20% of shares. Through their voting rights, they exert significant influence over corporate leadership and also play a role in shaping regulations and political decisions.
When one consumes something from a supermarket, there is a considerable chance that the product comes from a brand which is, firstly, owned by one of the large multinational conglomerates – Nestlé, Unilever, Kellogg’s, Coca-Cola, PepsiCo, Mondelez, and a few others control most brands and products directly or indirectly – and which is, secondly, controlled at a higher level by the aforementioned investors.
The actually existing free market is galaxies away from the imagined ideal of the free market – however incoherently theorized the latter may be. It is rife with concentrated ownership and market power, and the attendant phenomena of political influence, excessive wealth and income inequality, precarious employment and exploitation of the workforce, as well as structurally inherent aspects like market volatility and financial crises, short-term thinking, and all sorts of negative “external” effects euphemistically termed “externalities”.
At the heart of the economic system, moreover, lies the logic of capitalism. Our societies have coupled their basic economic functions with the accumulation of capital, as the German sociologist Wolfgang Streeck aptly puts it. By linking our material provision to the accumulation of private capital, which is measured in monetary units, traded through (theoretically) free contractual exchange on markets, and driven by incentives favouring individual utility calculations, we have made ourselves fundamentally dependent – for our very existence – on the successful build-up of privately appropriated capital.
Furthermore, today’s actually existing form of capitalism has an inherent tendency to expand into all spheres of human life. Not only does it lead to all economic activity being conducted according to its logic, but it also increasingly encroaches upon other – previously not commodified – areas of life. If unchecked, and lest there be a related or different form of collapse, only political resistance and action can impose a limit.
PRE-PUBLISHING HERE OVER THE COMING WEEKS
Excerpts from We and the West (and the World):
I. The West’s Emergence as a Historical Civilization
→ 1/11 The “West” Merely Relative? – Geographically Western Eurasia
→ 2/11 First Traces of the West 2500 Years Ago?
→ 3/11 Ancient Greece as a Key Reference – Not Only for the West
II. The West’s Trajectory toward Modernity
→ 4/11 Switzerland’s Emergence at the Heart of the West
→ 5/11 Western Expansion and Imperial Continuity
→ 6/11 The West in Modernity – The Measure of Almost All Things
III. The West as a Contemporary Entity
→ 7/11 The West in the Global Order
→ 8/11 Unipolar, Hegemonic, Transatlantic Biases
→ 9/11 Various Moral Souls in the West’s Breast
→ 10/11 Western Modes of Functioning – “Liberal” and “Democratic”?
→ 11/11 Barely Veiled Oligarchies? Truly Legitimate Social Order?
→ Bonus: Whither, Post-Unipolar West?