I've just finished reading Simon Reid-Henry's Empire of Democracy: The Remaking of the West Since the Cold War, 1971-2017. Because I could. It's quite a tome and I read each of its three parts separately with a bit of time in between reading something a bit lighter.
Reid-Henry teaches history, political economy and international law at the University of London as well as being Senior Researcher at the Oslo Peace Research Institute. I'm super-impressed by people who can write books like this. You would have to read and catalogue an almost unimaginable number of sources - the end-notes alone cover 87 pages - and then somehow make sense of all those little pieces of data to try and tell a coherent story. I'm convinced that history writing is a kind of conjuring trick, but without historians we would have to do all that fact-checking ourselves, or just rely on our memories. All the events he covers in this book took place in my lifetime, but there's plenty here that I had never heard about.
It's hard to summarise such a book, but essentially it deals with three phases in the life of the post-war West, focusing mostly on Europe and the USA with the odd reference to places like Australia, New Zealand and Canada. It is mostly focused on political and economic history, with social, environmental and cultural questions largely left to the side.
In the first phase, beginning in the late 1960s and going on into the 1980s, the end of the post-war boom and a number of economic and financial shocks created a crisis of legitimacy for Western democracies. Through this period governments responded by setting a new economic architecture in place, largely taking themselves out of the picture through financial and labour deregulation, tax cuts, privatisation and the establishment of independent institutions like central banks.
The second phase was defined by the fall of communism in the USSR and Eastern Europe and a resulting sense of triumphalism in the West. In the warm glow of this supposed triumph, Western governments and the advisors they sent to the newly democratising countries mostly focused on duplicating their financial arrangements by selling government enterprises and establishing stock exchanges and independent central banks. Little attention was paid to the reform of government and legal systems. The result was that instead of functioning democracies we got corrupt regimes, crony capitalism and a rapid slide towards neo-fascism.
The third phase focused on two seminal events which tested and strained this rather shaky system. The first was the commencement of the War on Terror in the wake of the World Trade Centre bombing. This led to a mass-scale US military intervention in the Middle East, at enormous expense, a consequent mass flow of asylum seekers across borders into Europe, and escalation of security and surveillance of citizens in Western countries under the rubric of 'national security'. The second event was the Global Financial Crisis which exposed the weakness of the West's financial structure and its regulatory oversight.
There's a lot to ponder in this book, but for me the key to understanding it is what Reid-Henry calls 'governing from a distance' which defines the operation of Western democracies since the 1970s. This has a number of dimensions - delegation, deregulation, divestment and globalisation. These are, of course, driven to a huge extent by the influence of corporate interests over government, but are generally couched in terms of efficiency or transparency even though they are neither efficient nor transparent.
Delegation involves governments transferring their powers of oversight and even law-making to independent technical decision-makers - courts, central banks, corporate regulators and so forth. This removes many areas of government responsibility from direct government control and democratic oversight, on the basis that governments cannot be trusted with these levers which need to be left to technical experts. While this prevents the venal or corrupt use of these tools to promote re-election or distribute favours, it also allows politicians to disavow responsibility when things go wrong, and places the distribution of favours further behind closed doors.
Deregulation goes along with this delegation, giving the independent regulators and policy-makers fewer and fewer levers through which to manage the financial and legal systems that have been delegated to them. One important result of this since the 1980s was that the financial industry, freed from much of the regulation placed on it after the Great Depression and the War, grew out of proportion to the rest of the economy and in a sense, became an economy on its own with various tradeable products like mortgage-backed securities or commodity futures only loosely linked to the 'real' economy. But we have also seen deregulation in areas like labour markets, environmental protection, consumer protection, trade and so forth. This means that when things go wrong (such as in the GFC) there are few options governments can use to fix the problem, and this is exacerbated by the fact that regulators are starved of resources and often delegate compliance tasks to the mega-corporations they are meant to be regulating.
Divestment involves transferring the ownership of infrastructure and provision of services to private or non-government service providers. This provides an extra delegation strategy, removing a layer of service delivery responsibility from government. All sorts of things get divested in this way - electricity, public transport, telecommunications, health care, welfare services. The War on Terror even saw vast employment of private contractors to help carry out the wars in Afghanistan and Iraq. This then goes hand-in-hand with deregulation to give companies a freer hand even in the delivery of essential public services, along with a lack of any public accountability for the outcomes.
All of these strategies have both enabled, and been strengthened by, the process of globalisation. The finance industry, for instance, is now highly internationalised, trade and multi-national ownership are involved in every area of the economy. In Europe in particular, greater economic and social integration has been mainly overseen by unelected bureaucracies rather than either national governments or the elected European Parliament, leading to a strong sense of loss of autonomy as domestic politicians blame 'Europe' for whatever their citizens are unhappy with - hence Brexit.
What this amounts to is that over recent decades we have effectively hollowed out democracy. We still have its forms - elected parliaments and executives, the rule of law and so forth - but these forms have rendered themselves unable to actually do anything - at least, not to address the concerns of ordinary people. The levers are no longer there - they can't raise taxes in an increasingly globalised world because businesses will just shift their money elsewhere, they can't provide extra services because someone else owns the service infrastructure, they can't impose extra regulations because the regulators are hands-off independent bodies. Understandably, trust and engagement in democratic and civic life is at an historic low. Corporations set the terms for our world and we are powerless to control them even though we are expected to bail them out when things go wrong. Right on cue, the War on Terror has given us a growing surveillance state where the government gathers all manner of information about us on the pretext of making us safer, even as the breakdown in trust and communal identity makes us less safe.
The thing is, we are facing serious problems. Our inability to effectively regulate industry is driving us towards a three-fold ecological crisis - climate change, pollution and resource depletion. These things do not merely affect 'the environment', they also affect humans, starting with the poorest - natural disasters, food shortages and the wars and people movements that flow from these. This is not some future speculation, it is happening right now. These are things that require government and public responses - humanitarian aid, economic and social development, strong environmental regulation, technological transition. Instead, what we are getting is a rise in nationalism and isolationism (Brexit, the Border Wall, offshore detention) disinformation (fake news, climate denial) and a doubling down on deregulation and divestment.
Where will it go next? I'm not a fortune teller. Where would we like it to go? I'm pretty sure we would agree, not where it is going now.
Reid-Henry teaches history, political economy and international law at the University of London as well as being Senior Researcher at the Oslo Peace Research Institute. I'm super-impressed by people who can write books like this. You would have to read and catalogue an almost unimaginable number of sources - the end-notes alone cover 87 pages - and then somehow make sense of all those little pieces of data to try and tell a coherent story. I'm convinced that history writing is a kind of conjuring trick, but without historians we would have to do all that fact-checking ourselves, or just rely on our memories. All the events he covers in this book took place in my lifetime, but there's plenty here that I had never heard about.It's hard to summarise such a book, but essentially it deals with three phases in the life of the post-war West, focusing mostly on Europe and the USA with the odd reference to places like Australia, New Zealand and Canada. It is mostly focused on political and economic history, with social, environmental and cultural questions largely left to the side.
In the first phase, beginning in the late 1960s and going on into the 1980s, the end of the post-war boom and a number of economic and financial shocks created a crisis of legitimacy for Western democracies. Through this period governments responded by setting a new economic architecture in place, largely taking themselves out of the picture through financial and labour deregulation, tax cuts, privatisation and the establishment of independent institutions like central banks.
The second phase was defined by the fall of communism in the USSR and Eastern Europe and a resulting sense of triumphalism in the West. In the warm glow of this supposed triumph, Western governments and the advisors they sent to the newly democratising countries mostly focused on duplicating their financial arrangements by selling government enterprises and establishing stock exchanges and independent central banks. Little attention was paid to the reform of government and legal systems. The result was that instead of functioning democracies we got corrupt regimes, crony capitalism and a rapid slide towards neo-fascism.
The third phase focused on two seminal events which tested and strained this rather shaky system. The first was the commencement of the War on Terror in the wake of the World Trade Centre bombing. This led to a mass-scale US military intervention in the Middle East, at enormous expense, a consequent mass flow of asylum seekers across borders into Europe, and escalation of security and surveillance of citizens in Western countries under the rubric of 'national security'. The second event was the Global Financial Crisis which exposed the weakness of the West's financial structure and its regulatory oversight.
There's a lot to ponder in this book, but for me the key to understanding it is what Reid-Henry calls 'governing from a distance' which defines the operation of Western democracies since the 1970s. This has a number of dimensions - delegation, deregulation, divestment and globalisation. These are, of course, driven to a huge extent by the influence of corporate interests over government, but are generally couched in terms of efficiency or transparency even though they are neither efficient nor transparent.
Delegation involves governments transferring their powers of oversight and even law-making to independent technical decision-makers - courts, central banks, corporate regulators and so forth. This removes many areas of government responsibility from direct government control and democratic oversight, on the basis that governments cannot be trusted with these levers which need to be left to technical experts. While this prevents the venal or corrupt use of these tools to promote re-election or distribute favours, it also allows politicians to disavow responsibility when things go wrong, and places the distribution of favours further behind closed doors.
Deregulation goes along with this delegation, giving the independent regulators and policy-makers fewer and fewer levers through which to manage the financial and legal systems that have been delegated to them. One important result of this since the 1980s was that the financial industry, freed from much of the regulation placed on it after the Great Depression and the War, grew out of proportion to the rest of the economy and in a sense, became an economy on its own with various tradeable products like mortgage-backed securities or commodity futures only loosely linked to the 'real' economy. But we have also seen deregulation in areas like labour markets, environmental protection, consumer protection, trade and so forth. This means that when things go wrong (such as in the GFC) there are few options governments can use to fix the problem, and this is exacerbated by the fact that regulators are starved of resources and often delegate compliance tasks to the mega-corporations they are meant to be regulating.
Divestment involves transferring the ownership of infrastructure and provision of services to private or non-government service providers. This provides an extra delegation strategy, removing a layer of service delivery responsibility from government. All sorts of things get divested in this way - electricity, public transport, telecommunications, health care, welfare services. The War on Terror even saw vast employment of private contractors to help carry out the wars in Afghanistan and Iraq. This then goes hand-in-hand with deregulation to give companies a freer hand even in the delivery of essential public services, along with a lack of any public accountability for the outcomes.
All of these strategies have both enabled, and been strengthened by, the process of globalisation. The finance industry, for instance, is now highly internationalised, trade and multi-national ownership are involved in every area of the economy. In Europe in particular, greater economic and social integration has been mainly overseen by unelected bureaucracies rather than either national governments or the elected European Parliament, leading to a strong sense of loss of autonomy as domestic politicians blame 'Europe' for whatever their citizens are unhappy with - hence Brexit.
What this amounts to is that over recent decades we have effectively hollowed out democracy. We still have its forms - elected parliaments and executives, the rule of law and so forth - but these forms have rendered themselves unable to actually do anything - at least, not to address the concerns of ordinary people. The levers are no longer there - they can't raise taxes in an increasingly globalised world because businesses will just shift their money elsewhere, they can't provide extra services because someone else owns the service infrastructure, they can't impose extra regulations because the regulators are hands-off independent bodies. Understandably, trust and engagement in democratic and civic life is at an historic low. Corporations set the terms for our world and we are powerless to control them even though we are expected to bail them out when things go wrong. Right on cue, the War on Terror has given us a growing surveillance state where the government gathers all manner of information about us on the pretext of making us safer, even as the breakdown in trust and communal identity makes us less safe.
The thing is, we are facing serious problems. Our inability to effectively regulate industry is driving us towards a three-fold ecological crisis - climate change, pollution and resource depletion. These things do not merely affect 'the environment', they also affect humans, starting with the poorest - natural disasters, food shortages and the wars and people movements that flow from these. This is not some future speculation, it is happening right now. These are things that require government and public responses - humanitarian aid, economic and social development, strong environmental regulation, technological transition. Instead, what we are getting is a rise in nationalism and isolationism (Brexit, the Border Wall, offshore detention) disinformation (fake news, climate denial) and a doubling down on deregulation and divestment.
Where will it go next? I'm not a fortune teller. Where would we like it to go? I'm pretty sure we would agree, not where it is going now.
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