In light of the mass public demonstrations in the United States and Europe, we must ask ourselves why so many of us have become so disenchanted with the dominant socio-economic paradigm that was so welcomed at the fall of Berlin Wall: the merger of liberal democracy and free market capitalism.
Since the phenomenon needs a starting point, one can start with the triumph of the "West" against its adversaries - and it may be useful to assess what and who the victory was against.
In the 2000s, when resurgent Moscow's foreign policy became increasingly confrontational towards the "West," many forwarded the notion that the Cold War did not end in 1989/91, it had simply gone into remission during the reconstitution of the Russian Federation. This view suggests that the Cold War was a conflict between the Soviet Union and the United States. Add China into the narrative and one creates an interpretation of the Cold War that is largely great powers-oriented.
However, this perspective fails to account for civil conflicts around the world where domestic forces co-opted major powers to achieve political objectives. The Korean War is a great example of this: the North Koreans dragged the unwilling Soviet Union and China into a bloody conflict that very quickly involved the United States, but was initially only against South Korea.
Without accounting for other nuances of Cold War history, the nature of the post-WWII period is already very complex; nonetheless, a simplified model that continues to find itself into political rhetoric is the idea that the United States and Western Europe had championed the cause of democracy/capitalism against Soviet totalitarianism/communism.
German-American social psychologist Erich Fromm took offense to this notion and stated in his afterward to Orwell's 1984 that the use of "doublespeak" and the distortion of reality were prevalent in the West as they were in the dystopic novel and behind the Iron Curtain (obviously in varying degrees, but present nonetheless).
Just as the Inquisitors who tortured their prisoners believed that they acted in the name of Christian love, the Party "rejects and vilifies every principle for which the socialist movement originally stood, and it chooses to do this in the name of socialism." Its content is reversed into its opposite, and yet people believe that the ideology means what it says. In this respect Orwell. quite obviously refers to the falsification of socialism by Russian communism, but it must be added that the West is also guilty of a similar falsification. We present our society as being one of free initiative, individualism and idealism, when in reality these are mostly words.One needs not go far back in history to find prominent examples to support Fromm's position; the overthrow of Iran’s democratically-elected Mossadeq government through CIA support, the praise for Pinochet's Chile as a key member of the "free world" and President Reagan's assertion that Grenada posed a threat to the security of the United States are only few of the examples among many disturbing contortions of reality during the Cold War that few in the general public questioned.
At the same time there is an important truism in narrowing the conflict to one between democracy and communism. It is not possible to maintain a pluralistic society and impose an economic system based on the denial of private property because such an economic model implies involuntary expropriation. Though some will argue that the forced march to industrialization helped the Russian people defeat the Nazis (again it's hard to create a counter-factual here), there is (or rather ought to be) little opposition to the notion that the Soviet Union was a supremely flawed experiment that produced neither prosperity nor equality. On the other hand, despite all its shortcomings, the handful of non-communist countries with its imperfect democratic institutions have undoubtedly nurtured the most tolerant and progressive societies in history. While there is a long road ahead, the progress made by the "West" must also be appreciated.
Reorienting our analysis to the era of globalization, the question now becomes the extent upon which democracy and capitalism are compatible, the limits and thresholds of their cohesion in the modern community of nations.
The friction between pluralism and capitalism is more nuanced within established liberal democracies because the system more or less provides avenues for redress and maintains a system of due process. However, as politics cannot be divorced from the appropriation of public funds and ensuring the general (economic) welfare of the constituents, there is ample room for principles to be trampled for (perceived) practical solutions.
The recent financial crisis in Europe revealed many contentious areas where the democratic system was in open confrontation with economic rationality.
Take George Papandreou's socialist government in Greece. When he came into office, he pursued a more transparent and honest economic policy than his predecessors and revealed that the Greek public debt was nearly two-folds higher than previously announced. This announcement panicked creditors and loans to Greece ceased, launching a major financial crisis. Papandreou was forced to devise austerity measures to qualify for a bail-out from the European Union, an absolute necessity for the economic survival of the Greek state; yet when these essential measures were introduced to the public, discontent boiled over and bloody riots reigned over the streets of Athens.
Naturally the markets reacted badly when the Greek government initially announced that it will place the conditions imposed by the European community on a national referendum. Under pressure to accept the conditions and curtail the market devastation, the government retracted the plans for a referendum and pushed forward without public consent. Ultimately, Papandreou resigned and a new coalition government is slugging along with the massively unpopular measures.
The question is: should the Greek government NOT have sought a popular mandate for the bail-out preconditions? The European Union clearly didn't think it was necessary, but is it so outrageous to seek the approval of the very people who will be most severely affected by the new policies? In fact, to act without a popular mandate on such a major issue seems abusive.
Many Greeks legitimately have redress against slashing public welfare funds - despite portrayals of Greeks lavishing in a Mediterranean paradise with generous pensions and retirement benefits that far exceed those received by Germans, this only applies to a portion of the population. Poverty rate in Greece is very high and in particular, poverty rate among the elderly rank highest in the European Union. Indeed, the cold front blowing across Eastern Europe and the Balkans appears to be a cruel twist by nature to further degrade the well-being of those Greeks whose safety nets have only recently been slashed open.
As evident in the Greek case, loss of faith in today's economic environment could spell disaster for a whole country. Most countries are drowning in debt and require a continuous line of credit to stay afloat - that's why the slow downgrading of the credit ratings constitute a serious threat to economic stability.
So the country's first line of order is to keep risk low and ensure the creditors that its macroeconomic policies are stable - but what happens when the wishes of the people are contrary to economic rationale? Or if the people's shortsightedness and the natural inclination of politicians to hold on to power turn into a vicious cycle?
In the case of Hungary, the economic performance of the entire country pivots around the electoral cycle - politicians promising economic/market reforms, incumbent government raising public expenditure, wild policies being proposed with even wilder expectations, etc. These are all legacies of Hungary's Goulash populism, instituted in the 1960s to appease the population that was still upset about the military occupation and repression following the 1956 Revolution. Under the communist regime, this populist policy manifested itself as small openings to the West. After the collapse of the Iron Curtain, it has turned into Clientelism by various political parties. Now, Hungary under the Fidesz government has finally maxed out the patience of its creditors.
What is happening in Hungary is not the people's fault. It's a moral hazard that political players waded into and then subsequently became stuck in. Nonetheless, it's hard to break from the vicious cycle when the general public reacts so wonderfully to increased government expenditure on welfare and wages.
The public often acts irrationally - fully knowing the consequences of their collective actions, societies still jump overboard, a la the Rapa Nui of Easter Island.
If this is the case, should the governments suppress public demands and forward plans that it sees will be for the welfare of the entire country? One is reminded of Bertolt Brecht's famous quote:
...would it not be be simpler,Indeed the reduction of the government's power to influence the market has been a key element of the intra-state agreements on free trade. The European Union demands that the central banks of all member states be independent and the United States forwards standardized labor regulations that many think will eventually render minimum wage laws obsolete. But are these regulations inhibiting the people's right to collectively decide how to live their lives? More importantly, what is the impact of these new socio-economic model on the essence of democracy.
If the government simply dissolved the people
And elected another?
These are definitely issues that require greater public attention and detail. After all, the concept of a dog does not bark; we cannot simply call our society a democratic one without exploring what that means and then applying our ideals into practice.