Champagne toasts are in order this fall. It has been twenty years since the fall of the Berlin Wall and the ideological collapse of communism. Some ten years preceding the fall, Czech playwright, Vaclav Havel, had penned a seminal essay, The Power of the Powerless, in which he outlined the dynamics of living within an ideological lie and what was required to break away in order to live within the truth. Essentially, it was the collective refusal of the population within Eastern Europe to perpetuate the system and the refusal of the elites, as well as those who were governed, to go along with the systemic lies that allowed millions to break out from their ideological prisons and to set out on a new collective path.
Twenty years is simply a blink of an eye from the perspective of world history. Yet, this year, with the tabling of the first Obama budget, we witnessed the collapse of the second ideological pillar left standing in the post-war ruins, free market capitalism.
And for good reason: today, market failures abound and the global economy is still in recession; partial nationalization of key financial institutions in the United States and the European Union has occurred; and huge economic stimulus programs have been implemented, engendering a previously unimaginable scale of government deficits. Without question, the invisible hand dropped the ball.
However, now that the economic pendulum has knocked over the unwavering belief in the sanctity of our political economy, will we follow precedent and stop living within the lies perpetuated by our own system and seek to live within the truth, or will we, once the damage has been contained and the worst is over, return to the comfort of directing our collective lives by the dictates of what are essentially dead ideas?
Striking parallels arise when we look back and compare our present situation with that of Eastern Europe some thirty years ago. In both situations, a ruling elite exploited a docile population, a notion captured well by the old soviet adage: "within capitalism, man exploits his fellow man; within socialism, it is the other away around."
In the former Eastern Bloc, Havel’s green grocer mindlessly placed his “workers of the world unite” sign in his store window; while in today’s global recession, equally mindless journalists and politicians exhort their fellow citizens “to shop until they drop.”
Twenty years ago, the West ridiculed the inefficiency of central planning by pointing to the mountains of pairless left boots, yet today in the United States millions of houses remain unoccupied, boarded up, while millions remain homeless.
Unfortunately, it is much easier to detect the nature of the lie when easily comparable alternatives exist. Thirty years ago, the dissidents from the Eastern Bloc could look to the West and see the material wealth and unparalleled growth in personal freedom of its citizens and then subsequently juxtapose one system against the other. Moreover, the coercive measures employed by the police states to keep its citizens in line, notably absent in the West, suggested the ruling elite exercised its power as a result of a rapport of force rather than a willing transfer of power from the masses.
From today’s perspective, however, there is a notable absence of ideological alternatives to the rampant conspicuous consumption that underlies free market capitalism. As a result, for less inquisitive minds, it has become the natural order. Its utilization of seduction rather than coercion as its modus operandi suggests a democratic legitimacy that pushes substantive critical analysis towards the periphery.
Nevertheless, for the last thirty years our political economy has been kept in place by a series of lies that, for the most part, have been circulated by our political and business class and have gone unquestioned by the masses as they went about living their lives.
The biggest lie is the one that asserts that as the market economy grows, all boats rise on the same tide. The economy in question is not the real local economy in which people live and where people have some sense of the qualitative well being of their collective existence, but the fictive economy of aggregated statistical economic data that does not distinguish between productive or destructive economic activities, lumping them all together and labeling the ensemble as the Gross Domestic Product (GDP). Indeed, politicians, the business class and the media have become obsessed with making sure that the entire population buys into the belief that the perpetual growth of the GDP is a sacred trust, the nation’s manifest destiny. As taught, it’s as if the GDP turns us into pack animals hitched to a wagon, managed by government with a whip, trying to make the wagon reach the highest possible elevation.
Conversely, scant attention has been paid to the recent empirical data that demonstrates across the OECD that for the majority of the population the growth of the fictive economy does not translate into greater material wealth. Instead, the top of the top (the richest one percent of the population) receives the lion’s share of the newly created wealth while little of the leftovers trickle down to the masses down below.
The second and more dangerous lie is the belief that economic growth is best ensured by letting markets, in particular, financial markets self-regulate. This is the economic dogma put forward by Milton Freidman, Alan Greenspan, Margaret Thatcher, Ronald Reagan, etc. that has informed economic policy for the last thirty years.
Essentially, according to the cant, government regulation of markets impairs their performance and impedes economic growth. Consequently, left to themselves, guided by the invisible hand, free markets will increase economic growth and the wealth of the nation as private greed translates into public good.
Unfortunately, the faithful repeatedly fail to give proper consideration to the propensity of markets to collapse and the often catastrophic results that such events engender in the real economy. They underestimated the propensity of certain individuals to engage in unscrupulous behavior and its systemic consequences. No where is this more evident than in the recent collapse of global financial markets and the subsequent economic upheaval it has brought about.
Twenty years after the fall of the Berlin Wall, let us celebrate by burying ideology altogether and by moving forward an agenda that gives justice to the complexity of the one world that we all inhabit.