Will democracy survive?
It’s no spoiler to say that Robert Kuttner’s answer to the title of his book is yes, albeit a yes tempered with realism. As he judges it, the wave of global deregulation that began in the 1970s and accelerated until the crash of 2007–08 was not only catastrophic economic policy but also the first step on the long road toward illiberal leadership in the United States and Europe. Because Kuttner sees globalization primarily as a regulatory regime mostly benefiting financial institutions and big corporations, he thinks it has brought very little in the way of rising wages and improved living standards to most people.
To save democracy, Kuttner insists, the priorities of globalization must be reversed. But doing so will involve tackling institutions directly. As he warns, summoning the political will to make such change possible won’t be easy.
Cofounder and coeditor of The American Prospect and a Brandeis University professor, Kuttner begins his story shortly after World War II, when, in an effort to rebuild the West, the major powers practiced a form of managed capitalism. This facilitated collaboration and investment across borders when necessary, even while allowing each country to maintain its economic sovereignty. Applied alongside high tariffs and tight domestic controls on national currencies that obviated the need for devaluation, public international investment created a winning formula.
Until, bit by bit, it didn’t. In early 1971, as the Treasury found it increasingly difficult to honor convertibility between the US dollar and gold, the dollar fell in value. In late 1973, objecting to Western support of Israel in the Yom Kippur War, the Organization of Petroleum Exporting Countries levied an embargo that quadrupled the price of gasoline in the United States. The decades of delicate balance abruptly drew to an end, and the era of government austerity and privatization represented by Ronald Reagan and Margaret Thatcher would shortly follow. One crucial effect of the turmoil of the early seventies was that the financial industry—along with less than ideally democratic institutions such as the European Union, the World Bank, and the International Monetary Fund—grew at the expense of what might be called real democratic checks and balances to their authority.