Is the crisis of capitalism a crisis of democracy?

Supporters of Lebanon's President Michel Aoun hold his poster during a rally in Baabda near Beirut, Lebanon, November 3, 2019. REUTERS/Goran Tomasevic

Is the crisis of capitalism a crisis of democracy?

Globalization has many winners, but there are losers too, and they are taking to the streets around the world. The list of countries where there is unrest spans the globe: Hong Kong, Lebanon, France, Chile and Ecuador. These protests all have similar roots: In Lebanon a tax was supposed to be levied on the use of social networks. Housing is too expensive in Hong Kong. In Chile, the price of bus tickets was set to rise. In France, it was the price of gasoline.

For those who have emerged as globalization’s winners over the past three decades, it is incomprehensible that increasing a ticket price by a few cents could cause a million people to revolt. This is not due to a lack of empathy. Rather, the worlds in which we live today have slowly, step by step, moved away from each other. The worldwide political polarization, based on the same economic problems, bears eloquent witness to this. The Brexit vote, like Donald Trump’s election, is widely understood as an outcry and protest by those who feel disconnected from social developments. These people feel alienated in their own country. They have lost a sense of belonging.

Is neoliberalism the cause of all evil?

The famous political scientist Francis Fukuyama described this in his new book, Identity, as a feeling of “indignation,” of humiliation. And indeed, what would it feel like to no longer be able to afford a ticket to travel to work, which you have to do because there is no affordable housing in the city? We instinctively see the reason for such developments in neoliberalism. This may not be completely wrong, but it is only half true.

In our globalized time, in which the earth’s resources are coming to an end, no global economy based on growth can survive long-term. This does not really have anything to do with privatization, for which the term neoliberalism stands. More importantly, where there is no more growth, no more interest can be earned. That’s why, even in rich countries like Germany, pension plans that rely on a certain interest yield on annual deposits are no longer sustainable. For this reason, pension funds and insurance companies are investing in the only thing that is still considered safe: concrete. This is increasing demand for real estate around the world and raising real estate prices. Many observers see this as one of the main drivers of the protests in Hong Kong.

Market economy and capitalism at an impasse

This is why there are such loud calls for a re-nationalization of the economy, even in the US, a once hopeful, forward-looking country. In this land of alleged opportunity, the reality is that there are entire regions of desolation, and large sections of the population are impoverished. When, only a generation ago, people moved from Alaska to Florida for a new job, today they are moving back in with relatives so as not to end up homeless on the street.

In constitutional democracies, the market economy and capitalism are driven by personal freedoms and are supposed to lead to independence and through education to prosperity. But this has come to a dead end. And because political participation no longer leads to prosperity and financial security — as the promise of democracy has been so far — democracy is ultimately in danger everywhere. As long as the root cause of the problem is not tackled, we will see more protests and unrest in the future, not less.

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