Modern history, Fukuyama contended in the 1990s, was defined as the struggle between two fundamentally opposed systems: Soviet communism and the liberal capitalist democracies.
Communism had lost, the Berlin Wall came down, and the world, it was believed, would only become better and better.
The Davos Message?
However, from a recent survey—and just in time for the World Economic Forum in Davos—we learn that most people in the world don’t believe that the capitalism of the Western democracies is the best route for the future.The key point that prompted the survey concerns the question of growing inequality around the world, with the question: “Does capitalism, as it exists today, do more harm than good in the world?”
That’s undoubtedly a loaded question, but the answer isn’t as simple as much of the world thinks it is.
Complaints of the Corrupt
More pointedly, it’s really just a new round of bellyaching by the usual suspects. About three out of four Thais and Indians were critical of Western capitalism, with the French reporting a slightly lower percentage of negative feelings. Notably, other negative poll results came from Asian, Gulf, African, and Latin American nations.Should we care about these results?
Not really. Naturally, those countries want to blame more successful nations for their own woes. That’s good politics for those few at the top who wish to hold on to their power, wealth, and status at the expense of their people.
Looking at Inequality
Historically, inequality has risen and fallen in the United States. Much depends upon policies in place from one period of time to the next.For example, when laws make it difficult to start a business through excessive regulation and high taxes, business creation slows and fewer jobs are available. Federal Reserve policies also affect the economic picture in powerful ways.
But simply pointing a finger at who holds most of the wealth, although somewhat relevant, doesn’t reveal everything. There’s also another important way to look at inequality.
For example, it seems that Jeff Bezos of Amazon is getting wealthier every year. His business is growing by leaps and bounds. (I’m not arguing for or against Amazon here, by the way.)
But Amazon is also hiring more and more workers—and, yes, using drones, too. But drones have to be made by someone as well. The larger point is that Amazon workers, and many others, have jobs that they didn’t have before, and are likely better off with their Amazon job than without it.
Sure, Bezos’s wealth is growing faster, but so what? Relatively speaking, thousands of people’s wealth is growing, compared to their wealth level in a lower-paying job or without a job at all.
Most Nations Have High Inequality
Or, as is the case in most of the world, if a nation’s legal system is corrupt and highly political, serving those in power rather than being transparent and fair, economic growth and opportunity are stifled. Inequality and poverty increase.That’s because only those with the money to bribe can afford to be in business and stop market competitors from market entry. That’s how many, if not most, of the world’s nations function, including the whiners who made the poll read the way it does.
It’s also worth noting that unlike in most capitalist countries, where the rich become powerful, in communist nations, Communist Party leaders and bureaucrats—the powerful tiny minority at the top—are the ones who become rich.
The wealth inequality gap between Party members and the rest of the people is huge. Living in palaces, shopping at the most upscale stores, and traveling like rock stars was, and still is, in countries where communism persists, the Party life. Constant food scarcity, lagging technological innovation, poor health care, and dismal pay levels was the lot of the vast majority of the people over whom the Soviets ruled with an iron fist in the name equality.
When Soviet communism fell, the liberal democratic economies of the West were proven to be superior in providing better economic conditions, greater levels of opportunity to acquire wealth, and more innovation across the technological spectrum. Overall, they were just better at providing a better life for their people.
That’s precisely why, in the 1990s, people wanted to leave those failed countries and come to ... wait for it ... the Western liberal democracies.
And sadly, for most of the world, that reality remains today.