America is a mess. So are many other Western nations. Populism is on the rise because our existing system of a market-based liberal democracy is falling short of producing what citizens need and want.
The argument made by Francis Fukayama in 1993 that liberal democracy has won in the competition for ideas now seems quaint. History has by no means ended. Its next phase is, to many people, extremely worrying.
Some of the problems are economic: rising inequality, stagnant wages, lack of employment, lower intergenerational mobility, disappointing levels of health and education in the U.S. despite their large costs, rising levels of public and private debt, growing place-based disparities.
Some are political: hyper partisanship, influence-buying and corruption at the highest levels, paralysis, and declining trust in government.
Some are cultural: resentment of migrants and growing tensions over race and gender in America.
These problems are interrelated. We can no longer address them in isolation from one another. A failure in one domain creates failures in the others. Economic and cultural anxieties elected Trump. Trump and his ilk in other countries are using these anxieties to gain and maintain power and further erode confidence in our institutions. Government paralysis is undermining efforts to deal with economic disparities and those left behind.
Underlying these discontents at a deeper level is a mindset that has treated markets as the ultimate arbiter of human worth – a mindset I will label “capitalism” or “market fundamentalism” for short. The basic idea is that markets work, governments don’t. This ideology has been especially strong in the U.S. in recent decades.
This essay argues that this mindset has led to ever-rising inequality and a government that has been captured by business interests and the wealthy. It is creating a spiral that can only end in crisis unless the intellectual foundations of the current system are better understood and challenged.