Saturday, July 22, 2017

Multi-party kleptocracies rather than illiberal democracies

The term “illiberal democracy” was, I think, introduced by Fareed Zakaria. It was used as a badge of honor by Viktor Orban, the Hungarian Prime Minister, the erstwhile poster-child of youthful East European reformers and liberals of the 1990s who then decided to turn over the new leaf. More recently, the term has gained further popularity as a way of naming and explaining the regimes such as Erdoğan’s in Turkey or Putin’s in Russia. Perhaps Venezuela can be placed in the same category too.

The implication of “illiberal democracy” is that the system is democratic in the sense that there are free elections, more or less free, or at least diverse, media, freedom of assembly etc., but that the “values” espoused by the regime are illiberal. Erdoğan believes in primacy of Islam over the Enlightenment-defined human rights, Orban believes in “Christian civilization”, Putin in “Russian spirituality”, Maduro in “Bolivarian revolution”. “Illiberal” also implies that the system is majoritarian in the sense that certain “inalienable” rights can be taken away through simple vote. At the extreme, a majority can decide to deny certain rights (say, to free speech) to a minority.

This definition, in my opinion, overstates the value component of these regimes. The core, or the desired objective, of this new breed of quasi democratic regimes is multi-partyism in which, however, only one party can win. Russia has gone the furthest on the road of “electoral engineering” where there is seemingly a democracy, multiple parties etc., but the rule of the game is that only one party can win, and that the others, in function of their “pliability” and closeness to the “party of power”, are allowed  to participate in the division of the spoils.

For it is precisely the “division of the spoils” which is a crucial feature of the regimes. They do not share, as some commentators believes, “values” antithetical to Western liberal values. Rather, I believe, these different values are simply invented to provide voters with a feeling that they are indeed voting for some distinct “national”, “homey”, “non-cosmopolitan” program while the real objective of the party of power is to control the state in order to steal, either directly (from overcharged public works or state-owned enterprises) or indirectly (through private sector corruption and laws and regulations that are for sale).

Thus, the party of power is simply an organized thievery that, in order to survive and prosper, needs to pretend to defend certain “values” and, most importantly, to keep on providing financial benefits to its supporters. The system is thus fully clientelistic. It functions very similarly to Mobutu’s Zaire (as beautifully described in Michala’s Wrong’s  “In the footsteps of Mr. Kurtz”). The top guys (Erdogan and his son, Putin, Rothenberg and other oligarchs etc.) do, like Mobutu, take the largest slice of the pie, but they are more than anything else, arbiters in the process of the division of money between various factions. When you read Wrong’s book on Zaire, you realize that Mobutu was at the apex of the pyramid, but that he was not an unchecked dictator. To remain in power, he had to maintain support from various groups that were vying for money. This is precisely how Putin maintains his power: not as a Stalinesque dictator, but as an indispensable umpire whose sudden departure would throw the system totally off-balance until, possibly after a civil war, a new, generally accepted arbiter emerges.

I realized that it is this particular nature of the rule combined with clientelism, which is crucial and not some opposition to “liberal” values, when I spent this Summer in Serbia and Montenegro. Montenegro had been ruled by one man, Djukanoviċ, for thirty years. He has in the meantime changed, like Putin, various positions from which he ruled: president of his party, prime minister, president of the country. Moreover, Djukanoviċ’s rule is broadly consonant with Western liberal “values” in the areas of gay rights, environment, lack of regulation and the like.  He has brought Montenegro to the threshold of the European Union and included it into NATO. But  the structure of his rule is equivalent to that of Putin: control of the government in order to steal, and distribution of these gains to his supporters (and of course to himself and his clique).

In order for such a system to survive it needs to continue winning elections, ideally forever. Ben Ali and Mubarak who headed similar systems in Tunisia and Egypt eventually failed. But Djukanoviċ, Lukashenko, Erdoğan, Putin and Orban have not failed so far. Again Russia is at the forefront here. To win elections, all means are used: state sector employees are strongly “recommended” to vote for the “right” candidate or the “right” party, people are given cell phones with which they record their vote and, if they vote “right” are allowed to keep them (Montenegro used this technique for more than a decade), votes are directly bought, or false ballots are added to sow confusion. The outright stealing of the votes, by falsifying the totals, remains as the ultima ratio. In Russia, such falsification is difficult or impossible in big cities but quite feasible in small towns or faraway areas where the percentage of the vote for the “right” candidate reaches 90 percent or more.

I think that it would be wrong, though, to regard such regimes as a different species from the Western liberal regimes. They simply exaggerate some features that exist in “advanced” democracies: sale of regulations and laws is done in both but it is done more openly and blatantly in the “new” regimes; creation of a real second party in Russia is as difficult as the creation of a third party in the United States; voter suppression is just taken one step further. They amplify, sometimes in a grotesque way, the negative sides of democracies and suppress, almost fully, their positive sides.

But the new regimes’ key characteristic is that they are multi-party electoral kleptocracies where only one party can win.

Wednesday, July 12, 2017

Inevitability of the need for economic growth—the nth time.

Today, I got into a bit of a Twitter spat with Kate Raworth who suggested in a talk to OECD top brass that their statement of objectives (defined, I guess, in the 1950s or 1960s) which emphasizes the achievement of high growth rates should be modified to create “redistributive and regenerative economies..whether or not they grow”.  I have to confess not to have read Kate’s very successful “Doughnut economics” yet but hope to make up for that very soon. But I have read some reviews and my reaction to the suggested change in the OECD mission statement was thoroughly negative. De-emphasizing growth is not desirable, and perhaps more importantly, is utterly unrealizable in societies like our modern societies. Because I am convinced of the latter, perhaps I should refrain from criticizing her position—since I believe that nothing will ever come of it.

But let me still explain under several headings why I think so. (Surely, the OECD statement may be changed for PR reasons, but this is immaterial.)

Economic growth is key for reducing global poverty (and even global inequality). This is an easy point and I am sure Kate would agree that countries in Africa need more growth than what they have now. The same argument applies to many other parts of the world: South Asia, Latin America, most of Eastern Europe, many OECD members: Greece, Turkey, Mexico, Chile. (And even the richer ones do not seem particularly happy with the recent period of zero growth: they would not be complaining of the Global Recession otherwise.) Growth is (with better redistribution) the only way to get out of poverty. Even growth that is to some extent going roughshod over environmental and other concerns is better than no growth—and this is one of the reasons why I am so supportive of the new Chinese investment Bank and generally of China’s investment in Africa (I wrote on that here).

Commodification of today’s societies. But the really important counter-argument to Kate is that her proposal fails to acknowledge the nature of today’s capitalist economies. They are built on two “fundaments”: (a) at the individual level, greed and the insatiable desire for more, and (b) on the collective level, competition as a means to achieve more. These are not necessarily most attractive ethical characteristics for either individuals or collectives but they are indispensable for capitalism to function—they provide the engine that pushes it ever further.

Such characteristics have then become fully internalized by the majority of the population. They have led to the progressive expansion of commodification of things that were never commodified before. It is of course well-known since Marx, Polanyi and Gramsci that capitalism commodified factors of production (labor, land, capital.) (For a nice discussion of the early commodification and how it led to growth, see my review of Bas van Bevel's wonderful new book “The invisible hand?”).

Commodification has continued unabated since. Art, entertainment, knowledge have become fully commodified.  Nowadays, we are witnessing encroachments of commodification in the areas we never dreamed of. Gig economy is from today’s perspective an extreme commodification (but from tomorrow’s perspective may be just a new normal). My free time has become a commodity: rather then drinking beer with friends, I do taxi service.  My apartment when I am not there has become a commodity to sell. Even my “free” drinking-beer time has become a commodity: I use it to “network”. Thus even the free time needs to be justified in terms of leading to greater income. People attend speeches of famous economists (who, by the way, have commodified their speeches) not because they expect to learn much, but because they expect to find there others with whom they can “network” (meaning, create future lucrative connections during a time ostensibly spent “learning”). I could go on.

This extreme commodification is obviously linked with insatiability of our needs  and our desire to climb up in hierarchical rankings. Since today’s uber-capitalism accepts only one ranking criterion, money  (and since all other possible ranking criteria can be, through commodification, converted into the money-metric), the desire for higher societal rank is almost entirely identified with the desire for higher income.

And if everybody wants to have higher income, how can we then argue they our society should cease to place a premium on economic growth and that growth should become a “response variable” (as Kate argues)?  Being a “response variable” means “yes, I do not argue for zero growth like the Club of Rome in the 1960s, but I am fine with whatever growth rate turns out to be”. But if what I see as the “fundaments” around which all modern societies are organized, are correct then the only rate of growth that can really “turn out” will be a maximum rate of growth.

The Italian example. Let me then, as a way of illustration, introduce the Italian example.

I think that it could be reasonably argued that no group of people in the history of the world has lived as pleasant lives as today’s Italians. The advantages are well-known:  lots of wealth, peace, moderate working hours, strong family and friendship bonds, nice weather, beautiful historical and natural sights, excellent and healthy food. Who then needs to grow? And Italy did not. It has by now stagnated for a generation and while in 1999, its GDP per capita was 3.5 times the world average, it is today 2.5 times. One could say, “it does not matter if people are happy”. But the problem is that, while superficially people may be happy this Summer as they congregate on the beaches and drink aperol, there is a deep malaise induced precisely by the absence of growth. The young are not happy because of lack of opportunities, the middle-aged people are not happy by non-challenging jobs, the old are not happy because their pensions are stagnant. So even if you have achieved a stagnant Arcadia, you cannot be happy and stop running because others are overtaking you and the fundamental features of capitalism, in Italy and elsewhere, are as I have described them above.

If one really believed in, and wanted to argue for the incidental nature of economic growth (“whether or not the economies grow”), then he or she should start by trying to change the bases on which our (global capitalist) civilization has been built, namely insatiability of needs and commodification. But these features have become so strongly ingrained that I cannot see how they can be changed in any foreseeable future.  All the rest is romanticism.