BUDAPEST – The rerun of the Greek parliamentary election on June 17 was only the latest symptom of the most serious crisis to plague Western democracies and open societies since the 1960s. Liberal democracies in the West today are struggling to avoid — and in doing so are exacerbating — a crisis of identity, which puts the existing social contract at risk and threatens their implosion.
The end of the Cold War bequeathed our leaders with a new set of governance challenges that promptly grew in magnitude, in large part owing to faster globalization, the consequences of the 1980s economic liberalization, and the 1990s revolution in information technology. These challenges, insufficiently addressed, soon led many to question the sustainability of liberal democracy’s appeal at home and its universality abroad, and to probe the alleged merits of the “Chinese model,” best characterized as a form of authoritarian or state capitalism.
The financial meltdown of 2008, which soon metamorphosed into the deepest Western economic recession since the 1930s, added fuel to the fire, as policymakers hunkered down in a nontransparent crisis-management mode, condoning massive state intervention in the economy and socialization of private-sector losses on a previously unprecedented scale. The resulting fiscal austerity plunged many below the poverty line and accelerated economic inequality, while many private institutions, having caused the 2008 bust, recovered on the public dime.
Adding insult to injury, in Greece and Italy, two of the hardest-hit countries, financial markets effectively deposed elected, if imperfect, governments. The hapless former Greek prime minister, George Papandreou, had to resign last year after daring to suggest a referendum to decide the economic future of his fellow citizens. (Ironically, the upcoming election will de facto serve as the referendum that Papandreou suggested in October.)
At the root of the European crisis (and its equivalent crisis in the United States) is a shift in the configuration of economic, social, and political power. Liberal democracies and open societies have traditionally relied on a fine balance of these three forms of power. Over the last two decades, our elites have been unable to maintain it, as economic power has long since gone global and dislodged itself from political power, often corrupting democratic politics in the process.
At the same time, social power, which provides the oxygen for democratic legitimacy, has been marginalized and disillusioned, and is increasingly turning away from the traditional transmission belts of politics. The result is an erosion of the stature of mainstream political parties and trade unions, and all-time low levels of trust in governments writ large. Powered by new media, identities are beginning to form around new networks of social interaction that often defy state boundaries and have little connection to liberal democracy’s traditional institutions of governance.
The refusal of today’s elites to promote an effective balance of the three powers — to recognize a larger purpose beyond maximizing each individual power — has visibly translated into a waning regard for the public good. This has dramatic consequences for liberal democracy and open societies.
With political power diminished (and sometimes usurped) by the transformation of its economic counterpart, and its detachment from its social base rendering it increasingly illegitimate, this is the hour of populists and extremists. We now see them feast on enfeebled democracies in many European countries, as fringe movements become serious contenders for power and threaten to wipe out the achievements of more than 60 years of European integration.
In the U.S., the political system has descended into seemingly intractable partisan paralysis, gravely undermining the system of checks and balances and generating a deepening sense of malaise and frustration.
We stand at a critical juncture. Recreating democracy and open societies in a global age requires investment in new ideas to rebalance political, economic and social power at both the national and the global level. Nationally, we need to experiment with new mechanisms for policymaking and implementation, reconnecting democratic institutions to citizens and emerging networks of civil society. Globally, we must allow political and social power to establish their rightful place next to economic power.
Mere tinkering will not do; we need a transformation of the global institutional architecture. Unless we can establish a global socio-political space, we cannot legitimately deliberate over the provision of global public goods, let alone deliver them successfully. The push toward such a space needs to be spearheaded by risk takers — social and political entrepreneurs who are unafraid to work across lines traditionally dividing sectors and states, and who help to re-create a global community of purpose beyond power.
The French philosopher Jean-Paul Sartre once described the Berlin Wall as a mirror. In view of the Soviet system, it was indeed easy to overlook our own weakness and fallibilities. As the wall came down, our elites struggled to maintain the fiction of an inherently imminent victory march for liberal democracy worldwide, now laid bare by the economic crisis on both sides of the Atlantic.
We have lost two valuable decades to respond adequately to globalization and the crisis of liberal democracy and open societies. It is time to begin an honest reflection about power and its purpose in today’s rapidly changing world.
Wolfgang Reinicke is founding dean of the School of Public Policy and International Affairs at Central European University in Budapest. © 2012 Project Syndicate/Institute for Human Sciences