The Everything Crisis

Nobody is more convinced of the decline of liberalism than liberals themselves. In Western countries, the past decade has seen a veritable avalanche of essays and books raging at the dying of the light. A rough consensus has taken hold that the world is witnessing the end of an age. The liberal ascendancy that followed the American triumph in the Cold War—with the subsequent expansion of both democracy and free markets—is now over. (The terms “liberal” and “liberalism” here denote the larger political and economic philosophy and should not be confused with their frequent use in the United States to describe left-wing views.) By all empirical measures, democracies are backsliding around the world. Governments are raising barriers to trade and migration. And right-wing populist political movements once deemed fringe are taking center stage. Under President Donald Trump, the United States has resolutely turned its back on its role as the champion of the so-called liberal international order. American officials now trumpet an aggressive nationalism, dismissing long-espoused commitments to democratic norms, individual liberties, and human rights.

Various inflection points tend to punctuate this narrative. Chief among them is 2016, when the United Kingdom voted to leave the European Union (an act often understood as a public rejection of a technocratic liberal project) and when Trump first won election in the United States (similarly understood as the popular rejection of out-of-touch liberal elites). The rise of Indian Prime Minister Narendra Modi and Turkish President Recep Tayyip Erdogan set back liberalism outside the West. The 2008 financial crisis revealed the imbalances of global capitalism, and China’s accession to the World Trade Organization in 2001 and its integration into the international trading order helped hollow out the industrial workforce in many Western countries. One can delve further back still to the oil crises of 1973 and 1979, after which wage growth in the United States and elsewhere slowed tremendously, or to the tumult of the 1960s, which weakened the sway of traditional social institutions.

Whatever the chronology, the diagnosis is often the same: liberalism ate itself. The success of the twentieth century soured into the disarray of the twenty-first. Prosperity bred inequality and the concentration of wealth, individualism bred anomie and the disintegration of traditional community, and democracy bred mistrust and polarization.Liberal elites professed toleration, equality, and openness, but they seemed unwilling to apply them consistently.A sharp divide grew between winners and losers.As the British columnist Adrian Wooldridge puts it in The Revolutionary Center, “Liberalism’s triumph has been the common man’s loss.” The Turkish American economist and Nobel Prize laureate Daron Acemoglu sounds a similar note in his exploration of the crisis, What Happened to Liberal Democracy? “Liberalism’s current failures,” he argues, “are related to its abandonment of the working class.”According to this narrative, economic neglect ushered in the rise of decidedly illiberal forces, such as Trump’s “Make America Great Again” movement in the United States. Wooldridge also flags assorted strongmen and Islamists as challenging liberalism from the outside. But the difficulties that now haunt liberal democracies, the authors claim, come more from within than without.

The necessary recalibration, according to both Wooldridge and Acemoglu, would have liberals embrace more left-leaning economic policies to redress the damage done by decades of runaway neoliberalism and shift rightward on matters of culture. They suggest focusing on “working-class priorities,” in Acemoglu’s words. These include, for Wooldridge, stronger borders, limits on immigration, and the need for cultural assimilation; for Acemoglu, a greater emphasis on local community and attention to concerns about immigration; and for both, an impatience with the focus (often in elite circles) on issues of sexual self-determinism and racial identitarianism.

With these suggestions, the authors join many other liberal thinkers who have sought to make sense of the dashed promise of the post–Cold War liberal ascendancy. But their fixation on the ills of liberalism makes them miss a deeper truth. The alienation and unrest palpable in liberal democracies are not particular to them. Similar dynamics are present in ostensibly illiberal countries, such as China and Russia. Today’s crises don’t land squarely at the feet of a beleaguered liberalism. And that means that the prescription is, at best, limited. The current turmoil reflects a far larger breakdown, one that can be addressed only by embracing the universal, cosmopolitan principles at the heart of liberalism, not by turning away from them.

RISE AND FALL

In many conventional narratives, the two decades from 1989 to 2009—roughly spanning the defeat of communism and the global financial crisis—often appear as the golden age of liberalism. This era saw the dominance of centrist politics in most parts of the world, including the tenures of U.S. President Bill Clinton, British Prime Minister Tony Blair, German Chancellor Angela Merkel, and Indian Prime Minister Manmohan Singh. It also saw the accelerating interdependence of global markets, steep reductions in global poverty, a rise in the number of liberal democracies, significant openings in India and other once shuttered economies, deeper European integration, more permissive regimes of legal migration, the growing multiculturalism of societies in places such as the United Kingdom, the retreat of many forms of racism, the expansion of women’s rights, a worldwide reduction of violence, and—one might even add—a general lightness of being.

Neither Wooldridge nor Acemoglu see that era as some halcyon time. Instead, this period carries a whiff of tragedy for both authors. It contains the seeds of liberalism’s eventual disappointment.

To explain the failures of liberalism, both delve into intellectual history. Wooldridge powerfully catalogs a cluster of ideas that made liberalism successful: the rise of the sovereign individual, limits on the arbitrary power of government, the creation of effective government, toleration, freedom, and meritocracy. Liberalism’s ills, Wooldridge suggests, come not from its ideas but from the overreach of liberal elites, who failed to apply these ideas appropriately.

Acemoglu, by contrast, blames liberal thinkers themselves. Through hurried readings, he advances an unconvincing case for the prosecution, accusing assorted giants of liberalism of setting it up to fail. Immanuel Kant’s categorical imperative was dogmatic and did not, as Acemoglu puts it, “encourage fallibility or doubt.” The social contract tradition, from the writings of Jean-Jacques Rousseau to those of John Rawls, devised idealized contracts without asking real people about their real interests, thus bypassing democracy. Adam Smith was overly optimistic about the invisible hand, downplaying monopolies and concentrations of power in society. And all of them ignored community. Acemoglu’s liberalism would correct for these shortcomings by becoming a more pragmatic, results-oriented doctrine rather than a political morality.

In this light, it is not surprising that both Wooldridge and Acemoglu see the 1950s as the period closest to a golden age. According to Acemoglu, liberal democracy once enabled broad-based shared prosperity and strong governance. In the 1950s, productivity gains, especially in the United States, translated into rising wages and more effective government and public services. This social compact broke down with the decline of manufacturing in the late 1970s, which severed the connection between rises in productivity and wages and also destroyed the basis for labor’s bargaining power by weakening unions. The era of deregulation under U.S. President Ronald Reagan and British Prime Minister Margaret Thatcher, in the 1980s, further skewed the balance of power against labor. In the first decade of this century, a flood of Chinese imports dealt a final blow to U.S. industry. Technological change displaced many jobs and created a skill bias in the economy, helping educated workers more than those without college degrees. The net result was the exacerbation of income inequality in the United States, with a striking geographic dimension: small towns and rural communities became less relevant to the national economy. Similar dynamics came to define other, increasingly postindustrial economies in Europe.

A central concern in much of the ferment about liberalism is how the resulting economy has disempowered workers. “Western capitalism,” Wooldridge writes, “is turning against the liberal values that guarantee its long-term success.” He warns that “the wealthy are transforming themselves into a hereditary caste.” Acemoglu’s biggest worry is automation, which he fears will displace workers and erode the pathway to shared prosperity.He notes, however, that technology is not an inevitable force: governments can set policies that incentivize how technologies emerge and are implemented, enhancing the skills of workers rather than displacing them.

As Wooldridge and Acemoglu both show, liberalism ultimately triumphed against the backdrop of the crisis of the early twentieth century by reimagining the economic order. The New Deal in the United States and Keynesianism in the United Kingdom transformed the social and economic compact, guaranteeing labor a fairer share in the economy, committing to protect individuals against the vagaries of the market, and producing full employment. In the wake of the economic convulsions of recent decades and with the advent of artificial intelligence, democracies need another new compact.

Acemoglu offers a sketch of one that might serve. He hopes that states can pressure companies to develop “pro-worker” AI that increases the productivity of nonskilled workers and the quality of services such as health care and education. Governments should amend tax codes to stop incentivizing automation. In the United States, labor income is taxed more heavily than capital, encouraging employers to eliminate jobs through automation even when doing so might not yield productivity gains. The main problem, however, is that workers have too little say over how production is organized. Unions, Acemoglu insists, are essential to democratizing the economy.

Acemoglu’s “working-class liberalism” is rich in laudable objectives: inclusive growth, more considered forms of technology, stronger labor unions, wiser systems of taxation, greater democratic control, and better services and governance. It is a rousing call against fatalism in the face of technological change. But it is surprising that an economist cannot offer a clearer account of its tradeoffs, including a reckoning with the inevitable tensions that would arise between the need for regulation and the fostering of innovation.

Although both authors mention the financialization of developed economies in passing, neither Acemoglu nor Wooldridge fully considers the expansion of credit and debt markets, the rise of shareholder capitalism, the investment of pensions in stock markets, and the growing importance of debt and capital mobility. Both tend to see the fall from the golden age of the 1950s as an intellectual mistake, as if liberalism took the wrong conceptual turn toward globalization, financialization, deregulation, and labor suppression. But an alternative story is that these were not intellectual mistakes but shifts that were necessitated by declining productivity, industrial conflict, and fiscal pressures in the 1970s. In short, Acemoglu’s era of shared prosperity had run its course, and the financialization that followed was one of the remedies. The authors might have explored whether financialization was responsible for shifting the emphasis in many economies from productive investment to financial returns, or they might have considered what exactly greater worker control looks like in an economy in which, paradoxically, workers’ well-being is increasingly dependent on the success of the very financial markets that disempowered them in the first place.

WOKEY-DOKEY

If liberalism has forsaken the economic interests of the working class, it has also apparently added insult to injury by aggressively defending a new cultural ethos through what Acemoglu darkly terms “social engineering.” Both Wooldridge and Acemoglu worry about the rise of the college educated as a distinct class whose cultural norms are at odds with the rest of the population. Wooldridge also warns about the consequences of “unprecedented levels of immigration” and demands that liberals place “more emphasis on assimilation,” fretting in particular about Muslim migrants in Europe. Acemoglu, in milder terms, asks liberals to take white Americans’ concerns about immigration more seriously.

Wooldridge lingers on how elite liberals have turned commitments to freedom, equality, and inclusion into a demanding politics of identity. Liberalism, in his view, became too tolerant and too intolerant at the same time. When faced with real assaults on free speech, such as the fatwa on the British writer Salman Rushdie in 1989, liberals were willing to abandon liberty and equality for the sake of cultural sensitivity. “People who were brave as lions in poking fun at Christianity,” Wooldridge writes, “had second thoughts when it came to Islam.” Yet the same liberals are intolerant toward those who question their progressive orthodoxies on issues such as self-defining gender identity or diversity, equity, and inclusion programs.

Today’s crises don’t land squarely at the feet of a beleaguered liberalism.

Wooldridge and Acemoglu are entirely right that liberal cultural politics helped discredit liberal economic policy. Much of their criticism of the performative and censorious excesses of college-educated elites is well taken. Curiously, neither dwells much on the myriad ways elites in liberal democracies lost the trust of the public, including by embracing wars in Vietnam, Iraq, and now Gaza. That tendency helped collapse the credibility of both the center-right and the center-left in the United States and even lowered the guardrails against untrammeled executive power. Be that as it may, the authors’ scolding of elite “wokeness” is dissatisfying for other reasons. Echoing critics on the right, both authors speak of the cultural changes of the last couple of decades in almost apocalyptic language: Acemoglu refers to a period of social engineering; Wooldridge writes of so-called cancel culture in terms evocative of a Stalinist dictatorship, lamenting how “identitarians” have launched a “purification campaign” and are “ruthless in imposing their orthodoxy.” Untangle the media and political frenzy around wokeness, and it’s not obvious how much tangible change actually occurred—whether in the composition of the academy or the structures of any other powerful institution. There are good reasons to be skeptical of the imperative to advance diversity, equity, and inclusion at the expense of other goals. But such efforts hardly amounted to social engineering on a transformative scale.

Indeed, more social engineering may be what liberalism genuinely needs. In reading Acemoglu, in particular, the gap between the expansiveness of the diagnoses and the unambitious nature of the prescriptions is glaring. Surely, a liberalism that—following Acemoglu—requires the radical redirection of technology, the preservation of communities, the expansion of worker rights, and the inculcation of deeper democratic attitudes can be reconstructed only through a massive remaking of institutions and the revamping of economic incentives.

THE LAMPPOST AND THE KEY

Acemoglu and Wooldridge are correct in calling on liberals to defend freedom, democracy, good governance, and the interests of the working class in the face of authoritarianism, popular disempowerment, the concentration of wealth, and governmental dysfunction. But liberal democracy is not alone in wrestling with these problems. The supposed crisis of liberalism is, in fact, just one manifestation of a larger crisis of modernity.

Competitors to liberalism are facing crises of their own. Despite vast differences in its political system and its manifest economic successes, China is responding to parallel challenges: inequality, technological disruption, difficulties in rebalancing the economy, and the problems of the “mass line,” of knowing and representing the needs of ordinary people through the structure of the Communist Party. Beijing has responded in ways that are uncannily similar to the course of action that Wooldridge and Acemoglu prescribe: leftward in economics and rightward in culture. Chinese authorities have centralized power and reined in the private sector, ostensibly to address growing inequality and quality-of-life issues, including those inherent to a fiercely exam-based meritocracy.Meanwhile, Chinese leaders are turning to a more assertive nationalism and to invocations of China’s civilizational past to make up for the national cohesion that communist revolutionary ideology once supplied.

It is also striking that both China and the United States hope that technology will do the work of crafting a better future, acting as a kind of substitute for an exhausted politics. The United States is betting on the AI revolution to solve the problem of productivity and growth. China has a different model, but it has also pinned its hopes on technological innovation. In fact, both countries increasingly equate national purpose with maintaining or gaining a lead in technology. The expectation is that technology can solve the problems that the current technological regimes have generated. Acemoglu is right to worry that these technologies might increase productivity without creating enough new jobs or empowering workers. The problem here, however, is not intrinsic to liberalism but to how technology can foreclose possibilities for shaping the world.

The conflation of modernity and liberalism leads to other confusions. It is easy to attribute the dissolution of institutions such as the family to liberalism’s emphasis on the individual. But the drop in fertility rates is as spectacular (and sometimes more so) in Islamic Iran, Confucian South Korea, and communist China as it is in Western liberal democracies. It is true that liberals can sometimes express disdain for small towns and communities left behind in the march of economic development. But the withering of these communities is hardly a pathology of liberal ideas. The continual movement of labor and capital, the recurring destruction of older occupations, and the hollowing out of traditional heartlands in the name of greater productivity are all constant features of the pathology of modernity. It is unfair and too easy to see shattered postindustrial towns as the collateral damage of liberal conceits. The problem, as classical social theorists knew, is how to organize economic and social power so that those who generate wealth have a stake in the institutions that govern that wealth, and those who bear the costs of economic change have some power over that change’s direction. It is a challenge that has seen liberals, conservatives, and socialists alike repeatedly fall short. None have ever been able to resolve the tension between the frenetic dissolving power of modernity and the preservation of stable institutional forms.

Even the problem of “wokeism” is not a unique pathology of liberalism. Modern society unleashes a fantasy of self-creation, in which leaders such as Russian President Vladimir Putin and Chinese leader Xi Jinping can contemplate achieving immortality, billionaires can think that through cryogenics the body can be conquered, and geneticists float the possibility of made-to-order babies. In this era, the desire to redefine gender, for example, is hardly an outlier that results from liberal pathologies but rather just one form of a deeper tendency, evident in many different ideological ecosystems,to radically remake individual identities.

Both books also want to paint liberalism as parochial, as if it were the product of particular histories and circumstances and not the province of the whole world.Liberalism can still be universal even if not all societies embrace it. The contest between liberty and repression, between hierarchy and equality, between subjecthood and citizenhood, and between acceptance of the social order and rejection of it is a universal one, even if that contest takes different shapes. Liberal democracy may not be, as Acemoglu argues, to everyone’s taste. But these fault lines run within every society, and often within most individuals.

The authors’ concerns over immigration and cultural assimilation push liberalism to retreat from cosmopolitanism. They worry that liberalism’s aspiring universalism has undermined cultural stability and national identity. But this turn away from cosmopolitanism would come at a high moral price. Casting cosmopolitanism as some elite affectation is to mistake the scale of the problem humanity faces, twice over. In practical terms, the consequences of modernity are now everywhere: the challenges of technology, information flows, climate change, demography, economic rebalancing, pandemics, and existential risks cannot be solved within the framework of individual nation-states alone. Nor can they be solved by a bargaining structure in which each country simply looks to its own interests. That impulse is the essence of Trumpism and the global turn toward nationalism, which liberals are now unwittingly intellectually supporting. In moral terms, what is also lost is not only liberalism’s universal ambition but the recognition that the struggle over freedom, equality, and human dignity is a shared human problem, not the possession of any particular civilization.

In this context, the project of rethinking liberalism recalls the person who looks for the key under the lamppost not because he lost the key there but because he found a puddle of light. The challenges of modernity are making all ideologies flounder, others perhaps even more than liberalism.

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