Two-thousand and eight was not the best of years for capitalist culture. The world financial system took a substantial hit starting in October, there is widespread fear that this will lead to a lengthy recession and government intervention in troubled economies has become not only publicly acceptable, but actively encouraged by many. The free market is more often these days viewed as a fount of greed than as a mechanism for the efficient regulation of human relations.
As for that other facet of capitalist culture, liberty — whether political, cultural, social, or otherwise — it has been knocked well down the agenda in inter-state relations. That can be put at the door of the Bush administration’s failure to move much beyond rhetoric in its so-called “freedom agenda” for the Middle East, but more broadly because of the widespread skepticism the administration elicited. The world is happy to see George W. Bush go and therefore everything he was associated with seems to be fair game for dismissal — the baby with the bath water.
That’s a pity, because while the Bush administration largely came up short in its support for democracy, and while the abysmal postwar planning in Iraq virtually ensured the United States would not soon attempt again to put dictators on the spot, for the first time in decades the ideas of liberty and democracy were actually being discussed. Bush may have ended his term in office by supporting the old despotisms of the Middle East, but he did remove a mass murderer from power in Iraq and replace it with something far more pluralistic. In Lebanon he did, along with France, push for a Syrian military withdrawal that ended 29 years of hegemony by Damascus — wherever the present uncertain aftermath leads.
All the signs are that the new Obama administration in the US, while its differences with Bush when it comes to the Middle East may be less flagrant than many were led to believe, will be even less concerned about placing democracy and human rights at the center of its regional policy. Many of those in the next administration served under President Bill Clinton, whose wife Hillary will be secretary of state, and if the Clinton years were any indication, we may see an administration devoted to the status quo regarding liberty.
When it comes to the markets, things are likely to be rather different. Thanks to their majorities in both houses of Congress, the Democrats have an open highway when it comes to state intervention in economic affairs, and now a rationale for doing so as the markets buckle. The Republicans were no slouches in expanding the federal government’s powers over the economy, or over the lives of many Americans in the so-called “war on terror”, but the Democrats are supported by constituencies that will make economic intervention far more likely and extensive.
While these two developments — a greater ability to play with free markets and declining interest in the promotion of liberty — are worrisome, they are also taking place in a very different context than when Bush entered office eight years ago. The talk in the past two months on Western governments having effectively “nationalized” their financial sectors by buying stakes in troubled companies, or injecting them with capital, is laughable. Ultimately, the success or failure of this policy will be judged by market forces, by whether these interventions are deemed efficient by the societies involved and by whether salvation’s price was worth the payback. In all likelihood, regulatory frameworks will be tightened across the board, but the aim will be to avoid persistent interventions since few states can afford massive bailouts. The real question in the coming year will not so much be whether the free market is discredited — it will not be — but whether states can impose the proper balance between allowing markets to function efficiently and what their societies will demand from them when it comes to stabilizing the markets. The fear is that too much intervention demanded may undermine free markets.
More uncertain is the fate of liberty in the near future, particularly political liberty. When it comes to that issue, both the US and Europe remain wary of challenging their allies or business partners on matters of democracy or human rights. In the Middle East in particular, the Bush administration’s “freedom agenda” all but collapsed after 2005, as Washington was compelled to rely on alliances with leading Arab autocracies to contain Iran and to stabilize the situation in Iraq. Ten years after the start of the Barcelona process the Europeans essentially admitted, in 2005, that the democratization facet of the project had failed among their southern and eastern Mediterranean partners. The EU was forced to admit that economic liberalization in no way guaranteed more political openness.
With those failures in mind, the likelihood in 2009 is that liberal democracies will push ‘liberty’ to the background. As they work to find the right dosage to rejuvenate free markets, expect much less interest from the US and Europe when it comes to bolstering free societies.