World Politics since 1989. Jonathan Holslag
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New services, like real estate and finance, were embraced with the same ease in the West as so-called sunset industries were demoted, disregarding the fact that Western citizens could still not imagine a life without basic goods like cotton, polymers, or aluminum.
A critical part of Western society that also suffered from low investment was education. In the 1980s, President Ronald Reagan had wanted to abolish the federal education department altogether, leaving schools to be managed by local governments and dependent on private financing. Neoliberal puritans posited that free education would be better. From a more opportunistic viewpoint, privatization and decentralization were meant to reduce costs. In the United States and the United Kingdom, privatization added to polarization. While schools had once been considered a social blender, they now contributed to segregation.12 With good education reserved for a small group of rich students, experts warned of a tide of mediocrity. Civic education, crucial for democracies to show that they were truly superior to communist societies, had fallen into disarray.13 Robust civics instruction, usually organized into three mandatory high-school courses, had been left to atrophy. Large groups of children were left behind, children getting second-rate education in third-rate schools.14 Child labor returned to parts of the United States.15 Ten subway stops from the lavish apartments around Central Park, New York, poor school pupils were seen doing worse than their parents: “Bleeding gums, impacted teeth, and rotting teeth are routine matters for the children in the South Bronx. Children get used to feeling constant pain. They go to sleep with it.”16
For many Western countries, the 1980s were a period of decreasing investment, dwindling saving rates, and increasing household consumption. One of the comments of liberal economists about the Soviet planned economy was that it misallocated capital to sectors that did not make the country more productive. Now it could be questioned whether capitalism was not leading to the misallocation of capital in the West. How could it be that giant shopping malls were erected, yet there was no money to build schools and maintain bridges? How could it be that the rich were spending lavishly on yachts and penthouses, yet millions of poor children were ignored, hardly received quality education, and, hence, would not in any way help the economy to grow stronger? A berth for a yacht in New York could cost as much as US$2 million a year, enough to pay for about 500 children at elementary school. When asked about his single apartment worth US$12 million in downtown Manhattan, the property owner, a future American president, said: “While I cannot honestly say I need an 80-foot-long living room, I do get a kick out of having one.”17 How could it be that privatization in the 1980s had made the average American or British citizen spend more on healthcare and other public services, yet with their quality being in decline? Should it really be taken for granted that capitalism was superior?
The growing consumption in several Western countries coincided with growing external debt. As they imported more than they exported, some of the imports had to be pre-financed. But President Ronald Reagan had explained this as a sign of strength. After all, he argued, it implied that countries like the United States were creditworthy enough for foreigners to advance money.18 You can only borrow large quantities of money if you are strong. Many economists agreed, but suggested some conditions.19 America and other deficit countries could use the foreign money and cheap imported consumer goods as an opportunity to invest in innovative industries, education, and infrastructure. If not, some experts warned, growing debt combined with a weakened economy would mean repayment problems in the future. Even the position of the United States as the leading economy and the American dollar as the leading currency could be at risk.20 Why, after all, would one accept American dollars to build financial reserves if the American economy was set to weaken in the long run? One economist referred to the dilemma as the morning-after problem.21
A first source of uncertainty about the ability of the West to preserve its power and its position at the center of world politics concerned, thus, the downside of neoliberalism. The retreat of the state, advocated by politicians like Ronald Reagan and Margaret Thatcher, had affected the vital tissue of American and British society. The shopping malls erected against the backdrop of decaying public infrastructure, manufacturing, and schools also exemplified how much this neoliberalism strayed from the Enlightenment beliefs that lay at the origins of liberal thought. Whereas the original liberal thinkers emphasized the need for the emancipation of the mind and civilization, this neoliberalism was about the creation and satisfaction of new material needs. Statesmen in the past stressed the importance of active citizenship and of education. “Patriotism, virtue and wisdom,” one reads in the Federalist Papers.22 Neoliberalism reduced citizens to consumers. It did not set them free, nor empower them, as some neoliberal intellectuals maintained. Instead, it left them to the influence of corporate Leviathans, their advertisements, their role models, and the banality of their media channels.
Previous generations of leaders called for frugality. But now, families and nations spent beyond their means. In previous times, also, leaders warned against the sort of capitalism that bred large inequality and ignored the objective of a strong society. “It is a bad thing for a nation to admire the false standard of success and there can be no falser standard than that set by the deification of material wealth,” President Theodore Roosevelt had warned.23 Was Western society even that free? Soviet citizens lived in a dictatorship that denied them fundamental freedoms, including the freedom to choose how to live their lives. While these freedoms were guaranteed in the West, Westerners had come to face some serious challenges concerning their own lives, in particular the moral dimension of their lives. On the one hand, they ended up living in a system that educated them less about morals and citizenship, yet, on the other hand, heavily influenced by commercial publicity, powerful retail chains, and mass media with their own ideas of what lifestyle ought to be. There were, of course, differences inside the West, but in the core of the Western world – the United States and the United Kingdom – neoliberalism had made the spirit of the Founding Fathers and the liberal ideal of emancipation fall on many citizens like a worn-out cloak. It surely was not always better in the past, but many wondered whether the abandoning of the ideals would help build a better future.
Decadence
Wealth without virtue breads decadence. Decadence in its turn is the precursor of decline. Historians who had studied the rise and fall of great powers saw resemblances between the internal weakening of the late Roman Empire and the West. They were also familiar with the words of the Roman historian Sallust and theologian Saint Augustine that the abolition of external adversaries and the removal of the necessity to be alert was followed by disasters arising from prosperity, greed, and inequality.24 So, if the collapse of the Soviet Union already presented an opportunity, it would at best be a pause in which to remedy these internal economic problems.25
Even such pause was considered by some to be more a curse than a blessing. The problem of a breathing space, contended the historian Paul Kennedy, is that one feels less pressured to tackle challenges.26 He made a comparison with the late-Victorian age, during and after which Britain constantly staggered from one crisis to the next. Decline is not necessarily a collapse. Decline can also be slow, with moments of recovery that allow politicians to dismiss the warnings of critics. Decline can be subtle, encouraging leaders to go on with laissez-faire policies, and citizens to enjoy their prosperity without worrying about the erosion of their productivity and wealth. The harsh confrontation with reality is thereby postponed for another generation or so. Kennedy, who in earlier years investigated the phenomenon of imperial overstretch, the fact that global interests were growing too much in comparison to the means to secure them, now highlighted the moral dimension. Like many historians who wrote about the fate of great powers, he saw decadence as the main threat, describing his country drifting lazily downstream, putting out the boathook to avoid an occasional collision.
Moral decay was also what the influential economist John Kenneth Galbraith saw around him. He had previously outlined how a small part of private America had become outrageously rich, while the public sector remained outrageously poor. The problem, he saw, was economics. But the cause was the dissipating of virtue and ethics, the erosion of the values that America’s Founding Fathers embodied. Materialism among