Krishnan Nayar has just produced a challenging read in his Liberal Capitalist Democracy – the God that failed (2023) which argues that
the pre-consumerist, pre-welfare capitalism of a penurious working class and severe precarity was far more likely to lead countries to right-wing, aristocratic autocracy than to democracy.
Branko Milanovic honoured it with an extensive review which made three points -
First, he argues that bourgeois revolutions frequently failed to lead to democracy, a view strongly embedded in the Anglo-American Whiggish history and in simplified Marxism. Rather they provoked aristocratic reaction and the authoritarian economic developments which in many respects were more successful than those of bourgeois democracy. In other words, democracy does not come with capitalism and, as we shall see, capitalism often destroys it. The authoritarian modernizers (Nayar studies four: post-1848 Germany, Louis Napoleon’s France, Bismarck’s Germany, and Stolypin’s Russia) enjoyed wide support among the bourgeoisie who, fearful for its property, preferred to take the side of the reforming aristocracy than to throw in its lot with the proletariat.
Second, Nayar argues that the unbridled Darwinian capitalism always leads to social instability and anomie, and that social instability empowers right-wing parties. He thus argues that Hitler's rise to power was made possible, or was even caused, by the 1928-32 Depression, and not as some historians think by either the fear of communism or bad tactics of the Communist Party which instead of allying itself with Social Democrats fought them.
Third, and for the present time perhaps the most interesting, Nayar argues that the success of Western capitalism in the period 1945-1980 cannot be explained without taking into account the pressure that came on capitalism both from the existence of the Soviet Union as an alternative model of society, and from strong left-wing parties linked with trade unions in major European countries. In that sense the period of “les trente glorieuses” which is now considered as the most successful period of capitalism ever occurred against the normal capitalist tendencies. It was an anomaly. It would not have happened without socialist pressure and fear of riots, nationalizations, and, yes, defenestrations. But with the rise of neoliberal economics after 1980 capitalism gladly went back to its original 19th and early 20th century versions which regularly produce social instability and strife. The lesson to be taken from Nayar is in some ways simple. Capitalism, if it's not embedded in society and does not accept limits on what can be commodified, has to go through recurrent slumps and prosperities.
If we look at the three main theses in Nayar’ s book none of them is new. But they are when strung together and placed in their historical context. The authoritarian modernizations have of course been a subject of many books some of which, like Barrington Moore’s classic, are cited here. The rise of fascism was, and is, increasingly linked with austerity policies as was recently done by Mark Blyth’s Austerity: History of a Dangerous Idea (2013) and Clara Mattei’s The Capital Order: How Economists Invented Austerity and Paved the Way to Fascism (2022).
The question which is on everybody’s mind after having read Nayar’s book is, What next? Because if capitalism continues along the current trajectory that Nayar believes almost preordained, it must again produce instability and rejection. And that would—again--play into the hands of right- wing movements. A century later we may be replaying the same story that we have seen in the 1920’s Europe. History seldom repeats itself word-by-word or drum-by-drum: but we already see parties with roots in nationalist or quasi fascist movements coming back to power and undoing globalization, fighting immigrants, celebrating nationalism, cutting access to welfare benefits to those who are not “native” enough. Is it fascism? Its light variety? This is the melancholy conclusion that can be made based on this sweeping study of western political and economic developments in the past two centuries.
Nayar’s book very much challenges the conventional thinking about the trajectory of present trends and I strongly recommend it – as well as the Blyth and Mattei books mentioned in Branko’s review
It would take too long to critique all of this. However, I would argue that capitalism always begins without democracy, at least without what would today be considered democracy, i.e. what I would argue is social-democracy, based on a universal suffrage. Not only does it begin under feudalism, but even when the bourgeoisie, as a whole, conquers political power, 1832 in Britain though the state was a capitalist state prior to that, i.e. around 1688, but after it 1832, it is a liberal-bourgeoisie democracy, i.e. limited to the owners of property, and concerned with the freedom of property (Classical Liberalism pace Hayek/Acton), not democracy per se.
ReplyDeleteIts role as with Bonaparte, Bismark, Stolypin is the use of the state to advance the cause of capital and bring about its accumulation and development, including creation of a single market/nation state. These latter arise as Bonapartism, because of the weakness of the domestic bourgeoisie, vis a vis an already sizeable working-class, and need to develop rapidly given the existence of a dominant British imperialism.
I disagree about the idea that it was the existence of the labour movement that led after WWII to capital introducing welfarism and so on. Engels in his later prefaces to the Condition of the Working-Class sets out why. Large scale capitalist production needed ever expanding consumption by workers, it also needed to socialise them for support against its other class enemies the landlords, financial oligarchy, and petty-bourgeoisie. The concessions it could easily afford, but small capitals could not, accelerating the concentration of capital.
The last 30 years have been an anomaly, reflecting a weakness of the bourgeoisie, and rise in the relative strength of the petty-bourgeoisie, reversing that trend. It cannot and will not last.