The future of the left since 1884

For the few

A new book on modern capitalism asks political and economic elites to reform themselves, finds Iggy Wood


Book review

A spectre is haunting Martin Wolf: the spectre of populism.

This book is, at its heart, a response to the rise of anti-establishment politics, and especially Donald Trump. Unlike more reflexive anti-populists, Wolf’s aim is to understand the problems that have made demagogues so attractive.

His deconstruction of the current Western malaise is fearless and unconstrained by the dogmas of modern economics. He is scathing about the financial sector, which he argues provides very little social value, and robustly defends higher taxes, which he contends are unlikely to have any negative impact on growth. He also makes clear that the crisis of democracy goes much deeper than many centrist commentators allow: Trump or no Trump, the role of money in politics means that the US is well on the way to becoming a ‘blatant plutocracy’.

Wolf convincingly argues that the decline of the industrial working class in rich countries, which he centres in his account of 21st century politics, was largely a result of technological advances rather than international trade. The profound implication of this is that there is no going back, no matter how many trade deals someone like Trump rips up: we can’t uninvent strip mining or the computer. In this and other ways, his account is firmly rooted in the present, leaving no room for either of the two main intellectual camps of the modern Labour party – those who want to return to the 1960s and those who want to return to the 1990s.

This excellent analysis of the challenges facing the Western world, however, sits within an overall argument that leaves much to be desired. Oddly at first glance, Wolf affords much less respect to the critics of capitalism than to the critics of democracy. Socialism is dismissed rather glibly, with frequent references to Venezuela and simplistic logic. “[Under socialism,] those who control the state will also control the economy. Since they will control both the economy and the government, they will control politics. There can then be no fair competition either for political power or in economic activity.” From this argument alone, democratic socialism is determined to be a ‘chimera.’ In contrast, Jason Brennan’s ‘epistocracy’ – or rule by the knowledgeable – is fully explained and given serious consideration, although ultimately rejected.

The source of this lopsidedness is that, ironically for a book about democracy, it is essentially addressed to political and economic elites, who tend to need more convincing about the advantages of democracy than the wonders of capitalism. It is reasonable for Wolf to write for this audience, given his argument that our democracy is barely functional, but this is no Beveridge report, ripe for adaptation into a popular programme. This is where, on his own terms, Wolf is weakest: having rejected populism in all its forms, he is reliant on the elites he is so critical of to reform themselves. This has happened before – Franklin D Roosevelt and Otto von Bismarck are important examples – but seems a faint hope now, not least because, for Wolf, our elites are morally and spiritually sick.

Short shrift is given to ideas that he knows his intended audience is likely to disagree with. Universal basic income (a ‘delusion’) and the degrowth movement are given a less than fair hearing. In the case of UBI, this is particularly puzzling, given that Wolf thinks that with the advent of artificial intelligence most humans could conceivably become “as economically irrelevant as the horse”. If democracy does survive in a world without work, what are people meant to vote for other than redistribution on a massive scale?

In a similar vein, it is remarkable that in a 400-page book about democratic capitalism some of the most obvious tensions between the two concepts are left unexplored. For example, most people have little power to challenge their employer. Do we really live in a democracy if we spend a third of our lives in a mini-dictatorship?

Wolf’s book should be required reading for the politicians, journalists and businesspeople it is aimed at. No doubt an economy and society organised along the lines Wolf advocates for would be far more resilient and prosperous than what we have now. And indeed, if our elites fail to listen, Wolf argues there is a very real risk they will be deposed by a populist in the vein of Trump or Le Pen. For the rest of us, it is a useful, incisive and remarkably engaging guide to the modern economy – but one that leaves us with little to do except cross our fingers and hope.


The Crisis of Democratic Capitalism

Martin Wolf

(Allen Lane, £30)

Iggy Wood

Iggy Wood is the assistant editor at the Fabian Society. He previously worked in an NHS community health team.


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