Liberal Democracy on the Ropes

The signs that liberal democracy is ailing are too many to miss.  We see them here in the U.S.  We also find them in international surveys.  Organizations like The Freedom House, the Economist Intelligence, and V-Dem have documented a decline in democratic norms and a rising discontent with how democracy works. 

In its 2020 survey in 34 democratic countries the Pew Research Center found that 52% of the people asked expressed dissatisfaction with how democracy worked in their countries.  This percentage was 59% in the U.S., 69% in the U.K., and 58% in France.  Across the sample, the dissatisfaction mostly stemmed from the perception that elected officials are disconnected from the people’s concerns.  Now dissatisfaction with how democracy works does not mean rejection altogether.  The percentages of dissatisfaction do not seem to correspond to the perceived quality of democracy in the various countries.  It is often the case that citizens in more democratic countries are actually more critical of their democratic institutions. 

What is more worrisome, however, are the trends toward more or less democracy across the globe.  The Freedom House and IDEA (International Institute for Democracy and Electoral Assistance) found that in 2020-21 more countries moved in an authoritarian direction than a democratic direction.  The Freedom House has found that democratic standards have declined for 16 years in a row.  And backsliding toward less democratic rule has occurred even in well-established democracies.  Some of this can be attributed to public health policies to contain the Covid pandemic, but the dissatisfaction with democracy goes beyond that.

The receding satisfaction with democracy among citizens of democratic countries along with the economic successes of the Chinese one-party politico-economic model and the forceful way Russia is challenging Western values have heightened the anxiety about the future of liberal democracy.  Liberal democracy is in competition with one-party capitalism and autocratic governments and the question seems to be which system is or will be perceived as the best in delivering results for the people.  From a geopolitical standpoint, the concern is whether countries will coalesce around different governing models which will then choose to compete – not necessarily by peaceful means – for influence and economic resources.

To have a thoughtful debate about liberal democracy, it is important, I believe for us in the Western world to realize that liberal democracy in the modern era is mostly a western phenomenon and our anxiety about its state and future may not be shared equally by the rest of the world.  In the West, liberal democracy grew gradually over several centuries to serve religious, political and economic freedoms.  The Reformation gave a first opening to religious freedom by rejecting the centralized authority of the Church of Rome.  The Enlightenment period philosophers promoted freedom from unaccountable state (monarchical) authority.  And the market economy was the way to establish economic freedom. 

These developments made the individual a central agent in the practice and allocation of power, and inevitably it fostered a highly individualistic attitude and approach as a way of life.  The rest of the world, however, developed out of other historical experiences and human needs.  Contrary to our celebrated individualism it is the socio-centric principle that is celebrated in many parts of the world outside the West.  Therefore, the practice of democracy may be understood differently or influenced by other underlying cultural conditions in the rest of the world.  The Western sense of cultural superiority has often led Westerners to overestimate the universality of their values and, thus, to be often disappointed when other nations do not fully adopt them.   

We also need to recognize that although the West gave rise to liberal democracy, it is also the one that gave the world fascism and communism that stood opposite to democracy.  That means, liberal democracy has not been a constant organizing principle in the West.  Liberal democracy, therefore, has waxed and waned even in its Western cradle.  Today, we face again an ebbing of popular confidence in the efficiency of democratic states to address human needs, fears and aspirations.  Questions about economic security and cultural and national identity have acquired such critical importance within wide swaths of the citizens of democratic countries that now they threaten to undermine their democratic systems. 

I think that in order to understand the changing fortunes of democratic governance we need to identify its foundational principles.  The first is tolerance toward other peoples’ ideas, beliefs, and ways of life.  The other is acceptance that we are all members of one species, which means we refuse to be racists or xenophobic.  And the third is that we trust that the passing of governing power through elections does not forestall our return to power.  These are sentiments that do not remain constant over time.  They change and they are challenged.  And as they change and are challenged our faith to liberal democracy is tested by our capacity to accept others, tolerate new beliefs and ways of life, and have trust to the rules of political process.

Today a good number of Western democracies are been confronted with issues that test our tolerance and trust to each other.  The economic freedom promised by the model of market economy is seen to reward more the accumulation of wealth than being concerned with the basic needs of the everyday citizen.  Our tolerance regarding racial issues and matters of personal choice is challenged by differences of opinion about secular and religious freedoms.   And under the weight of immigration and economic globalization, our attitudes toward foreign people and nations have grown more ethno-centric.

Institutions like democracy and market economy are not ends in themselves.  They are instruments toward solving needs and it is as such they are judged by people.  What the rest of the world sees now is that Western democracies find it difficult to deal with the changes and challenges of our times.  No wonder then they start to question the value of democratic governance. 

I would conclude then that the responsibility to restore the appeal of democracy, especially in its liberal form, belongs to the West.

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Author: George Papaioannou

Distinguished Professor Emeritus (Finance), Hofstra University, USA. Author of Underwriting and the New Issues Market. Former Vice Dean, Zarb School of Business, Hofstra University. Board Director, Jovia Financial Federal Credit Union.

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