To Survive, Liberalism Must Adapt

When it comes to liberalism and its offspring, democracy, we can say that two things are true: First, some form of liberalism and democracy is more widespread now than for most part of the last century; and second, both are currently challenged and even in decline.  The doubts about liberalism as an organizing principle of societies has given way to an open rebellion against its principles. 

Classical liberalism emerged gradually after the Protestant Reformation and found its full intellectual articulation in the Enlightenment.  It was a movement that purported to unshackle people from ecclesiastical authority and dogma, to liberate people from the oppression of absolute monarchy, and establish reason and science as the drivers of human choices and actions.  It espoused three foundational principles: individualism, egalitarianism, and universalism. 

In his new book Liberalism and Its Discontents, Francis Fukuyama writes that despite its liberating intentions, liberalism has not always lived up to its principles.  By accepting colonialism and slavery it violated its egalitarian principle.  By imposing Western European moral, social and economic standards on non-European societies it turned its universalism into an instrument of erasing other cultures.  And by failing to apply checks to extreme individualism, it has led to the modern excesses in wealth creation and selfishness.

So, we have come to a point, that the forces classical liberalism unleashed are spilling dissatisfaction on both sides of the political spectrum, the right and the left.  Conservatives, with their stronger sense of nationalism and cultural traditions, is pushing back on the liberal ideals of universalism which supports tolerance toward diversity.  Working class people on the right are also resenting a liberal international economic order that undermines the economic and social well-being of local communities.  And they have also grown distrustful of government authorities and elites as the complexity of governing modern states has opened a wider information and transparency gap between those in the know and those outside the centers of power and knowledge.  This distrust feeds into notions of alternative facts and rejection of science.

On the left, the dissatisfaction with classical liberalism has several sources.  One is the tremendous inequality in wealth and incomes between a tiny slice of the population and all others.  Here the accused culprit is neoliberal economic policies with their sacrosanct reliance on property rights and unfettered economic freedom.  Another discontent comes from the leftist critique that liberalism with its belief that individuals are autonomous agents of their interests fails to see that many individuals are in reality constrained by the weaker rights or lack thereof of the group they belong to, whether defined by race, faith, ethnicity, gender or sexual orientation.  Therefore, according to this critique, what matters is not just the affirmation of individual rights but rather of group rights.*  That’s how the left in its fight for equal rights for marginalized individuals is driven to identity politics and the closing of its mind to opposing voices.  (On this point, Fukuyama hastens to add that white identity politics has actually presaged identity politics regarding other groups.)

As these discontents harden, each side has come to believe that the prevalence of the other side cannot be reversed through the democratic process and, hence, it represents an existential threat to the defeated side.  Thus, politics becomes a zero-sum game that renders victory a goal by all means.  Thus, distrust in the intentions of the opposing side leads to doubting democracy itself.

Fukuyama offers several possible ways to restore liberalism.  These include: checks on abuses emanating from absolute property rights; submitting economic behavior to the checks of worthy social ends; safeguarding individual rights regardless of group identity; reconciling nationalism with universalism; and above all exercising the virtue of moderation in order to avoid the excesses of selfishness.

In light of these thoughtful suggestions, we have to ask whether liberalism has the capacity for self-correction.  Liberalism is a lofty ideal but the facts on the ground are determined by the relative power of competing groups.  Liberal societies have always struggled to live under the principles of liberalism and have oscillated between social progressivism and unfettered individualism.  As Fukuyama points out, absent in the principles of liberalism is the pursuit of the common good.  That leaves liberal societies with the hope that individuals are rational enough to behave in ways that do no harm to collective aspirations and purposes.  But as Fukuyama himself admits individual rationality is a misguided assumption questioned by modern behavioral science.

I am afraid that embedded in liberalism are the seeds of its multiple crises.  By prioritizing individual self-reliance liberalism set the conditions for impersonal markets based on trust which were good for the market economy but undermined social bonds.  By elevating property rights to sacrosanct status, it checked the arbitrary expropriation of property by authoritarian states but it exposed societies to the whims of property and capital owners.  By placing its faith on science liberalism ushered in waves of innovations which, despite enormous benefits, they nonetheless destabilized the old structures and often put ordinary folks at a disadvantage as to how to navigate modernity.

At its birth, liberalism was shaped by the then prevailing historical circumstances.  Its emphasis on individual freedom and rights was a progressive reaction to the power of oppressive institutions.  Without, however, an effective restraining principle, it was inevitable that individual freedom would lead to excesses.  Manifestations of these excesses are the unrestrained pursuit of wealth and the reigning of, what Fukuyama calls, the sovereign self.

Now, however, we face different circumstances.  Powered by science and technical innovations, humanity has bent nature in many ways to satisfy its ever-growing needs.  Under the force of human intervention, our planet’s environment and climate are pushed dangerously close to the point of unsustainability.  At the same time, our failure to address economic and social fairness undermines the well-being of large swaths of humankind and raises the danger of social upheaval.

For the moment, liberalism remains the best of the alternatives we have available.  To survive, though, liberalism must again adapt to the circumstances humanity faces now.  If moderation is the means to this end, as Fukuyama proposes, then liberalism must balance its faith in individualism with the care for the common good.

*This is what started in Europe as the Critical Theory of liberalism and is narrowly presented as critical race theory in America.

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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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