The crisis of liberalism in one word: infidelity.
The liberal world order is, or was, like a marriage between the market and democracy. Democracy gave the market legal certainty and stability, and the market gave democracy prosperity.
But the market began to stray. It found autocracies with faster decision-making, cheaper labour and untapped natural resources. For business and for those in power, the infidelity has paid off.
Why the market was unfaithful
The market is impatient. It wants to make money. Representative democracy is built to prevent bad decisions, not to quickly deliver the decisions that business is asking for. Separation of powers, consultation rounds, appeals and elections every four years are brakes. They protect citizens against abuse of power, but seen from the market’s side of the marriage they are a cost.
The electoral cycle makes matters worse. In a representative democracy, what gets rewarded is whatever delivers results before the next election. Voters end up in a prisoner’s dilemma. Quick reward or long-term responsibility? They cannot possibly know whether the next government will scrap the long-term plan. So many vote for the short term.
Major reforms such as new infrastructure are costly to build and pay off only after 15–20 years. That makes them a hard sell politically. An autocracy, by contrast, can have a long time horizon. China’s expansion of high-speed rail, ports and green energy between 2005 and 2020 is the classic example.
The price and value of the brakes
Here one has to be honest: China is an exception, not the rule. Most autocracies deliver neither growth nor security. And the same absence of brakes that built the high-speed trains also produced the Chinese property bubble. Democracies, moreover, have built for the long term when they have wanted to. Japan, France and Spain have their high-speed trains too.
But that does not save the marriage. The market does not need every autocracy to favour it. It is enough that a few do, and that capital is free to move there.
The weakness of the brakes is that they preserve the status quo. They stop new decisions, not what is already under way. Emissions continue without anyone having to decide anything, while every attempt to reduce the exploitation of oil and other natural resources has to get past every veto point.
Democracy protects what we already have. When we live in an unsustainable consumer society with runaway climate change, democracy’s inertia becomes a large part of the problem.
The last objection
Defenders of the open society have long pointed to an information advantage. Hayek argued that no central authority can gather and process all the knowledge needed to run an economy. Democracy rests on the same idea: only citizens themselves know what they want, and so they must be asked in free elections.
That advantage is shrinking. Meta, Palantir and others have turned the collection and analysis of data into a business model. Whoever has access to their systems knows more about citizens’ habits, relationships and movements than any parliament. The knowledge is owned by companies and states, not by the citizens themselves.
Some conclude that AI will replace both markets and elections with central planning. That is contested, but data shows how people behave, and sophisticated models can presumably understand how they prioritise. What would it mean? Probably that those who want to rule no longer need to ask.
This can become the last nail in the liberal coffin.
What do we want?
If liberalism were merely a means of creating a market economy with goods on the shelves for everyone who can afford them, we can conclude that it has become superfluous. The shelves can be filled without liberal democracy.
If, on the other hand, we want a say in the planet’s future, we must go in the other direction: develop and expand democracy. That does not mean removing the brakes. It means rebuilding it so that it can make long-term decisions.
The short-termism comes from the fact that we choose between competing parties every four years, parties that often counteract each other. We make no real decisions. If citizens make the decisions issue by issue, the plan need not fall with a change of government.
The same applies globally. We would need a global democracy strong enough to push through binding climate agreements, crack down on cyber warfare, and act as a counterweight to the multinational corporations that strive for monopoly. The road there runs through a digital reform of democracy.