Martin Wolf, Head of Economics at the Financial Times and considered one of the most influential economic journalists, maintains the theory that capitalism and democracy are a successful marriage, but that they are going through a maturity crisis. This is the thesis he defends in the book La crisis del capitalismo democrático, which has just appeared in Spanish and which he details in conversation with La Vanguardia.
He was born in 1946, just after World War II, and is described in the book as a child of catastrophe. That means?
Something quite simple. My parents were both refugees from Hitler’s Europe. My father was Viennese and Jewish, my mother was Dutch and Jewish. Practically all his relatives were killed. And they met in London at a party. There is no universe in which my father, a Viennese intellectual and writer, and my mother, a Dutch girl from the provinces, could have met and I would not have been born; so my existence is entirely a product of the great catastrophe that destroyed Europe.
Have Hitler’s ideas returned to Europe today?
There are echoes of those ideas. What we are seeing is the return of nationalist, repressive, authoritarian and socially reactionary ideas. We are going through a period of great upheaval which has left many people feeling disoriented and when this happens, people become tribal. They tend to be xenophobic and authoritarian, looking for a great leader to save the nation. And in this sense, there are ideological echoes.
If democratic capitalism has been a success story for many years, why is it now in crisis?
My argument is that democracy and capitalism represent a marriage of complementary opposites. They need each other, but they are in tension. Capitalism is like a dollar, a vote, and it can generate enormous inequality and insecurity. What has gone wrong is that for a long period we were very complacent. Globalization, new technologies, and growing inequality were accompanied by social and cultural changes that undermined people’s confidence in democracy, and the financial crisis made things much worse because it destroyed the credibility of capitalism.
Is inequality the main reason for this crisis?
It is a necessary condition, but not a sufficient one. There are other elements. We could have managed growing inequality well with very dynamic economies. But if rising inequality is combined with low productivity, many people feel that absolute decline is at risk.
He says that capitalism cannot survive in the long term without democracy, and democracy cannot survive in the long term without a market economy either. What do you mean by long term?
What we are seeing in China is interesting. He succeeded for three decades in moving the communist system to a more market economic system. But now we see a reversal of this process, because the Communist Party and its leader decided that the capitalist system was subverting the authoritarian system. This shows that they have reached the limits of autocracy within a market system and are reinstalling the authoritarian system. What I was wondering, how long is the long run? Probably 30 years.
It’s a long time
It is a generation, which is not much in human life.
Did this crisis of democratic capitalism begin with Donald Trump?
No, certainly not. It became obvious, really obvious, with Trump. The important thing about Trump is that, for the first time, a politician reached the highest office in the most important democratic country, and that politician was not a Democrat. I think it symbolizes this transformation, but it is the product of a long historical change, which was already evident, for example, in the Bush administration. At a certain point, a large enough number of people decided that traditional conservatism was no longer acceptable, and they looked for someone who embodied a different form of conservatism. And Trump catalyzed that in America.
What will happen to democratic capitalism if Trump is re-elected president?
I think we would have a pretty terrible problem, it’s an immense danger. The United States is the most important power in supporting liberal democracy and markets. People don’t like to hear it, but we live in the world that America created. Now, if the United States elects an isolationist man, indifferent to alliances, to the preservation of democracies, who is hostile to the rule of law and who has now surrounded himself with passionate ideologues, then I believe that a new Trump’s term could be a decisive disaster.
