Martin Wolf - Ideas Lab Series - May 10th, 2023

[00:00:07] Martin

There are some similarities in why people went this way with what happened in Germany in the interwar period. People don’t vote for people this far out if they aren’t really bitterly disenchanted and angry with what’s going on. To me, the most worrisome thing about the US is such a huge proportion of the population I think, to some degree, are really unhappy with what’s going on. That’s frightening in what most of us objectively would say is, despite obviously gigantic problems, a fantastically successful society.

[00:00:50] Intro

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Here’s your host, veteran hedge fund manager, Niels Kaastrup-Larsen.

[00:01:46] Niels

For me, the best part of my podcasting journey has been the opportunity to speak to a huge range of extraordinary people from all around the world. In this series, I have invited one of them, namely, Kevin Coldiron, to host a series of in-depth conversations to help uncover and explain new ideas to make you a better investor. In this series, Kevin will be speaking to authors of new books and research papers to better understand the global economy and the dynamics that shape it so that we can all successfully navigate the challenges within it. With that, please welcome Kevin Coldiron.

[00:02:23] Kevin

All right. Thanks, Niels. Welcome, everyone. Our guest today is Martin Wolf, whose work I’ve been reading my entire career, and I think many of you will be in a similar position. He is the Chief Economics Commentator at the Financial Times and has been called the world’s pre-eminent financial journalist. As you might imagine, he’s received a very long list of awards and honors, including Commander of the British Empire for services to financial journalism and the Gerald Loeb Lifetime Achievement Award for business journalism.

He’s here today to talk about his new book called The Crisis of Democratic Capitalism, where he’s warning us that the way of life we’re used to in the West, particularly this marriage between democracy and capitalism is at risk, and the risk is not from the outside, it’s from the inside. When someone who has observed the world so keenly for so long has his view, it’s important for all of us to understand, and that’s why we’re fortunate to have him here today.

So, Martin, it’s a pleasure, it’s an honor to have you on the show. Thanks so much for joining us.

[00:03:37] Martin

Well, I’m looking forward to the discussion.

[00:03:41] Kevin

You say, at the beginning of the book, that many people who read your work complain you’re a pessimist and that that’s served you well in life because it’s meant that most surprises have been positive. But you also make a much deeper personal point that your existence in the world is due to the decision of two pessimistic men, your father and your grandfather. I was wondering if you could maybe just tell us a little bit about that history and how it motivated you to write this book at this particular point in time.

[00:04:18] Martin

Yes, I’ll be very happy to do so. So my family, my mother and my father were both from continental Europe. They were born in the early part of the 20th century. My father lived most of his life before he came to England in Austria. He was actually born in what later became Poland. When he was born, it was actually still part of the Austrian Empire.

My mother was born in Holland. So in 1937, my father who was then 27, was a very successful writer for the German speaking stage, decided that living In Vienna and in Austria was simply too dangerous, that he didn’t know what was going to happen, but he was very frightened. So he left Vienna for England and that’s why he was here during the Second World War. My mother lived with her parents in a coastal village in Holland, where her father, my grandfather, was a self-made fish merchant. He had grown up in poverty in Amsterdam and had succeeded in business.

When the Germans already crossed the frontier in May 1940, he got hold of a trawler. We never were quite sure whether he hijacked it, as some say, or persuaded the captain or bribed the captain, I don’t know. He got hold of a trawler and he invited all his family. He was one of eight. So his brothers and sisters had many children. It’s a large family, about 30 people in all I understand, and he invited them all to join him on the trip to England as the Germans were pouring into Holland, but they all decided that was unnecessary. They all stayed, and he and his family got out. All of his family, really without exception was killed in the Holocaust and my parents met in England at a party.

As I also note, I think that it’s inconceivable that they would ever have met in any other world than the world created by Hitler. Why this is relevant for me, obviously, there are two aspects. The fact that such catastrophes can happen. They’re perfectly possible events. The world is not safe and political order is not safe. It has always been obvious to me, and if it gets sufficiently disordered, unspeakable tragedies, that people never imagined could happen might happen. So that’s just part of my make-up, this sense of the fragility of institutions.

Now, I’m not trying to compare where we are now with the ‘30s. There are many, many differences, mostly highly positive ones. Things are clearly better for a whole host of reasons. But some of the arguments and ideas that were so current in Europe in the interwar years, particularly this time on the right, the old left has almost completely disappeared, the communist left has pretty well disappeared. But on the right, we are seeing a rebirth of authoritarianism, autocracy, nationalism, ethnic hatred, and so forth, which are very obvious. The book is partly written, significantly written, in response to what I see as the dangers of those trends.

[00:07:46] Kevin

Thanks for that. You entitled the book The Crisis of Democratic Capitalism, and you say early on that the potential for conflict between those two things is self-evident. I must say that, personally, it took me quite a while to see this. I don’t mean quite a while reading your book, I mean quite a while in my own life to see this because I guess, maybe naively, I kind of always sort of thought, well, those two things kind of just naturally go together.

You described the two systems as complementary opposites. So I was wondering if perhaps we could just start with the complementary bit and then move to the opposites. What are the aspects of democracy and capitalism that do go together so well?

[00:08:39] Martin

I think your attitude, by the way, is very widely shared, particularly in Western countries, mostly because they’ve been democratic and capitalist since anybody who is alive pretty well can remember, which isn’t actually a very long time. It is worth remembering. The oldest of us might be 100. So that goes back to 1923, and they would have been 20 at the time of the war. So they probably would have a living experience of authoritarian regimes.

That’s, of course, not true for people who live in Central Eastern Europe. So it’s not very far from us. But they weren’t living in capitalist countries either. It is, however, worth remembering that capitalism preceded democracy. In 1800, which was when capitalism was really beginning to get going, particularly in Britain and of course in America and a few other places, Poland and so forth, there were absolutely no democracies anywhere. Nothing we would regard as a democracy existed. These regimes were all autocratic, authoritarian, or class aristocratic or plutocratic regimes. That’s basically the norm.

My argument here is capitalism itself was a revolutionary set of ideas because it said your status in the world is not dependent on who your parents were. Your inherited class position doesn’t determine who you are. Anybody, male or female, in a capitalist country with the rule of law is entitled to start up a business for themselves. If they’re successful, they can make a lot of money. If they make a really large amount of money, they can become aristocrats, but that’s sort of notional.

The Rothschilds’ famous story in the late 18th century to become the richest people in continental Europe in a few decades is the perfect example of what capitalism could deliver. But there were many, many other examples of such entrepreneurs. The basic idea of capitalism is, of course, no ascribed status, the rule of law, individual effort and enterprise and gaining the rewards of success and employing people in competitive markets. So not exploiting them beyond the fact that you have more resources than they. So that’s the basic idea.

Now, once you’ve got this mechanism in processes, in play, this economic mechanism, I think it has ideological and practical consequences. To start with the practical consequences, it completely transformed society. It made completely different sorts of societies that ever existed before. Among the most important things that happened is mass urbanization brought vast numbers of people together. You created mass industrial labor forces which were organizable and could be organized in trades unions and similar organizations. You generated rising living standards so people could start thinking about more than daily survival. You generated ever rising demand for education.

Capitalists wanted educated and skilled working forces, labor forces. They started actually agreeing that the public should be educated, there should be universal education. That came in most capitalist societies in the 19th century. As a result, it created a society that wanted a place in society because they were educated, increasingly prosperous, upper middle-class or upper working-class people, and they wanted a voice. So in many, many countries, though not all, they started being given a voice in Britain, in America. I believe that the reversal and undoing of slavery was partly a consequence of this. It became an untenable system in this sort of free-market society. So the demand for democracy became very great, extended. There was this push.

There was also a value element in it because if capitalism says everybody, in some sense, has an equal claim on the right to succeed, it basically says individuals are valuable. If individuals are valuable, then it becomes quite difficult to argue they should have no say in public life just because they’re poor. Property limits on the franchise were quite common, but they became increasingly untenable and arbitrary. By the early 20th century, particularly with universal conscription in many countries, it became impossible to sustain. So we got in a universal suffrage democracy. So those are the ways in which I think both historically and ideologically the two systems turned out to be complementary.

[00:13:52] Kevin

Yeah, it’s interesting listening to you talk. There’s a certain sense of inevitability, but certainly, those are quite powerful forces that you describe. We’ll talk about China later on, but obviously, they’re trying to manage a system where you have a market economy which will unleash all the forces that you just described in terms of democracy but not having democracy.

[00:14:20] Martin

It’s absolutely correct, one of the most fascinating phenomena. In the late 19th century, the country that was different, very different, which resisted most strongly these democratizing forces and quite consciously was Germany. The German Empire remained authoritarian politically and Bismarck the great founder designed it to do so, but of course, it led to catastrophe.

[00:14:46] Kevin

Well, let’s talk about the opposite sides where democracy and capitalism have a conflict, an uneasy marriage I think you say at one point. Tell us about that.

[00:15:00] Martin

Well, in some way, it’s interesting. I thought about this after I wrote this. The founding fathers of America, the US or the United States, were very aware of the danger that their society might become democratic. They weren’t very keen on democracy you’ll remember back in the late 18th century. They rather looked down on the people. So they created a system that was designed to limit it. Some of that is, I think, valuable and some of it is more problematic. I won’t go into that.

But the point is, even in the United States were clearly the founding fathers were worried about it, the pressures became overwhelming. Now, what this suggests, which is I think an important point is, and history strongly supports this, that very broadly speaking, there are two ways that this marriage can erode.

One is that the power of the plutocracy, people who are much richer than other people, completely dominates public life. Basically, society is dominated by the power, political society is dominated by the power of money, or at least is very powerful and it feels increasingly resentful of the, to my mind, completely inevitable demands of the people in general for some form of welfare state.

There can be many different versions of that, but some form of universal welfare, particularly when the society gets very rich. That conflict in America, of course, has really played out between the beginning of the 20th century and the New Deal. In the end, if you like, the democratic elements in that story, won, and overwhelmed the plutocratic element, at least that’s how I would see it. But of course, this doesn’t necessarily last forever. There can be a huge backlash and I think there is one going on.

Now, the other element in the story is that the masses of the people, for one reason or another, there can be different elements in them, find the democratic system is not generating the sort of rule they want and they may resent particularly some elements in the elite, different elements in the elite as they see it. They look for an autocratic demagogue, a populist demagogue to protect them against these elites. What comes out of that, and it could be actually of the left or the right, is an autocrat, an autocrat plays on the fear that the masses, the majority, have for the plutocratic elite or the intellectual elite, it could be either. Once that happens, you go into autocracy.

So one danger is a plutocratic oligarchy and the other danger is an autocracy. Now, we’ve also seen in the past, but not in a prosperous capitalist societies so I don’t really discuss it in this book, left wing autocracies of the communist variety. But for now, for a long time, they ceased to be very relevant, so I’ve ignored them. It’s the other two possibilities that are the most plausible ones. In the United States, I think very clearly, we’re saying an amalgam of the plutocratic with the autocratic forces, and at the moment, we simply don’t know which is going to win.

[00:18:43] Kevin

You spend a lot of time talking about the United States and the risks to democracy in the United States. Do you see those same types of risks in the UK and continental Europe?

[00:18:55] Martin

Yes, absolutely. Actually, the places where these risks are most developed are developing countries, emerging and developing countries, and I give lots of examples. A critique of my book which I think is perfectly reasonable is that I’m mostly interested in the fate of high-income countries and that’s because these have been democratic for a long time. So most people thought they were consolidated democracies, just a technical term, and because these are the countries that I know and have lived in.

But obviously, if you look at the fragile democracies of the emerging and developing world, you see one after another where an autocrat is taking over. Right at the moment in Sudan, we’ve got a classic military coup going on. The normal way now is for an elected leader to use the power given to him as an elected leader to subvert the democratic process. You’re seeing that in Turkey, you saw it of course in Russia, you’ve seen it in Hungary. Some would argue you’re seeing it in Poland, you’re seeing it I believe in India. It didn’t quite happen in Brazil, but it might yet do so from the left or the right. It is clearly happening in Mexico.

There’s an endless slew of that sort of leader emerging out of democracy to create autocracy. Now, if you look at the consolidated democracies, some of them are obvious cases where there’s a real risk. It would be France, where many people expect Marine Le Pen, who is a Neofascist, there’s no doubt that’s who she is, where she comes from, to be elected as the next president of France. France is a country with a very strong executive presidency who essentially could pretty well do what she wants. It’s not clear how that would play out.

The current prime minister of Italy is a fascist, a member of the fascist party. So far, she’s been very constrained by there’s a lot of fiercely fascist and populist rhetoric coming from her. We don’t know how that’s going to play out. There are large, very right-wing parties, I mean, really right-wing parties in Spain, Sweden, even Finland, and even Germany. So they are significant but their shares are sort of in 20%, 25% range or smaller, so not yet at the point of being able to take power. But we don’t know what will happen if things get very bad.

In Britain, there’s a very strong right-wing conservative element in the Conservative Party. It was behind Brexit. But I would say the authoritarian element is still relatively weak. We don’t have an autocratic leader in the offing now. Thank heavens. So I would say, in the European countries, there’s very clear fragility, but not mortally. I focus on the US for two reasons. First of all, it’s incomparably the most important democracy in the world. I think we can safely say, or at least I would safely say that democracy would probably not have survived the 20th century without the United States since it essentially defeated the two great rivals, fascism and communism.

I would also say the anti-democratic elements in politics in America are particularly well-developed, and notably after the ‘stop the steal’ movement, which I regard as a coup attempt in the US, because of its huge importance and because of that history, I think it’s crucial. If the US were to fall to an autocratic regime, a regime that no longer allowed ordinary democratic processes to work, then I think the politics of democracy in the world will probably be fatally injured. You’d only really end up with Europe and maybe Japan and a couple of other countries. It’s just not enough.

Already today, it’s important to note that more than half the world population lives in countries that are outright autocracies or moving in that direction.

[00:23:16] Kevin

Did your view on the US change at all after the midterm elections in 2022? I think a lot of us were surprised at how well the Democrats did and also the responses of some of the Republicans saying, hey, let’s move on from Trump. We’re tired of losing. Let’s kind of refocus. Did that change your view at all or is that just kind of a blip?

[00:23:45] Martin

Well, the obvious answer, although I don’t count myself as any real expert on this, but one midterm is only a blip. That’s obvious. Anybody who follows American politics at all, and I’ve followed it passionately as most British people will be doing, and I lived in the country for 10 years and during Watergate (as it happened), so that was quite an education – a very favorable one, by the way. I was immensely impressed by Congress at that time.

I might mention this because the contrast between the impeachment hearings in the house, on Watergate, when the Republicans voted with the Democrats that Nixon should be impeached for obviously impeachable offenses. There was no doubt about that. The contrast between their behavior at that time, I remember Barber Conable, I think, was the head of the minority in the House Judiciary Committee. He impressed me immensely. I got to know him later. I admired him greatly. The contrast between that and what happened, with a very few distinguished exceptions like Liz Cheney, more recently, is very, very disturbing and that is important.

I think something big has changed. But I think my answer to this is I thought the midterms were very interesting and encouraging. It shows that maybe the Republicans have overreached, the people I rightly or wrongly regard as the crazies have overreached. But I’m very far from completely encouraged because (this is based on reading, I’ve not been in the US for a while for a few months) it appears that Trump is still the favored candidate to be the next President of the United States. If it’s not him, it’s Ron DeSantis, who strikes me as pretty horrifying, from my point of view.

The Republicans still control the House and they are truly scary. It’s almost unbelievable to say this for somebody like me, but we don’t know whether the US will or will not default in a couple of months. That’s just inconceivable, I mean, inconceivable to me. Anybody knows anything about economic history, that’s just inconceivable. We know, and I read a lot about it, there are ongoing attempts to subvert the election process in different ways in the States with ideas going to the Supreme Court which would apparently allow the legislature to overturn the outcome of an election in states.

Some of this looks, with the gerrymandering, very similar to the historic pattern of politics in the Deep South before civil rights. If Trump or somebody like Trump were to be elected, my understanding is that there is a pretty well-developed program now, unlike in 2016, which would allow them to use their control over the major departments, Department of Justice, the security agencies, the Defense Department, the Inland Revenue, whose power is often under-appreciated, to assault their enemies.

So I think that the midterms (that was a lengthy answer) was very encouraging. But we’re just at the beginning of a long war, not at the end of it.

[00:27:18] Kevin

Yeah, I think that’s right. Some of us, I think it was a welcome respite. But then, we’ve kind of returned to normal a little bit. I want to get on to some of your recommendations for reforming democracy and reforming capitalism. Can that happen in a country, like the US, when one party seems to be so, as you say, anti-democratic and not really committed to the Democratic Party? Can we proceed with reforms that will make a difference? Although I should say that we have to be careful in overestimating the support for that.

Trump lost the first election by 3 million votes in the second election by 7 million votes. The Republican Party has gained power despite representing a minority of the country. So I think that there would be a large constituency in favor of a lot of the reforms you advocate. On the other hand, do you need more than that? Do you need both parties committed to reform to make progress?

[00:28:34] Martin

Obviously, your founders in their wisdom, and they were very remarkable people, though I don’t think their constitutions worked quite as well as they might have hoped. But that’s an interesting question. Even people like that wouldn’t design this sort of constitution now 240 years later, roughly (not giving me the exact number of years). But they designed it to make changing the constitution and just making big policy changes very, very difficult, and I understand that. I understand the reasoning behind that.

So the result is that in most times, big changes from the center in America have been impossible and the exceptions have been rare. Obviously, one crucial set of exceptions came after the Civil War. It did take your worst war to end slavery, as you know very well. You’ve lost more people absolutely, never mind in relationship to the population, in the Civil War than, I think, in all your other wars together. That was a hell of a thing to go through.

The Great Depression, obviously, had a devastating effect on your politics and led to the election of an administration with overwhelming support in Congress which carried through changes which I would have thought would have been inconceivable without the complete shattering of the economy. So that’s certainly not something I would recommend. I think the war also itself created demands for changes which were very, very important, the sort of things I would now be recommending if there hadn’t been the GI Act and so forth.

So the country has shown itself able to respond to really enormous challenges, but they have been difficult. Most of the time, not much change happens. All of my friends who work on this area tell me that the constitution has become more or less unamendable, which wasn’t the case originally. So the combination of that it’s very difficult anyway and it has gotten even more difficult, and the rise of an enormously powerful conservative movement which goes back clearly to the ‘50s and ‘60s, it’s not new, plus the effect of civil rights shifting the South into the Republican camp.

That’s a crazy and immensely powerful, I think, reactionary movement. I don’t think this is conservative in any way I would understand it. I’m very sympathetic to Edmund Burke, as you probably know if you read my book, but I don’t think Edmund Burke would feel very attracted by this form of conservatism, which I think is reaction, populist reaction.

So in that context, I don’t know how big changes can be brought about. I would say, and I have written this, that this administration, although I don’t agree with all it’s done, has been braver and more successful in making changes of the kind that I think were necessary, broadly speaking, than I expected, and I give them a lot of credit for it. Because I would have to say, from my point of view, Clinton and Obama, both of whom I regard as fantastically talented men, didn’t achieve what I would have hoped that they would achieve in dealing with the obvious problems that were growing in the US. So I’m a little more optimistic than I would have been a couple of years ago. But it does seem to me very fragile.

A sizable part of the Republican movement as it is now is, as I said, they’re reactionaries. Some of them are just incomprehensibly crazy to me. I just can’t understand. It really is a lack of moral imagination. I cannot understand how any elected official of a great republic can seriously contemplate using national bankruptcy default as a tool for achieving changes which are themselves highly undesirable and for which they have absolutely no mandate.

[00:33:01] Kevin

There’s a lot of people who share that. To be fair, I do think there is a large but kind of disappointingly silent group of Republicans who just want to get back to a conservative agenda but well-run agenda.

[00:33:19] Martin

Their base isn’t with them. So if the base of your party, which I suppose you will tell me probably they’re probably quarter of the electorate, but obviously the largest single trunk in the Republican Party now doesn’t want to go there, then you’re trapped. You’re trapped by your supporters and what they want. What does interest me, and I don’t think I fully got that in this book, is why as many as 1 in 4, maybe 1 in 5 of Americans is so unhappy with the way they live in the richest country in the world, despite all its problems, that they are prepared essentially to vote for people who are willing to bring the whole tower of Babel down on top of their heads. It’s just sort of incomprehensible to me. But that’s the reality.

As long as such a huge proportion of the people who vote for and actively engage in Republican politics feel that way, I don’t see how they can go back to some other form of republicanism. It’s not what their supporters want them to do. Trump’s genius was to realize, genuine genius, was to realize before anyone else did that so many people who voted Republican were looking for that sort of leadership. They didn’t want the Jeb Bush. They didn’t want a Romney. They wanted him or someone like him, and that was a revelation. That was the cool revelation. Trump isn’t the issue to me. The people who vote for Trump are the issue.

[00:35:02] Kevin

Yeah. Part of me thinks that the appeal, like you said, wasn’t so much what Trump wanted to do. It’s not clear what he wanted to do, but that he was just happy to say exactly what he wanted at all times. I think a lot of people don’t feel that freedom in their lives.

[00:35:26] Martin

What I think I didn’t get fully and maybe I underestimated this is there’s clearly a very, very powerful element. What I stress is a lot of these people haven’t been doing terribly well and they feel that it’s unjust, because they’re hard-working decent people, why aren’t we doing better. But I think they also feel passionately disrespected, embittered in the famous adjective that Obama used, and deplorable, even worse, the famous adjective that Clinton used.

Well, if people call you embittered or deplorable for the choices you make, you’re likely to get very, very angry. Let me be clear, I’m not trying to make this as a direct comparison, not at all. But I do point out that there are some similarities in why people went this way with what happened in Germany in the interwar period. People don’t vote for people this far out if they aren’t really bitterly disenchanted and angry with what’s going on.

To me, the most worrisome thing about the US is such a huge proportion of the population, I think, to some degree are really unhappy with what’s going on. That’s frightening in what most of us objectively would say is, despite obviously gigantic problems, a fantastically successful society.

[00:37:01] Kevin

The motivating philosophy of your recommendations is there’s two things really going on there. One, what you’re saying in terms of reforms, the goal should be to kind of remove harm as opposed to promote happiness. So almost like getting better at providing the fundamental social insurance role of the government. The second thing is you’re saying we shouldn’t really aim for a revolution, it’s a reform, what you call piecemeal social engineering, doing things in small bits.

Is that philosophy motivated by the idea that in the US or other democracies, we can’t really do big things right now, that if we’re going to succeed, we have to do it in small steps experiment?

[00:37:53] Martin

I think there are two elements of this, one which people might validly disagree with and one which I think makes sense. I want to have a program that could become a governing program and might make enough of a difference to shift enough people at the margin to give you stable majorities for more normal forms of democratic politics, which focused on looking after the people and giving them a decent life but don’t pretend to have the solution for all human problems because I think politics like that will always disappoint and embitter.

In the case of the US, in a way, it’s easier to recommend this than elsewhere because the fairly basic parts of the social insurance network either don’t exist or need such radical and obvious change. For example, the US has now very considerably the lowest life expectancy in the developed world. We know largely what causes that. Part of it is the lack of universal health insurance. Part of it is the absence of effective childcare. Part of it is really very, very considerable inequality. These are, I think, fixable problems, and I think it would improve people’s welfare greatly if they were fixed.

The deaths of despair and the opiate crisis, which is a gigantic thing to any outsider, let alone mass incarceration, are all reflections of quite serious social harms which other countries don’t suffer from so I think they are fixable and they would involve some more spending. But as I point out in my book, The US plutocratic elite is markedly undertaxed and it can be taxed more. They don’t pay particularly at the very top of the distribution. The tax avoidance and evasion is staggering, so that can be fixed.

I think again, that is the direction in which this administration is trying to go and I applaud them for trying to do this. I think we can start thinking about changes in the way corporations are run and managed, who has a say. I’m really rather keen on having workers have votes in corporate boards. I see no reason why that shouldn’t happen. The Germans do that. I can’t remember whether I discussed this in detail. There are quite a lot of things that I would like to change. But the total transformation of capitalism, as a system, seems to be impossible and probably undesirable.

I am very keen on radical changes to deal with the climate problem. I think I’ve always been in favor of heavy carbon taxes, all of which are returned to the public. So it’s not a net tax, it’s just changing relative prices. That seems an obvious thing to do, but even that has been far too radical to do. That gets to the second point, which is, these are the sort of things I want to do because I think they’re right. But it’s true that the way I see politics in our countries, all our countries now, nobody is discussing really radical change, anybody with a real electoral presence.

So the challenge is between reaction, real reaction, of the type that we were discussing earlier and some form of progressive change. Well, in that choice, I’d totally go for the latter. Because you can’t do things if you have no power. You have to win power. It’s pretty clear that in the world of Western countries, the sorts of people come in will make useful changes are moderates. That seems to me clear. The Democrats, rightly or wrongly and the people mostly I think from the African American caucus who decided that Biden should be their candidate were from an electoral point of view I think clearly right. So you have to go with what’s going to win even if you are much more radically inclined than I am.

I actually had a debate here in Britain very recently with Bernie Sanders, who I like and respect. We agreed on quite a few things, but he’s not going to win presidency. What’s the point? You’ve got to have somebody who’s going to win. My program, I think, is the sort of program people might want to win on or might be able to win on because they might persuade people that it’s possible. The other point about it, and this is much more controversial in the US case and I think of this in the British case too, I do think a lot of what we used to call it the identity politics of the left, even if I agreed with it, politics that focuses on gender issues and things of this kind, is not a winning ticket. You have to make much wider coalitions.

Now, abortion is a completely different issue. That’s sort of obvious. You have to fight back because it’s intolerable. So I think it has to be about focusing on social ills and getting rid of social ills. In the US, more than most cases, I can go through a long list, to me as an outsider, there are more obvious social ills and more unnecessary social ills because the resources to deal with them are so obviously present.

[00:43:36] Kevin

As you were talking about the various things that could be solved, there was a danger of you becoming a little bit optimistic there. I sensed it.

[00:43:48] Martin

I cannot easily be criticized, I think, but I can be, of course, for being far too optimistic and idealistic and having no real vision for the future at the same time. I was very aware writing this that I had to be at the limits of the plausible, but not, I thought, in fantasy land, and turning the United States into a social democratic paradise, certainly not I think a feasible project, but certainly not an electorally feasible project. Therefore, it’s not a same project for me, from my point of view, to start to deal with the… The real important thing is to defeat (well, I can’t really find any other adjective) a form of Neofascism.

[00:44:38] Kevin

Yeah, at one stage, I don’t know if it was a review of your book, I think you actually say this in the book as well that you’re worried that the US might not be a functioning democracy in the near future. My initial reaction to that was, I didn’t agree with it. Part of it was emotional. I suppose I have to admit that which is not a great way to react to those things. But the other thing was, when I look at our local democracies, our local elections, and we’ve got a boatload of them, they’re really well-run and well-debated.

My son was involved in a local election up in Oregon and the Democrat won by a little bit, but the Republicans controlled the county seat and they all agreed that they were going to work together and no one argued about the outcome, and they debated issues. That’s a city of 100,000 people and I think that happens all across the country.

So I do think there’s room for the sort of piecemeal experimentation that you recommend to be tried at the local level and to then be replicated in bigger forums. So maybe that’s being idealistic, but I think that’s possible.

[00:45:58] Martin

I wrote this to be shocking. But first of all, America is a federal country, which is a tremendous asset, but it is designed to be very difficult to make changes, we already discussed that. So that means at the local levels, you can do things very successfully. You have to remember that though the resources at local levels are limited so there are lots of problems they can’t really resolve at that level. So that is a problem. But in the end, the federal government does matter and the institutions of the federal government matter. Perhaps they’re too powerful, but they are powerful. If they’re in the control of really malevolent forces, they can make a big difference.

So if the Department of Justice were headed by somebody with the backing of the president who was willing to abuse that position to go after powerful opponents, to go after newspaper publishers for trumped up reasons, to use the Inland Revenue, to take tax cases against people. If the courts were not all run by honorable people, well, it seems to me you have a few judges who are rather problematic. Some of them maybe even be on the Supreme Court, it would be very difficult to do this. But if you’re determined enough, these offices can be abused very, very, very profoundly.

Again, this is how Viktor Orbán has achieved what he’s achieved in his limited country, but I don’t think you should understate it. Also, there are a lot of states which have legislatures which are prepared to pass simply unbelievable things. I’ll be honest, I’ve followed American politics and outside of those, I’m really an economic specialist, but throughout my life, it’s nearly 60 years, and what’s been happening in some of the abortion legislation in Texas, for example, the use of bounty hunters, the attempt to pursue people across state lines, this is horrendous.

It sort of made me realize that if you control the instruments of power in American states or more, the federal government, you can do a lot more than you can imagine. It is, of course, worth remembering that one of your greatest presidents, perhaps your greatest, Abraham Lincoln, temporarily ended habeas corpus. Now, maybe that was in the war, but you declare a state of national emergency, and if you get Congress to agree there is a state of national emergency, pretty terrible things can happen.

So all I would say is I may be alarmist and I probably am, but I think it’s better to be alarmist than complacent because by the time you realize you were wrong to be complacent, it’s too late. So that comes back to the starting point of my family in the interwar years. I promise you that even in 1925 in Germany, which admittedly lost the terrible war and had no history of democracy, nobody imagined that what had been for a long time the most educated, most cultural society in Europe, it’s unbelievable but that was the fact. The world’s greatest universities, the world’s greatest scientists were German, German Jews and Germans. Everybody knew this.

The idea that there would be a Hitler and that that would follow eight years later with all that meant, people couldn’t believe it. So I would encourage people not to be complacent about these things. Once historical processes start working really badly, it’s too late. You have to act.

To come back to the big point, the ‘stop the steal’ and all the lies that went with it and the punishment of the Republicans like Liz Cheney who simply pointed out that he’d lost, which is pretty obvious because he had a very debated democratic process. This is absolutely terrifying stuff. So I really would advise people very, very firmly against assuming that worse can’t happen. There are a lot of very malevolent people out there who are trying, in my view, to subvert the republic.

[00:50:48] Kevin

Yeah, I think in the end, I’m glad you said that, and I think that’s really the message that people should take from your book. I know you’ve got to go so I think that’s a good place to kind of wrap it up today. But I would say that, for people thinking about reading the book, that there really is a lot of detail that you put forward for ways we can improve things. Some of them are smaller things, but they’re doable. So it’s a book that, as you say, argues against complacency, but then follows up with, hey, there’s things we can do to avoid the past being repeated. So I appreciate you writing the book and I appreciate you taking the time to share some of your thoughts with us today. I wish you all the best.

[00:51:42] Martin

It was an enormous pleasure. One of my suggestions, get rid of primaries.

[00:51:51] Kevin

Well, if it was up to me, I would do that. But thanks again, and all the best.

[00:52:00] Niels

Thank you very much, Martin and Kevin, for a politically charged and at some times controversial to some conversation, but nevertheless, an important conversation at a time where societies are changing around the world, and not necessarily in a more democratic way. At the heart of Martin’s argument is his belief that democratic capitalism remains far and away the best system for human flourishing. But something has gone seriously awry, the growth of prosperity has slowed and the division of its fruits between the hyper-successful few and the rest has become more unequal.

Now, Martin may have come across as an alarmist but he does argue that this is still better than being complacent. So even if we don’t share all of his concerns today, I think it’s fair to highlight dangers to democracy in general and especially if it comes with suggestions of how we can improve it, which unfortunately, Kevin was not able to get to due to the limited time we had with Martin today.

Now, that’s it for today’s conversation. Please make sure and go and follow Martin’s and Kevin’s work, as well as getting a copy of their books because as you can tell from today’s conversation, some of these ideas and topics are not necessarily being discussed enough on mainstream media. From Kevin and me, thanks so much for listening. We look forward to being back with you on the next episode. In the meantime, take care of yourself and take care of each other.

[00:53:31] Ending

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