Can Europe Make It?

Authoritarian capitalism in modern times: when economic discipline really means political disciplining

The global spread of capitalism depends on an authoritarian form of politics. How can democracy survive alongside economic discipline in today's world?

Peter Bloom
22 July 2015

Flickr. European Council President. Some rights reserved.After months of tense negotiations, Europe and Greece have finally reached a new bailout deal.  Shadowing these talks were fears of a “Grexit” and, potentially, the breakup of the European Union.

The talks also highlighted growing ideological and political divisions within the continent and also globally. Syriza’s struggle against the Troika reflected larger disagreements regarding economic austerity and the rising power of financial capitalism. It was a David vs. Goliath battle of two opposing worldviews – social welfare vs. fiscal responsibility. 

At the heart of this battle are questions over the future of democracy in an increasingly hostile capitalist world. It spoke to fundamental issues of present day power, politics and economics. For example, what right does a country have to determine its own economic policies? What right does an international organisation or another country have in deciding such issues for them? 

Germany has been charged with continuing a tradition of market driven political authoritarianism, updated for the 21st century,  a classic and still tragic tale of a stronger country using its power to exploit a weaker nation at the behest of international finance. According to one commentator, the Greeks must “confront neo-liberal authoritarianism"

"Much like the mythical Atlas, Greece must carry the struggle against austerity on its shoulders as punishment for its government challenging the neo-liberal European consensus in Europe”.

This market despotism has evolved to meet the current realities of globalisation and whilst it may echo the past there are also many differences. In today’s world there is a new rationale for spreading not only economic capitalism but also political authoritarianism – where the demand for economic discipline has become an all-encompassing pretext for repressive political disciplining.

Imposing austerity

From the outset, this most recent Eurozone crisis appeared to be about more than just Greece paying back its considerable debt. Instead, it was motivated by the need to force the Greeks to accept economic austerity. As German theorist Jürgen Habermas recently told the Guardian: 

“the outcome is disgraceful because forcing the Greek government to agree to an economically questionable, predominantly symbolic privatisation fund cannot be understood as anything other than an act of punishment against a left-wing government”.

This “punishment” seems even harsher in light of mounting evidence that these austerity measures are economically ineffective. Indeed the International Monetary Fund, formerly a staunch ally of Germany, has challenged the orthodoxy of austerity. Far from helping countries like Greece reduce their debt, it is argued, they perpetuate the problem by redirecting vital investment from industry to creditors.

The ramifications of this strategy extend beyond the question of the Greek debt. Reflected is a broader politics of imposing austerity on often unwilling populations and the coercive demand that beleaguered countries accept exploitive conditions, leading to higher inequality and less welfare.    

This follows  an almost five-decade old project to expand neo-liberalism to all corners of the world. International financial institutions such as the World Bank and IMF deployed their global influence and capital reserves to compel countries to accept a destructive free-market agenda of mass privatisation and a weakened social safety net.To this end:

“Governmental elites, if they are to remain in power, must also answer to (or repress) their own populations. And the price to be paid for external help with “liquidity problems” has typically involved politically dangerous stabilization measures (devaluations, wage and credit restrictions, and fiscal deficit reductions)–measures that often arouse the strong opposition of major social forces”.

Authoritarian policies once reserved for the “developing” world have now come home to the west. Greece is just the latest example of a capitalism that respects democracy only so long as it profits elite stakeholders.

Market dictators

Traditionally, markets and democracy were seen to go hand in hand. The fall of the Soviet Union signaled the “end of history” – where liberalism would reign supreme both economically and politically. The days of state planning and repression were soon to be replaced by free markets and elections across the world.

The intervening two decades have severely tested such optimism. The post Cold War world reflects a much more authoritarian reality then the one predicted by the liberal triumphalists. It is characterised by “market despots”, such as China and Russia, as well as a rising tide of so-called “illiberal democracies”.

However, this authoritarianism is not limited to traditional forms of national despotism and illiberalism. It also encompasses the increased right of IFIs to dictate the economic policies of developing countries. Their mission is to introduce and maintain the neo-liberal transformation of creditor nations. In this respect, their “understanding of good governance continues to reflect a concern over the effectiveness of the state rather than the equity of the economic system and the legitimacy of the power structure.”

Vital to this mission is the active shaping of these countries political institutions. Under the banner of 'good governance' the World Bank and IMF mould the public sector and civil society to reflect its dogmatic commitment to marketisation. The mantra of development has shifted from getting 'prices right' to getting 'institutions' right. 

Here economic 'reforms' mean embracing a conservative agenda of privatisation and the retreat of public services. It entails accepting that the economy must be guided by the private sector, even at the expense of the material well being of the majority of citizens. It also involves reconfiguring politics to better facilitate these changes. 

Significantly, democracy is relegated to a secondary concern. The priority is establishing 'good governance' above and beyond all else. Explicitly authoritarian regimes can, therefore, justify their continued monopoly on power by trumpeting their 'good governance' credentials – including their preservation of private property, anti-corruption campaigns and investment in a permanent market transition.

However, it also profoundly limits the scope and possibilities of existing democracies. Elections become decisions over which party can best spread and protect the free market. It is, in the words of scholars, 'nothing less than a depolitisation of democracy'. Deeper questions concerning economic values or social organisation are relegated to technical debates of financial management.

Fiscal disciplining

In this new era, states have a primary obligation to be 'economically responsible'. This responsibility has at best a cursory relationship to democracy. Rather it is focused on implementing fiscally conservative policies. The economic conditionality of loans, in this sense, have transformed into moral imperatives. It is now not only politically demanded that countries accept neoliberal principles but it has become their moral duty to do so.   

This moralisation of capitalism as a development discourse speaks to an ongoing problem with successfully introducing market 'reforms'. As far back as the 1950s governments ranging from Africa to Latin America put in place the marketisation policies expected by their global 'partners' against a domestic backdrop of popular dissent. This often produced predictably authoritarian results.

Today’s regimes face almost identical pressures. Combined with the global push toward 'good governance' is the mounting burden to be fiscally 'self-disciplined'. It is their 'responsibility' to follow appropriate economic policies – namely deepening capitalism – and not allow them to be deviated from by ill-informed popular movements. The economic 'health' of their nation, and its ultimate development, depends on them being assiduous in their prevention and effective dealing with anti-market sentiment and desires.

Their inability to fulfill this moral obligation necessitates a decisive foreign intervention. International organisations and their powerful national supporters must punish 'irresponsible countries', not only for their own good but for the wellbeing of the global market. The absence of national 'self-disciplining' creates the imperative for a just as authoritarian international fiscal 'disciplining'.

Rise of authoritarian capitalism 

The emergence of 'fiscal disciplining' empowers governments to preserve economic marketisation by whatever means necessary. The suppression of opposition is acceptable and to an extent encouraged if it contributes to 'good governance' and being fiscally 'responsible'. While it is true that the role of the state in the economy has been substantially reduced, this does not mean they are less powerful. By contrast, 'neoliberal restructuring has not resulted in less state, as is fashionable to argue in some circles today, but in a different, often more coercive, role for the state'.  

At stake is the transition from democracy toward capitalist sovereignty. In place of deliberation and experimentation is technocracy and profitability, with nations that dare to subvert these priorities at risk of being taken to court by corporations or facing sanctions by international institutions.

The global spread of capitalism fundamentally depends on an authoritarian form of politics. It is a repressive logic whereby a strong capitalist sovereign is required to 'discipline' those who are economically 'irresponsible'. This can be seen as states 'disciplining' citizens, corporations 'disciplining' their workforce, or international organisations 'disciplining' states.

Witnessed now, therefore, is the rise of authoritarian capitalism, where the rights of capitalism are king, lording over all other political, economic and social desires.  We are entering an age in which economic discipline leads inevitably to authoritarian political disciplining.

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