A question for deep thought: Does the democracy in its current form, based on the model of ancient Athens and Montesquieu's idea of a tripartite power model with political parties in power, not causing a gradual collapse of the market economy?
Why do I think so:
first, since the Western world has:
a) crowd manipulation technologies (social engineering),
b) mass media (especially television, Internet)
c) is in the credit money regime, and it easily creates electronic money
in democracies based on the rule of political parties, there is a tendency to a very high rate of debt borrowing by governments (debt often above the critical limit of 90% in relation to GDP), but also to allowing such debt from the electorate. Societies have become very demanding, expecting multi-faceted welfare and even a basic / guaranteed income for the unemployed. The oldest democracies, such as Greece, Italy (including ancient Rome) or France, have been plunging for many years into gigantic debt, both domestic and foreign, contributing to the weakening of their region (Western Europe), and they also set a negative example for young democracies from post-communist countries that you can expect a lot of expenses from your government and live beyond the means (i.e. at the expense of future generations now, with impunity)
Secondly, I observe the process of state appropriation by the ruling parties, i.e. taking up positions in state-owned companies and in public media by politicians and their supporters, who often finance a selected political party in the election struggle during the next elections.
Third, I see a process of growing negative selection for the highest state positions in Western democracies. People with low professional achievements and low personal culture are becoming more and more often (see examples of the USA, Great Britain, France, Germany, Italy, Greece and many others) among the highest political authorities, we notice it especially since the end of the 20th century people who are poorly prepared to govern with low professional qualifications, low morals, but pushed by big corporate capital and / or by the party power apparatus. These new leaders of modern democracies are unable to introduce wide-ranging economic reforms (pension reforms, health care reforms, or urgent ecological shifting of the economy), put off difficult matters to be dealt with now.
What reforms does modern democracy need for the economy to have healthy finance, clear and simple fiscal system, healthy society, people who can not only get an education in a given country, but also a creative job?
thank you for your contribution in the discussion.
The injection of government money (for example) from the issue of debt securities forces the central bank to apply the lowest interest rates, often close to zero (so that the debt service by the state budget would be as cheap as possible). Such a situation in the long run causes negative real interest rates (expansionary fiscal policy leads to higher prices, the annual CPI index increases). On the other hand, a negative real interest rate discourages households from saving with banks, which leads to the crowding out of private savings into the securities and mutual funds market. Households, instead of saving with low risk, become stock market players with high investment risk. It is a mechanism of creating a speculative bubble on stock exchange instruments and a scenario for another stock market crash. After such a crash, everyone will be with losses and debts (except for a few stock exchange sharks), the state in debt and households without savings. Who will blame whom? what will parliamentary elections look like in such a democracy? will not even larger populists take power by promising another miracle recipe for economic recovery, for example nationalization of enterprise ownership? Or official prices, that is, administratively fixed prices for products?
To me, modern democracies are not causing the collapse of the market economy; but the market economy, under its neoliberal form, is slowly weakening the power of states and reducing the role of democracies.
The neoliberal process of privatization tends to weaken "nation-states", thus causing a resurgence of nationalism.
And nationalists are ready to support any leader who will slow this process of weakening the states, even though theses leaders may be "poorly prepared to govern".
About national debt and government spending, it seems government interventionism has been reduced these past decades, following a neoliberal agenda (though this point could be discussed).
Besides, I would rather say that debts are part of the current economic and financial system and do not necessarily constitute a good indicator to judge the well-being of democracies. David Graeber's book entitled "Debt" is a great academic reference on the matter.
Thank you Dr. Baverell for taking part in the discussion and recommending David Graeber's book. My position is based on an economic reference. Debt is debt, that is, an obligation to settle. Of course, private household debt carries a high financial risk for the household itself, or even worse for the individual consumer. The state, drawing its income from various sources and from many taxpayers, is able to service debts (pay interest installments on them) even exceeding its annual welfare expressed as real GDP. However, I would like to point out that the income is generated from the difference between the revenue and the tax deductible costs. This means that government debts that accumulate over the years as public debt reduce the real wealth of every citizen living in a given country. Why is it like that? Each citizen, being a taxpayer and consumer of goods and services in a given indebted country, will pay for these debts indirectly: first, in the form of increased various direct and indirect taxes, which he will not avoid (unless he flees abroad to a rich country), these debts by paying higher prices for the use of state and local government offices, thirdly, will finally pay for these debts using the increasingly degraded road infrastructure, increasingly poorly paid schools and increasingly poorly functioning health care (which in countries with high debt overwhelmingly the public is indebted beyond all boundaries and the directors save on the quality of their staff fourthly, in excessively indebted countries (scientists in most studies have calculated the limit of 90% to GDP) the economy slows down, ie economic growth is slower and the country is becoming less and less competitive. This further leads to a collapse on the labor market, the unemployment rate may increase, the emigration of some employees who cannot find a good job offer on the domestic market (read labor market statistics for mega-debtors such as Greece, Spain, Portugal, Italy, especially for 2009-2016). I do not see the advantages of having debts apart from the risk of collapse and the increasingly poorly functioning quality democracy, as I described in detail in another post. I recommend my previous entries. On the other hand, I see the wealth of saving and surplus countries that are creditor, for example, China, South Korea, Estonia, Switzerland, or even Scandinavian countries like Denmark, Sweden. Best wishes
Dear Prof. Dariusz Tomasz Grala ,
The most important thing within a democracy is meritocracy.
Only then, problems that you mentioned will be carried out successfully and with lasting solutions.
Regards,
Prof. Wiltgen
Dear Dariusz,
Interesting question. However, I think, it is more necessary to talk about advantages and how to succeed for social market economy instead of free market economy. Social justice (equity) can and should stand in the one line with economic efficiency and freedom. Possible contradictions between them have to be overcome in constant problems solving process. This is achievable !
Dear Arvydas Guogis, thank you for your valuable contribution to the discussion. I think you're right. If we take into account the example of Germany after 1949 and its systemic development within the social market economy until the end of the 1980s, the ruling German Federal Republic managed to change the economy to an average person friendly and introduce co-responsibility of employees for the economic results of their enterprises and socio-professional dialogue on the supra-regional and sectoral level. Moreover, Germany avoided the relapse of the populism and social radicalism of Hitler's time. However, let us remember that this great transformation of Germany after World War II took place after the settlement of war criminals in Nuremberg, the defascization of society and the introduction of a new federal system under the supervision of the US army and politicians. Best regards