There is no way around it – across the western world there is a strong push away from progressive policies towards more conservative ones. Changes in globalisation, migration, productivity and efficiency have happened very quickly. And rapid developments in technology over the last 30 years have played a critical role in this.
After the booming 50s and 60s, the world moved into the sluggish 70s and many economies stagnated. This led to the Thatcherism and Reaganism of the 1980s, heralding the end of many of the social democratic political and economic systems that were in operation in the western democracies. Turning those economies around took place at the expense of social welfare programs, union power, public ownership of utilities, wages growth and so on.
The effects have been spectacular, with unprecedented economic growth around the globe. It not only created enormous wealth in the western economies – China, India and large parts of Africa started to see enormous improvements in their economies as well. But, perhaps more importantly, significantly better education and healthcare led to an explosion of their populations.
Steady and ongoing economic growth is set to continue in these developing economies, this at a time when many predict that the West is set for another recession.
The positive view on the increase in economic growth in the western economies has become challenged especially since the Great Financial Crisis in 2008. Large numbers of people felt that they had become victims of the neoliberal economic model. Technology began to change whole sectors and agriculture, manufacturing and administration reforms saw massive job losses. While the service industry was able to absorb most of these jobs, this generally resulted in lower paid, less secure and often casual employment.
At the same time the cost of housing, household debt and energy skyrocketed and costs in healthcare and education increased. The social democratic system that existed till the 1980s had led to a more equal distribution of the wealth that was created in the decades following WWII. After the political and economic reforms of recent times new wealth has basically ended up at the top end of society.
The economic modifications that were carried out under Thatcher and Reagan in the 1980s, now require reverse adjustments in order to bring the balance back to a more equal society. Unfortunately, without such adjustments being made by the established governments, people have started to flock to the unrealistic promises made by a new and upcoming breed of populist leaders.
Looking back in history over the millennia, such developments only lead to disaster in the end, as populists will never be able to deliver on their promises. They are equally unwilling to make the necessary reforms and initiate important transformations to bring the balance back.
Whether these populists like it or not we live in a globalised world. The Brexit saga shows how interconnected we are.
A positive result of Brexit is that none of the populist groups in Europe are still advocating for their country’s departure from the EU.
Looking at Asia, we see a totally different development – one that is more reminiscent of the situation in the West during the 1960s and 70s. Countries in Asia are relentlessly moving into more regional and globally interconnected economic structures and their governments are receiving great public support for this.
The lack of good leadership in the western economies has led to an all-time low level of trust of the people in their governments (less than 25%). The opposite is true for Asia. In general, the approval rate of their governments is around 75%, this despite the fact of those governments’ often illiberal social policies. While the West frequently talks about the ‘bad’ leaders in some of these countries, it looks as though America, Britain, Italy, Turkey, Hungary and Poland are now suffering equally from such a leadership illness. And while many countries in Asia are becoming more democratic we see the opposite happening in the West.
Technology developments in Asia are continuing at great speed – we see Asia rapidly taking over international leadership in AI, EVs, 5G, renewable energy systems, smart cities and mobile finance. While the US is retreating from international cooperation and intends to become even more isolated, Asia is forging more and more international business relationships. Cutting the West off from these developments will be more detrimental to the West than it is to China. The USA and Australia are boycotting Huawei, but the Chinese government simply sped up its own 5G licensing process so that the company can compensate for a loss of business from those countries through growth in their domestic market. And on top of that Russia came up with a massive order for the embattled company.
Furthermore, under its neoliberal capitalistic structure many manufacturing sectors have moved away from the West. Trying to now rebuild those lost industries – as recently suggested by Malcolm Turnbull for the telecoms industry – will be nearly impossible within the current neoliberal structures in the West.
Important technical developments are needed to address the many issues in our increasingly complex world. If the West becomes more splintered, isolated and disconnected it will also lose its technological edge. Technology and innovation are rapidly becoming major casualties of ultra-right conservatism and populism.
The economic and political outlook for the West is not bright. However, as Parag Khanna recently wrote in his blog Can the East save the West? Asia is not affected by the state of affairs in the West, and within the not too distant future it will have moved on in a far more balanced way in relation to social, economic and environmental development. Sure, there are enormous problems in these developing economies as well – eg, climate change is not bypassing them – but while the West is coming to a grinding halt Asia, with Africa not far behind it, is moving full speed ahead.
The West can stay on its high horse and maintain a colonial/paternalistic world view in relation to the rest of the world, but it could also look at what keeps Asia ticking. The region has now achieved enough momentum to move forward without the western countries, and if they are not careful the western countries will be left behind.
If we look at spreading ‘values’, more countries are now looking at the social democratic Asian model rather than the neoliberal western one. The Asian model is based on mixed capitalism, with governments playing an active role in the economy by supporting champion companies and actively steering investment in strategic sectors. The political systems here are more of a mixture of emerging democracies and technocracies. Looking at the global population, more people are now living in Asian-style political systems than in western systems.
The more collaborative model they operate has gained them the trust of most of their people. True, this is clashing with the neo-liberal system of many of the western economies, but who can say who is right or wrong? For the time being Asia is booming. Unlike the West, their economies are growing and their pie is getting bigger by the day. Their people are much ‘happier’ than many in the West.
There are very few countries in the West that have a long-term vision of where they are going or where they want to be. Perhaps this is one of the most important and urgent issues for the West to address. Looking at the upcoming shifts in population, economic power and wealth it would make sense for the West to do this collaborative. They should have a long hard look at their current political/economic systems.
In that process let’s have a look at why Asia is so successful in many of the areas in which the West is failing. The western countries should not shy away from learning lessons from Asia. A very serious balance shift is needed, in favour of more progressive capitalism, more similar to the West enjoyed up till the 1980s. They need to take a good look at their neoliberal system and ask if this still best serves their societies – especially in the context of the current turbulent period of massive changes, social and political upheaval, technological change and threats from issues such as climate change.
In the end we, of course, will all have to work together – East and West – as the survival and well-being of a global population growing to 11 billion people by the end of this decade depends on it.
Paul Budde