Our Economic Malaise Is Fueling Political Extremism

The head of the fourth biggest and fastest rising political party in the world’s second most powerful economy is a racist. An aide to the Prime Minister of one of the world’s most promising societies is caught on camera kicking a protestor to the ground. The world’s largest democracy proudly elects a man who rode a wave of religious extremism. The head of yet another is a man whose calls for ethnic purity are becoming more strident. And that’s leaving out the rise of extremist parties in Greece, the U.S., France, and elsewhere.

What’s going on here?

Here’s my crude, rude version of events: history is repeating itself.

We’ve seen this before: a broken financial system that has created huge economic imbalances. Debtor nations that owe creditor nations impossible amounts, who would have to gut their very societies, and the futures of the people in them, to pay off those impossible debts. And debtor nations and citizens alike that are angry — furious — at the injustice of it. Out of this dangerous cocktail rises extremism, and eventually, war.

The great John Maynard Keynes saw all this as plain as day — after World War I, he predicted that a debt-saddled Germany wouldn’t take it lying down. After World War II proved him right — when not only Germany, but other economically gutted nations succumbed to nationalism and fascism  — Keynes tried to design a new global financial system, creating the IMF and the World Bank. Their goals were to prevent exactly the vicious cycle above: imbalances, debt, servitude, extremism, and violence. The IMF was to prevent the buildup of debts and credits; and the World Bank was to invest the surpluses of rich countries in poor countries. We can argue, half a century later, about the sins of these great global institutions — yet, contrary to what today’s conspiracists and fantasists believe, they were not created to oppress; but precisely to prevent oppression from darkening into vengeance.

Yet, today, the situation Keynes foresaw is repeating itself — only more subtly. The problem today isn’t a small number of creditor nations, to whom the vast benefits of global wealth are flowing. It is a small number of super rich individuals: oligarchs, monopolists, scions. In a sense, the same problem, of vast, unjust imbalances, has reemerged; this time beyond national boundaries. Today, the super-rich and their empires span multiple nation-states; whisked from home to home and country to country by private transport, they use different infrastructure (who cares if roads and airports are crumbling when you’ve got a helipad?), play by different rules (do tax laws really matter if your assets are all offshore?), and even different methods of wielding political influence (why knock on doors when you can fund your own super-PAC?).

While the super-rich are vastly disproportionately enjoying the fruits of global prosperity, too many are being left behind. What is common in societies with extremists on the rise? The poor and the middle feel cheated — because they are. In the sterile parlance of economics, their wages aren’t comparable to their productivity — but more deeply, their lives are literally not valued in this system. And so they turn, in anger and frustration and resignation, to those who promise them more.

In all these societies, social contracts prize growth over real human development. Economies “grow”; but the benefits of growth are enjoyed vastly disproportionately by a small coterie of people — usually those politically connected; at the very top of a socially constrained pecking order; a caste society. We are told this is capitalism; in fact, it’s a perversion of free markets I call “growthism.” And while the size of TVs and shopping malls may improve for the poor and the middle, life usually doesn’t. They feel stuck — one paycheck away from penury; one illness away from bankruptcy; one dull, meaningless day at a time at a deadening job. The economy may be growing; but their well-being is not improving; they are asked to work harder and harder; but they do not grow smarter, richer, tougher, wiser, smarter, fitter. Their human potential — the one great gift each of us may be truly said to own — is being stifled.

This, then, is a broken global financial system. It is broken in the sense that the social contract it offers is a fools’ bargain; in which the blind pursuit of growth is asking too many to watch too few get unimaginably rich, while their own human potential is thwarted. And as Keynes foresaw, a financial system that breaks down and corrodes social contracts inevitably fuels great tensions between societies. It leads to vicious spirals of extremism, nationalism, and ultimately, perhaps, war. And today, we seem hell bent on playing out that greatest of human tragedies again; judge for yourself where in that downward spiral we appear to be.

So. My story goes like this. Economies stagnate in real human terms; a tiny few get very rich; life stands still for most; economists call it “growth” and declare it success. Stagnation sparks anger: extremists stoke it; and so the world is ablaze in a new age of extremism.

All as predictable as the sunrise.

And yet. Extremists are hucksters: alchemists of prosperity. They promise us something for nothing; plenitude without peace; taking without giving; that all is a zero-sum game; that we must bully and bluster our way into human possibility. And so we are worse than fools if we are seduced by them; we are cowards.

The paradox of prosperity is this. Imagine a lush field that goes fallow. The tribes begin fighting over the last few dried, cracked stalks of wheat. They fight one another tooth and nail. Until, at last, one is victorious. The field is theirs; but there is no longer any wheat; just handfuls of dust. The others starve. They will do anything for the dust. Until one day, a man says: “Why, the dust! It is rightly ours! Let us take it from them!” And so they do. And the spiral of violence and impoverishment never ends.

One day, generations later, the starving tribes wonder: Why didn’t our grandfathers plant another field?

The paradox of prosperity is this. It is at times of little that we must plant the seeds of plenty; not fight another for handfuls of dust. And it is at times of plenty when we must harvest our fields; and give generously to all those who enjoy the singular privilege of the miracle we call life.

(Nope, extremists; that’s not communism — not government redistribution of dust. It is, as Keynes foresaw, just common sense).

I believe a very great deal about the unsure path of human history will be decided in the uneasy years to come. And so I believe our challenge is nothing less than this. A story as old as time; and as familiar as twilight. To stop fighting over fistfuls of dust, and decide to plant another field instead.