FRBSF Economic Letter: Estimating the Macroeconomic Effects of the Fed's Asset Purchases
The Duty to Bear Arms and Buy Health Insurance

John Quiggin Outs Himself as a Fukuyamaite

JQ:

Crooked Timber: how is Fukuyama’s view of the end of history looking? As far as the dominance of representative democracy is concerned, pretty good. Given a decade or two to establish itself, representative democracy has proved to be a remarkably stable system.... First, the representative system solves the succession/dismissal problem.... Second, democracy ensures that everyone has a say. Not, of course, an equal say, but, for everyone outside the ruling elite, more of a say than they would get under any alternative system....

The real threat, as Hidari observes in a footnote, is that democracy can be subverted from within, by charismatic/authoritarian leaders like Berlusconi and Putin.... In my view, the logic of representative democracy will ultimately prevail. If these guys hang around long enough, they will mess things up and be thrown out (as happened to Joh). If they last to retirement age, they will have no power to designate a successor.

The second part of the “end of history” thesis is, in essence, the theory of democratic peace.... I think this is broadly correct, but the thesis is undermined by the existence of nuclear weapons. Even if democratic peace is 99 per cent right, a low-probability nuclear war (between say, democratic Pakistan and democratic India) would be a cataclysm....

I’ll turn now to the last part of Fukuyama’s thesis that the “end of history” entails the triumph of liberal capitalism. Here, I think, Fukuyama is engaged in a bait and switch that is almost universal among American commentators. On the one hand, the triumph of capitalism is proved by the fact that capitalism, in forms ranging from Hong Kong-style free markets to Scandinavian social democracy is universal). On the other hand, since the US is assumed to be the archetype of capitalism, this proof is taken to show that US-style liberal capitalism must prevail. This is a spurious argument by definition.

Overall, though, the startling events in North Africa have undercut the recently popular criticism of the Fukuyama thesis, based on the temporary successes of Putin and the Chinese oligarchs. There is no reason to think that the rule of Putin, or of the Communist Party of China, will outlast the next economic downturn, or even slowdown, any more than Ben Ali or Mubarak.

Comments