Martin Wolf on saving democratic capitalism

This is an audio transcript of the FT News Briefing podcast episode: ‘Martin Wolf on saving democratic capitalism’

Marc Filippino
Good morning from the Financial Times. Today is Monday, May 29th, and this is your FT News Briefing.

It’s a holiday here in the US and in the UK, so we’re gonna do something a little bit different. We’re introducing a series called Martin Wolf on Saving Democratic Capitalism. Martin is the FT’s chief economics commentator. He’s been worried for a while about where western economies and democracies are headed. And in this new series, he talks to high-profile guests in the world of economics and geopolitics to ask how we should go about fixing things. This four-part series will drop in our feed once a week, and in the first episode you’ll hear Martin talking to the FT’s executive opinion editor, Jonathan Derbyshire, about his own thoughts on capitalism. So, here we go.

Martin Wolf
I should say that I am massively jet-lagged. Got up at six this morning to write this column. And then, and what are all the other things I . . . 

Jonathan Derbyshire
That’s Martin Wolf, our chief economics commentator here at the Financial Times. For many of you, he’ll need no introduction. I, on the other hand, should introduce myself. I’m Jonathan Derbyshire, and I’m the FT’s executive opinion editor. That means it’s my job to edit Martin’s columns. And whenever he’s in the office and not addressing some high-level international audience or other to discuss ideas with him, Martin often appears at my desk to talk about whatever is currently on his unusually fertile mind — visits my colleagues and I call Wolfian drive-bys.

Martin Wolf
Yes, and I’ve got to do a podcast. I never listen to podcasts. I believe that man and woman surely invented writing just in order to avoid listening to people.

Jonathan Derbyshire
Now, Martin may be a reluctant podcaster, but then he’s a writer who’s been at the FT for more than three decades. An economist by training, he’s one of our best known columnists. He’s also the author of several books. His latest, The Crisis of Democratic Capitalism, was published earlier this year. It’s the inspiration for this podcast series, Martin Wolf on Saving Democratic Capitalism.

[MUSIC PLAYING]

So, Martin, hello.

Martin Wolf
Hello, and it’s good to be with you.

Jonathan Derbyshire
Tell us your reason for doing this podcast series, Martin, despite your reservations.

Martin Wolf
Essentially because I wrote this book on the crisis of democratic capitalism, which seemed to me an enormously important theme. It was one that is obviously of global importance and one I recognised already back in 2016 when Donald Trump became the candidate for the Republicans for the presidency. Then Brexit happened here in the UK. But it also is a personal significance because it brings back painful, personal and family memories, because of how my parents got here to England in the 1930s and that, my whole life. And I’m worried that we’re going to see not dissimilar things again. So when the opportunity came to extend and develop the themes in the podcast and particularly to interview people I greatly admired, then it seemed a very attractive opportunity as a way of bringing a different approach to the issues that I have addressed at length in my book. So I’m going to be interviewing three heroes of mine. First, Larry Diamond of Stanford University, who is widely considered to be the leading scholar of democracy in the world. And second, Anne Applebaum, a very distinguished and much respected journalist and expert on central and eastern Europe in particular, who’s written books on this and is very well known for her writings in The Atlantic. And last, but very much not least, Hillary Clinton, the former US secretary of state, who, of course suffered the first signal defeat in the west by a rightwing populist when she lost to Donald Trump in 2016.

Jonathan Derbyshire
But this episode, Martin, is a bit different because in it I’m going to be interviewing you about the thesis of your book.

[MUSIC PLAYING]

So I want to start, Martin, by taking you back to your childhood and your family background, because that’s how you begin the book. You were born in 1946, in the immediate aftermath of the second world war. And you describe yourself in the book as a child of catastrophe. What do you mean by that?

Martin Wolf
I think that’s fairly straightforward. My parents were both refugees. They met here in England purely and solely because of Hitler. Without that catastrophe, what Hitler brought to Germany and Europe, and particularly to the Jews, and they were both Jews, they would never have met and I wouldn’t exist. So the irony of my life, in a way, is that my existence is due to one of the greatest crimes in human history.

Jonathan Derbyshire
So you’re literally the child of catastrophe. But there is also an extent to which the memory of catastrophe has shaped your entire intellectual temperament. Would that be fair?

Martin Wolf
Yes, I think it would be very fair. I think most people who are marked by the Holocaust and more broadly by the second world war were affected by it throughout their lives. In my case, it’s completely obvious. My parents had no families in this country and I grew up without any family in this country. And I was very aware this made me different from most of the other people I knew. And most of the adults I knew well were my parents’ close friends, and many of them were also refugees. So my family was, as it were, a collection of refugees. This made my life obviously somewhat different from that of most English people.

Jonathan Derbyshire
You talk in the introduction to the book about your father’s and indeed your grandfather’s pessimism, and that’s one of their bequests to you, as it were. How has that pessimism shaped your thinking, particularly about the relationship between capitalism and democracy?

Martin Wolf
Well, I think the basic point is that they worked out that the worst could happen, indeed was likely to happen, and it was necessary to escape because if they didn’t, they would all be killed. So my father left Vienna in 1937 to come here — that was before the Anschluss. But he thought he had to go and he took this risk. My grandfather’s story is more remarkable still. He was a fish merchant, that’s how he made his money, was quite successful after. He grew up in Amsterdam as a very poor boy, he left school at 11 and there he was, leading quite a prosperous life. And in May 1940, of course, the Germans invaded. At once, in a way we still don’t quite know how he obtained a trawler, which is not so difficult for him, got his family on to it, and he asked all his wider family and he was one of nine, so had many brothers and sisters and nephews and nieces, and he asked them all to join him and not one of them came. And so later that day, he, with his family, sailed to England, where they survived. Every single one of his wider families’ members was killed, more than 30 of them. So they were realists or they were pessimists. But anyway, that what they shared was a conviction that you had to recognise that the worst could happen. And I think that very much stayed with me. And the other thing that stayed with me is that there is no bottom to where politics can go if they get sufficiently demented.

Jonathan Derbyshire
So there is a sense in which this book then is an account of how we in the west arrived at a point at which the worst or something approaching it again seemed like a live possibility. Is that fair?

Martin Wolf
Yes, I’m very meticulous in saying that I don’t see yet, I’m maybe being blind, anything like what happened in the interwar period, which was exceptional both in the causes of this extreme politics and, of course, in the way they played out, particularly in Germany. There aren’t any Hitlers around. But what I do see unquestionably is the return of fascist tropes of various kinds, namely the condemnation of outsiders and immigrants and ethnic minorities, the attempt to split people into tribes and argue that you, the populist or demagogic leader, are the only legitimate leader of the right tribe, and that in order to defend the members of the right tribe, any attempt by institutions like the law or election officials, anything like that, is just fundamentally illegitimate. You are entitled because you represent the people to do whatever you like. And it’s obvious that we’re hearing people who are using that sort of rhetoric again, much less, I think, in Europe, than then, but very clearly in America.

Donald Trump
From this day forward, a new vision will govern our land. From this day forward, it’s going to be only America first, America first. (Applause)

Martin Wolf
So, yes, I see echoes. I hear echoes at the very least. And they frighten me.

[MUSIC PLAYING]

Jonathan Derbyshire
You are well aware that there has been a considerable amount of discussion over the past half decade among historians and political scientists about the value of using words like fascism to describe these contemporary political pathologies. You’re happy to use the F-word, aren’t you?

Martin Wolf
In the book, actually, I don’t use it. So this is a discussion, and I think one can use it perfectly well. Once you get to really serious authoritarianism and the suppression of books and the assault on companies that tried to do what are called, quote unquote, “woke things”, which in my view are just trying to be decent, and a very explicit statement that one is entitled to reject or ignore the results of elections and essentially try to run a coup, which is what Donald Trump tried to do in order to put the person who represents the real people again, pretty well exactly what he said — these are all tropes that are quite familiar, if not from Hitler, certainly from Mussolini. So, yes, I don’t think it is ridiculous to say that we are seeing echoes of fascistic politics. But if you want, we could simply say what we are seeing as, Jan-Werner Müller puts it so well, anti-pluralist populism. All populism is anti-elitist, and sometimes that can be understood and makes sense. But once it gets to be anti-pluralist, in other words, it rejects the legitimacy of a whole range of voices in politics and society, we are moving to something much more corrosive. And we clearly are seeing the rejection of the legitimacy of “the other” in the politics of some countries, notably the most important of them all, the United States.

Jonathan Derbyshire
So this anti-pluralist politics is, among other things, an assault on what you call just now decency. So let’s talk about your own political credo. The book carries an epigraph, as an epigraph, a phrase that appears at the shrine of Apollo at Delphi: Nothing in excess. Why did you choose that as your motto?

Martin Wolf
Well, it’s, I think now a rebuke to myself 40 years ago, like many people, as a relatively young economist, I thought it was important to reintroduce a greater reliance on market forces after the obvious disarray of the ‘70s. It was clear to me that we needed greater discipline on what trade unions would do. We had to control inflation. We needed a more competitive economy. And I also believe very strongly in more liberal trade. And I approach this, I think, too much as an economist. I ignored the effects on society at large of what the economy was going to do. But it made me realise, and this is the core of this book, that in trying to run a civilised, modern society, which is some sort of balance between a market economy and democracy, between individual efforts and entrepreneurialism in the economy and the collective good, it’s actually a very complicated balance. These different elements of our society — social cohesion, political authority and the market system — are in uneasy balance. When the balance works, these are, in my view, the most successful societies there have ever been. But the balance is very fragile. And that we’ve, I think, really learned again. And if that balance is broken, politics overwhelms the economy and you get extreme autocracy, or if it goes in the opposite way, the market economy dominates politics and you get plutocracy. Neither is a satisfactory and often even not a stable way of governing countries. So that means from my perspective, that a working society of our very sophisticated, really historically, almost unique kind, requires maintaining this balance. And to maintain the balance, we have to be aware that we can’t pursue any one goal to the exclusion of all the others. And that’s, I think, the mistake we made.

Jonathan Derbyshire
I want to come back to the account you offer in the book of this delicate symbiosis between the market economy and liberal democracy. But first, I’d like to pick up on something you hinted at just now, which is the extent to which your views have evolved and developed over time. You were describing a set of domestic circumstances in the early to mid-1970s, which led you towards a more pro-market position. The unchecked power of trade unions, sclerotic state-run industries and so on. You also alluded to your position on liberal trade. Now in the 1990s and early 2000s, you were a strong advocate of free market globalisation. And in 2004 you wrote a book entitled, Why Globalization Works. How has your view of globalisation as an economic project evolved over the past two decades?

Martin Wolf
So interestingly, because the book was focused in a certain direction, which I’ll explain, there’s really very little in it that I would now reject. I think it’s what it omitted rather than what was in it that might be more problematic. This book was really motivated by the protests against the World Trade Organization in Seattle at the end of the 1990s.

[CLIP OF PROTESTS PLAYING]

And the thrust of those protests was that globalisation was immiserising the poor countries. And I had been a development economist, I started my career at the World Bank and I was absolutely convinced then, and I remain so essentially now, that opening opportunities for trade for developing countries was likely to be very beneficial for development. And in terms of trade, I think it’s quite difficult to disagree with that broad thrust. The period of globalisation from 1980 to 2010 brought about the biggest and most rapid reduction in poverty in world history. You can see what happened in China and then India, the two largest countries in the world, once they followed this sort of route. I also argued in this book that the experience of the Scandinavian countries shows you can be very open to trade and still run a very generous welfare state. And finally, I argued that the big problem with development actually has been this instability of financial markets and capital flows. And again, that seems to me pretty clearly more than validated, in fact, more validated than I imagined when I wrote this. So those fundamental thrusts, I wouldn’t change at all. What I didn’t recognise is that the broader liberal market project in the developed countries without adequate safety nets and positive labour market policies, would lead to such a severe worsening of the position of substantial parts of our population. I argue in my book that trade is not the biggest cause of this. I think the evidence is pretty clear. It’s a mixture in my view, of technological change and fundamental changes in the governance of our companies towards basically a financially dominated version of capitalism. I think those are the biggest problems. But I would say that the thing that I missed most is that this combination of opening to world trade with these other developments in our economies would lead to a prolonged stagnation or at least relatively slow growth of the real incomes of substantial parts of our population. Big regional problems and the failure to deal with these, following the financial crisis we had in 2007-09, would turn out to be quite devastating for political stability.

Jonathan Derbyshire
But as you point out in this latest book, even during this period that we’re discussing, so the late 1990s, early 2000s, you were already seeing intimations of the crisis to come, intimations of profound instabilities and fractures in the global financial system. I think you mentioned the Asian financial crisis of ‘97, for example.

Martin Wolf
Yes, I think it’s what made me realise that finance really was very dangerous up to then when countries got into financial difficulty, particularly the Latin American debt crisis, so-called tequila crisis in the mid-1990s, one could argue pretty credibly that these weren’t very well managed countries. They’d made obvious mistakes and they blew up. While one could argue that in the case of the Asian countries, one had to do so with some humility, since these were, as a group, the most successful developing countries ever. I mean, they had achieved, all of them, Thailand, Malaysia, Korea, even Indonesia, staggering progress. So that inevitably made one wonder whether there wasn’t more to it than the so-called crony capitalism story we heard. And that’s when I began to realise that the banking sector we had created is fundamentally unstable, that cross-border capital flows can be destabilising and link to big global macroeconomic imbalances, which we saw then can generate enormous instability and crises. And I began to be really concerned that something big was going to happen, already in the early 2000s, with the huge global imbalances that were then emerging. But what ultimately happened was much bigger than I imagined.

News clip
Hello and welcome. Thousands of Northern Rock savers have queued for hours at branches to empty their accounts. Many more have withdrawn cash via the internet, despite reassurances from the bank . . . 

Jonathan Derbyshire
So this book, as you discussed at the beginning of this conversation, is about the crisis of democratic capitalism, about this highly productive symbiosis of market economy and liberal democracy. What role did then the global financial crisis of 2007-09 and the ensuing Great Recession play in shaking your confidence in the ability of that tandem to endure?

Martin Wolf
I think that I started by concluding that clearly we had to bring the financial sector under some sort of control. The financial crisis was the biggest financial crisis that the western countries experienced since the early ‘30s. It required a comprehensive bailout of the entire financial sector by the state, and it still caused a huge recession. Not, thank God, the Great Depression. But I think the description of it as a Great Recession was completely reasonable. Furthermore, it became obvious that the recovery was going to be very slow, as indeed it proved to be. But in 2016, everything was crystallised on the political ramifications with, of course, the success of Donald Trump in obtaining the nomination for the Republican party and then the presidency. And here, the Brexit vote, both of which I concluded, indicated a profound loss of confidence in very important parts of our population, in the establishment, in the conventional ways of running things, in the people who had conventionally run things. And it was pretty obvious that Trump and Johnson were playing a pretty traditional populist card, and people around them were combining this with pretty clearly anti-pluralist attitudes, much more so, I think, in America than in Britain. Thank heavens for those of us who are British. But so it was obvious, so something was happening politically, which was revolutionary. I mean, something I hadn’t seen in my life. And so this forced me to ask, well, I know that something’s gone wrong in the economy, but what’s going on in our politics? And that’s the subject of this book.

Jonathan Derbyshire
You mentioned the bank bailouts earlier. Now, clearly, the government response to the financial crisis worked on its own terms, narrowly construed. But did those bailouts prepare the ground for the political insurgency you’ve just been describing? Did they hope to discredit market capitalism in the eyes of voters in the developed world?

Martin Wolf
I argue that there’s a big debate on the, what has caused this breakdown. And it’s complicated because there’s obviously a complicated interaction of economic and cultural and social changes at work, and they’re very deep. The detachment of people from traditional political loyalties, the transformation of the media, all these are, clearly must be important. But I argue that we have to ask ourselves: what happened by 2016? And I suggest that any crucial factor, and I think this is consistent with a huge amount of evidence on the historical impact of financial crises on politics, is that three things come together. We have the crisis itself. We have this immense government rescue of the offending institutions and often the offending people who get off scot-free, as it were, while millions of others lost homes, jobs, there was a huge spike in unemployment. And then, as it were, to add insult to injury, there was a massive fiscal squeeze which led to significant slowdown in growth and a sense of being abandoned. This led them to look for outsiders and as happened again in the ‘20s and ‘30s, the outsiders they looked for were actually people who gave the oldest of stories, in a sense, a nationalist, tribalist one in which they were told that this is happening to them because there are traitors around who are ignoring their virtues and using all their money to benefit the unworthy. And that sort of rhetoric, you can see that in the Tea Party, which then moved on to Donald Trump. You can see it in this idea here that it’s all because foreigners are running our economy, the EU. You’ve got an enemy to identify. This can be linked with foreigners here. The anti-immigrant theme is very important in both countries. And then you have a genuinely powerful populist movement which allows you to blame somebody.

News clip
Look, whichever way you cut this, immigration is the number one issue in British politics. It has been for some years. People are very upset. They’re very unhappy. They’re seeing the impact on local schools. They’re seeing the impact on GP services. In my mind, this is the issue that will decide . . . 

Jonathan Derbyshire
Will that fiscal squeeze that you just alluded to and the post-crisis fiscal squeeze in the 2010s come to be seen as a major historical error?

Martin Wolf
I believe it will be. I thought it was a huge error at the time. I don’t think it was necessary because when you have a huge financial crisis, the private sector always cuts back spending and that’s for two reasons. Demand is weak, so there’s no reason to invest. And the credit system is weak and they’re not gonna lend. So what you tend to get is what economists would call a financial surplus in the private sector. So the government has to run the offsetting deficits. Now, in some cases, you’ve got a very, very strong trade sector. You can run the corresponding deficits abroad by running a huge current account surplus. But the world as a whole can’t do this. And the US and UK were completely unable to do so. So they were not gonna run huge surpluses. So the offset to the private sector surpluses had to be government deficits. By reducing them, it was inevitable that the economy would be weak for a long time. There was an attempt to offset this by ultra-loose monetary policy. I think it was the only alternative. I believe that created problems of its own. Above all, it took a very long time to work because in the famous phrase, it’s like pushing on a string. You can’t easily get people to borrow, even with very low interest rates when the economy is as weak as it was in the early years of the crisis. So the result is the recovery was much weaker than it needed to be. That led to prolonged excess capacity and very weak investment. And in the case of the UK in particular, investors really never fully recovered from the crisis and we’re still suffering the consequences. And I do think that the fiscal squeeze, the deterioration of local authority services, the weakness of the recovery together by 2015-2016, made people very happy to use the referendum here of Brexit as a way of just pummelling the establishment because they were just fed up with it.

Jonathan Derbyshire
Yes. So let’s talk about the political corollary to those failures of macroeconomic policy. Do you think it’s coincidence that the US and the UK in particular experienced especially virulent strains of the populist bacillus?

Martin Wolf
I don’t think so. And the obvious question is why they did. And my hypothesis is that what they really shared was this enormous reliance on and lionisation of the financial sector, and it let them down. I think that discredited, if you like, the traditional centre-right, somebody like Romney, going back to Reagan or Cameron and Osborne in a way where despite somewhat different rhetoric were basically saying, you know, we have free markets, liberal economy, low taxes and a deregulated system and this will bring us all great benefit. I mean, that’s been the basic logic since the early 1980s. After the financial crisis and its aftermath, that sort of view was more difficult to sell. Now, of course, many of the Brexiters did have that view, but it’s not what was emphasised in any way by the campaign. What was emphasised really by the campaign above all was immigration and the overweening intervention in our national life of the EU. And most people would agree that a decisive moment in the referendum campaign towards the end was when it was argued that you would suddenly be flooded by workers coming from Turkey, that not Singapore on Thames is what will get the workers out. And similarly, it’s pretty clear if you actually look at Trumpian rhetoric. In the election campaign, what he most focused on was crime, immigration, not what he actually did was the need to dramatically slash taxes for corporations and the relatively well off. So I think that form of populism turned out to be the solution, but it’s also a very dangerous solution for the centre-right parties to the unpopularity that had been created by both the financial crisis and its aftermath. It should be noted, however, that in America the authority was also, of course, associated to some significant degree, not by choice so much with the Obama administration, and that somewhat discredited the centre-left. And it is worth noting that in Britain, the centre-left government of Tony Blair and Gordon Brown had also identified very, very strongly with the pre-crisis way of doing things that made it far more difficult for them to disown what was being done by people with apparently rather similar views.

[MUSIC PLAYING]

Jonathan Derbyshire
You write in the book, and I’m quoting you, “economics provides the principal rationale for human co-operation. Politics provides the framework within which that co-operation works.” Now, one aspect of the long crisis that the book describes is what one might call the evacuation of politics. To what extent do technocratic bodies like central banks or multilateral institutions like the IMF bear some of the responsibility for the popular disenchantment we’ve been discussing? One thinks, for example, of the role played by the so-called troika, the IMF, the ECB and the European Commission in the Greek sovereign debt crisis.

Martin Wolf
Well, that’s a very big and complicated issue, which I discuss in many different ways. And one of them is what is called undemocratic liberalism. So this is part of the balance between democracy and liberalism. That’s one balance. And the other balance is between the popular will and the technocrats. So how does one make this balance work?

So on the former, it’s clear that to run a democratic society in modern times, we have the most complex and sophisticated societies by far the world has ever known. You need an immense amount of technocratic expertise in building things, in running hospitals, in regulating dangerous products and all the rest of it. We need a great deal of technocratic expertise. One of the most recent examples is the vaccination programme in the case of Covid. And those institutions of governance, and this must also include the judiciary and all the other restraining systems we have, are necessary conditions not only for a civilised life. They’re also actually even necessary for democracy, because democracy isn’t just a free-for-all. It’s very much an organised free-for-all in which there are rules that you have to obey. Democracy can’t be unconstrained if it is, it very swiftly becomes unbridled majoritarianism. There have to be all sorts of constraints and many of these are run by technocratic bodies, just as the economy is constrained by technocratic bodies. So in some ways the people are going to feel that these various institutions, law election officers and all the bureaucracy we have of stopping their politicians from doing what they want, what they, the people, want. It’s a very simple thing to see.

I think when things go reasonably well and people are reasonably content, they can live with this because they recognise that they don’t want to run everything in their society. But when things are not going well, it’s very easy and attractive to listen to somebody who says, look, all these various institutions and the EU is a paradigmatic example of this because it’s international are stopping us from doing what we want to do and what we obviously need to do. These constraints are intolerable, they’re undemocratic, we must overthrow them. And instead of that, you should trust me. Give me your votes and the power that is in your hands and I will fix all this. And that extreme version of the majoritarian logic, it’s democratic at the beginning but once all this constraining institutions are subverted, the judges are all chosen by the political leader. There’s not much left of democracy either. Once the technocratic elite and the politicians associated with them are seen to have failed in a very prominent, obvious way, or being even slaves to the wrong people, then you have the risk of a very different form of democratic politics.

Now in the EU, which you referred to, this problem is even greater because it’s a consciously supranational project. The supranational politics are not very well developed. They take mostly the form of bureaucratic processes or negotiations in closed rooms by government officials who then return with a fait accompli. The logic of this is if countries have unbridled democratic sovereignty, as of course our Brexiters wanted, they won’t be able to co-operate as deeply with other countries, and what other countries do is incredibly important to them. So they must have some way of influencing that. All these are tensions which can be managed just as long as things are going relatively well. But once they are not, they can’t. The eurozone crisis demonstrated this very clearly because some of the countries basically ceased to be sovereign because they ran out of money. And that meant other sovereigns through the EU essentially told them what to do. And of course, from the point of view of the countries suffering from this, these felt like — and because it was — a massive violation of their sovereignty and this is just part of the complex dilemma of life, because you can’t have purely national sovereignty in a complex, interconnected world. But it did look like undemocratic liberalism.

News clip
There’s no doubt that what we’ve created is a monster. We’ve created a European Union, which is deeply contemptuous of democratic process. This is the reason why I had in the end to resign and not pursue what I considered to be more than the policies . . . 

[MUSIC PLAYING]

Jonathan Derbyshire
I’d like to read you some stirring words that you uttered in 2019, Martin, when you received the Gerald Loeb Lifetime Achievement Award for business journalism, and I’m quoting you: “The role of the Fourth Estate is, in my view, to serve the great causes of individual liberty, the freedom of opinion and the primacy of truth. I’m proud to have been one of its servants.” So how much of what we have seen over the past half decade and what we’ve been discussing is due to a failure of the modern global media of our trade to act as servants of truth, liberty and good citizenship?

Martin Wolf
First of all, I think that’s a really good question and I don’t know the answer. I think it’s one of the most debated issues, how far the media themselves are the cause of our suffering. And then there’s a more specific point, how far the social media specifically and the way they operate, by using algorithms essentially to generate clicks, regardless of the truth of what’s being clicked on, how far that is causing the problem. And I think there is no convincing empirical evidence that this is the cause. ‘Cause the trouble is, there are so many other possible causes. I argue in my book that since not dissimilar things have happened in other times, it’s not easy to see that the new media are decisive. I think it’s probably true that the changes in the US media, which followed on the obliteration of the fairness rule as it was called, a requirement to be objective in the 1980s might have been significant in the US and generated new forms of media, which were extraordinarily irresponsible.

News clip
Good evening and welcome to Tucker Carlson tonight. Thank you for watching. We appreciate it. In case you haven’t noticed, it’s hard to trust anything you hear right now. As of tonight, tens of millions of Americans suspect that this election was stolen from them.

Martin Wolf
But we also have had, of course, a tabloid press operating on essentially the newspaper equivalent of clicks, get people excited by what angers them. And cumulatively, I would suspect that all these endless, mostly fake stories about the EU here, for example, will have changed people’s opinions. Now it comes back to a core issue. If you have a free press, it’s going to find that some of the opportunities that are profitable do consist of peddling fiction and making people very angry and worked up in the process. I don’t feel at the moment there’s anything one can do about this, but it does seem to me that it makes it very, very difficult for democratic politics to operate in a reasonably sensible way.

Jonathan Derbyshire
Is there a risk that democratic capitalism, as you conceive it, may just prove to have been a temporary blip in human history?

Martin Wolf
I think that’s a very plausible view. But I think then a lot more of our society might prove temporary. I mean, it is crucial to note that 200 years ago there were no democracies anywhere, and no one in the world was really thinking there was anything sensible about democracy. The general view is that democracy being tried occasionally in the past. It never lasted for very long. Sooner or later it went to ridiculous success or ended up in a sort of civil war, and it was replaced by either an invader or a strongman. I mean, the Roman empire replaced the Roman Republic. They just didn’t really work. In any case, it was impossible to run them in large, complicated, diverse societies. Empires or monarchies worked far better, and everybody would have taken that for granted. And it was very clear the founding fathers of the United States were very doubtful about the ability of any form of electoral system to function in the long run. And they put around many hedges designed to prevent the excesses of majoritarianism. So all this is consistent with the view that it’s very fragile. In smaller countries, more homogeneous countries, it seems to be more stable. But in really big and complex societies like the United States, one the differences among the people become big enough and the sense of social solidarity diminishes enough. It might be really difficult to sustain the unity which must underlie the differences, the sense that, yes, we’ve been defeated by the other party, but that’s OK because they’re also part of our democratic republic. And so they’re perfectly legitimate people. And we’ll have our own chance next time. If you lose that, you feel that when you lose an election, it’s the end of the world. You cannot lose ultimately and democracy will falter. And I think that sort of attitude is at least in the US, and of course, it’s been so in many other countries around the world, in Hungary or Turkey now, or possibly even in India, then democracy finds it very difficult to survive.

Jonathan Derbyshire
Martin Wolf, thank you very much. Now, I’m gonna pass the baton over to you because next week you will be discussing this question of the decline of democracy in the first of your three interviews.

Martin Wolf
That’s right. I’ll be speaking to Larry Diamond. He’s, I think, one of the world’s leading scholars of democracy. He has been an important source of ideas for me, and particularly because he came up with the concept of a global democratic recession in 2006. And things are certainly no better now than they were 17 years ago. But that’s for next week’s episode. Join me then.

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Jonathan Derbyshire
This first episode of Saving Democratic Capitalism was presented by me, Jonathan Derbyshire, and produced by Laurence Knight. Manuela Saragosa is the executive producer and Breen Turner, the sound engineer. The FT’s global head of audio is Cheryl Brumley. Next week’s episode will be published this Saturday, the 3rd of June.

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