 "Poor standard of living makes democracy difficult to maintain: Martin Wolf")
Martin Wolf, chief economics commentator at the Financial Times, London spoke in great depth regarding the factors that can influence the rise and decline of democracy in countries. During the Business Standard Manthan event, Wolf engaged in a conversation with Shailesh Dobhal, editor of Business Standard, shedding light on his book titled "The Crisis of Democratic Capitalism," released in February 2023. Addressing the audience, Wolf stated, "if people cannot gain a sufficient standard of living, a peaceful and democratic order becomes difficult to maintain."
Wolf commenced writing the book when Donald Trump assumed the presidency of the United States in 2016. Quoting Aristotle, Wolf emphasised the significance of a stable, contented middle class in a democracy. He explained that according to Aristotle, the best partnership in the state operates through the middle class, which is crucial for maintaining a stable democracy in the long run.
Wolf's motivation to write the book stemmed from personal history, with numerous relatives perishing in the Holocaust. He highlighted the economic failures of the early 20th century, such as hyperinflation and the Great Depression, as contributing factors to the collapse of civilisation in Europe. Wolf cautioned against assuming the stability of liberal democracy, asserting that a peaceful and democratic order becomes challenging to uphold when people cannot attain a sufficient standard of living.
Discussing the phenomenon of democratic recession, Wolf highlighted the foundational principles of liberal democracy, including individual civil rights, the rule of law, and respect for election outcomes. He condemned attempts by heads of state to subvert elections, citing Trump's actions before and after the 2021 Presidential elections as treasonous to the political order. Wolf expressed concern over the erosion of democratic norms and the loyalty Trump commands within his party, potentially paving the way for his return to power.
Addressing the decline in political freedom observed worldwide, Wolf raised questions about the future of liberal democracy. He noted the inclusion of the US and India in the list of countries experiencing a decline in political freedom, as identified by Freedom House.
Wolf traced the origins of democratic capitalism, highlighting its emergence from a historical context where power belonged to the wealthiest segments of society. He highlighted the "marriage" between a liberal economy and a democratic polity, noting that while market capitalism and democracy are complementary in rejecting hereditary status and advocating for citizen empowerment, tensions inevitably arise due to their differing nature, as a sense of shared citizenship may fray if the economy "fails to serve the interest of the majority".
Wolf also delved into the challenges faced by high-income democracies, citing fear of downward mobility, status anxiety, and rising inequality as contributing factors to cynicism among the working class. He pointed to a period of deindustrialisation, weak growth, and economic crises as underlying issues exacerbating discontent within these democracies.