The Contradiction at the Heart of Modern Liberal Democracy
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On today’s episode, Yanis Varoufakis, economist and the former finance minister of Greece, discusses how liberalism was opposed to democracy from the very start.
From the episode:
Andrew Keen: Where do we begin in terms of making sense of the relationship between contemporary capitalism and contemporary democracy?
Yanis Varoufakis: Not from Greece.
Let’s start from Britain, where capitalism grew most strongly and effectively at the end of the 18th century and beginning of the 19th century. I think this is a very good starting point, not only because capitalism was born in Britain and a little bit of it in the Netherlands, but also because for a very long while, defenders of the liberal order and of capitalism, from Adam Smith to John Stuart Mill to all the great thinkers that backed the capitalist enterprise, none of them were democrats. None of them believe in democracy. John Stuart Mill, lest we forget, was a great skeptic. He was a very liberal man, and he was very ahead of his times in terms of, for instance, supporting the emancipation of women and some kind of welfare state for workers. But he was very skeptical about democracy, about mob rule.
You have to realize, or to bring back to memory, that the ancient Athenian tradition, which played such a significant role in shaping the minds of liberals like John Stuart Mill, the vast majority of the ancient Athenians hated democracy. They were after democrats. Plato wrote one treaty after the next denigrating democracy. He tries to warn people of democracy, the idea of the people ruling and the majority ruling. Aristotle defined democracy as a regime where the poor control government because, by definition, the poor are in the majority. So if you have majority rule and universal suffrage, that means that the hoi polloi, the many, the man in rags or the ones without much property to their name, would be ruling.
The whole of the 19th century in Britain was typified by this distinction between liberalism on the one hand and democracy on the other, which is very strange in contemporary terms, is it not? Because today the two words go together. Liberal, democracy. In the 19th century, liberalism was juxtaposed and opposed actually to democracy. I believe this is a good place to start.
Andrew Keen: It is a wonderful place to start, particularly given that the 19th century was, to excuse the pun, the motor of industrial capitalism.
Yanis Varoufakis: Indeed. The first industrial revolution happened just before the beginning of the 19th century and the second and more significant industrial revolution happened towards the end of the 19th century. The networked firm, the vertically integrated corporation, was the result of two things. Firstly, limited responsibility and liability … and electromagnetism. Maxwell’s equations gave rise to the telegraph and to companies like Edison’s that produced everything from the power-generating factory all the way to the light bulb. All those where part and parcel of a liberal mindset that looked at democracy as a threat.
Even if you read the Federalist Papers, which were the foundation of the American Constitution, which is a remarkable document and some of it, justifiably, is considered the Bible of all the constitutions of states that can be described as the liberal and democratic, the Federalist Papers were all about restricting the many and restricting the multitudes, and creating a system of representative government and a system of checks and balances so that the many do not control the government.
My view is that whenever I hear people, especially members of the commentary at the progressive liberal press—The Guardian, The Washington Post, and The New York Times—talking about the failures of our democracy and how the people have become marginalized within our democracy, and how the majority have been turned off of modern democracy, my response to them is no, this is not a failure. This is baked into modern liberal democracy. The whole point of modern liberal democracies was to limit democracy.
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Yanis Varoufakis is a former finance minister of Greece and a cofounder of an international grassroots movement, DiEM25, that is campaigning for the revival of democracy in Europe. He is the author of the international bestseller Adults in the Room, And the Weak Suffer What They Must?, and The Global Minotaur. After teaching for many years in the United States, Great Britain, and Australia, he is currently a professor of economics at the University of Athens.
