Liberal democracies in many ways still defer to the eighteenth century ideas in the context of well-regulated and unsophisticated markets. Central Banks still operate believing that the aggregate of the output of self-interest produce, produces an overall ‘good’ result. The “Pareto-optimal”, a state where no one can be better off without making someone else worse off.
This assumption of economic balance, does not take into account market failures, and global external issues such as global warming, plus the influences of personalities that can tilt the outcomes in their favour. The old ideas about the division of labour, do prophesy the concept of globalisation. We see global enterprise expanding and integrating markets thus increasing productivity and competitive advantage.
What these economists like Adam Smith did not consider is how that massive wealth is distributed. At the same time there are massive failures, much bigger than Smith envisioned. To some extent this can be seen in the rationalisation of the motor car industry today. There is no way here the Pareto principle works.
We, as individuals, make social choices and create market economies, so the pound/dollar effectively equals votes. Those with most purchasing power have the most power and have more influence on social and economic developments. (e.g. The NRA in the US) Governments in social democracies are also meant to be social choices, and voting is distributed equally, regardless of wealth. Democratic institutions should be the balance against economic power.
However in both the United States and the United Kingdom, we see political power built on either plain unencumbered wealth; (donations to campaigns in the US), or the (elite coterie of influence in the UK). In both these cases the influence of the ballot box is heavily in line with economic strength. Now the counterbalance of democracy is severely weakened.
This devaluing of “my vote” and the undoubted rise of inequality has led to massive frustration in political outcomes and led to the abandoning of the establishment in favour of the unorthodox populists.
There lies on the horizon alternative ideas in the place of Liberal democracy. It is idea that, if the great and the good are unencumbered by elections then they can deliver decisions that advance the social good. With few or no checks and balances however corruption is never far away. Lack of public accountability seems a fatal flaw.
That liberal democracies have to change, is a no-brainer, the radical socialist agenda seems never to work, so the future continues to swerve to the materialist right.
How to correct or change this social, political, and economic direction simultaneously seems hugely demanding. We must resist so-called benign dictatorships and extreme populists, come what may! ��)