Maybe Francis Fukuyama had it wrong at the end of the Cold War when he talked about the “end of history”.
His predictions might have been more accurate if he had taken it one step at a time and first spoken about the end of economics.
Fukuyama thought that by 1990 the Marxist idea of the end of history occurring when the contradictions in capitalism caused it to eat itself was obviously wrong. Instead, with the commies were out of the way, ideological wars would end. Liberal democracy would be the world order. The great lists of trouble spots and wars that pepper the reportage of international relations would be at an end. It would be the end of history – in the sense of history being the story of titanic struggles between ideologies, the contest of ideas, wars and power struggles.
Liberal democracy had won, he thought.
Ho-hum. Fukuyama has not been alone. Even at a national level in Australia leaders have suggested that on their patch there would be a sort of end of history – an end to the great tussle of ideas.
Remember Malcolm Fraser wanting a society where people could turn to the sports page, indeed the whole newspaper would be sport pages because that would be the only conflict left.
Remember John Howard wanting society to be “relaxed and comfortable”.
But the triumph of liberal democracy was nowhere near complete. Since 1990 we have seen the external force of fundamental Islam challenge it. And we have seen the response to that challenge by liberal democracy’s biggest citadel, the US, actually strengthen the forces of the challenge.
History goes on.
But liberal democracy’s strength has increased since 1990 despite the attacks on the World Trade Centre and the poorly conceived war on terror. Obviously, we have had the end of the economically bankrupt system of communism. Of equal importance, though, we are seeing at least the beginning of the end of economics – in the same sense that Fukuyama spoke about the end of history.
We are seeing an end to the great conflicts between schools of economics, especially between Kenysians and Friedmanites.
Events in Australia illustrate the point. It is now recognised that the path to stability and prosperity lie in not running government deficits; having an independent central bank that sets interest rates; floating the currency exchange rate; deregulating what financial markets can do but at the same time providing prudential oversight into how they do it.
This very month in Australia we will see the point. The Reserve Bank will (almost certainly) increase interest rates in defiance of the political interests of the political party that dominates the government of the day.
This has been a challenge for liberal democracies – they have to hand over the controls of key economic levers to unelected technocrats.
That they should do so is clear enough. The more democracies go down this path the fewer and shallower are recessions and depressions, if we have them at all.
They should have done it long ago, in the same way that the administration of law and justice has been handed to unelected technocrats.
Australia is more advanced than most countries in moving towards the end of economics – certainly more advanced than the US.
Indeed, this election is shows that Australia is at the point where applying economic obviousness (the end of economics) gives a political party no advantage in. You only get punished in the medium term if you don’t apply it.
The US is not quite that far along the path. It has a Federal Reserve which sets interest rates independently, as in Australia. It has a floating exchange rate, as in Australia.
But it does not have the equivalent of the Australian Prudential Regulatory Authority which monitors and reports on financial institutions without heavy-handed restrictions. This is why the US is having a sub-prime mortgage crisis and we are not.
Nor does the US have non-deficit budgeting as a core orthodoxy. Indeed, President Bush has taken the US Budget from a $240 billion surplus under Clinton to a deficit of more than $400 billion. Small wonder sensible businesspeople now see the Democrats as the party of business.
This brings us back to taking the end of history in stages, starting with the end of economics.
The core reason that the US cannot even get to stage one – the end of economics (the bedding down of the economically obvious) — is because it is engaged in ideological wars: the very thing that Fukuyama thought were behind us, such that he could declare the end of history.
George Bush’s ideological wars include wars against Iraq, drugs, gun control, high taxes, abortion, gay marriage. These have been very costly – either directly against the bottom budget line or because they have taken his eye of the things that matter.
The politics of god, guns and gays do not make for an effective administration.
Bush will leave us in January 2009. Howard most likely on November 24, but perhaps a year or so later.
Howard’s record will be superior, despite his vile policies on refugees, David Hicks, the Republic, government advertising, freedom of information and so on. Howard never became a complete prisoner of the religious right or the gun lobby, mainly because they are far weaker here. Howard’s record could have been a lot better if he had not fallen in behind Bush on Iraq, but at least he had the good sense to keep the troop levels low.
When Bush shambles off, his legacy might be a lesson for future presidents. Ideology blinds good sense. It was so blinding in Bush’s case that he could not even get the economy right which should be fairly easy these days given the expertise and economic intelligence available.
We should be grateful that in Australia, however appalling some other policies were, the Howard Government – had at least the sense to follow obvious economic policy. We should also be grateful that Australian voters are learning that economics is no longer impossible rocket science beyond reach – it is getting so obvious as to be a given in political life, so as to spell the end of economics.
But, Francis Fukuyama note, with fundamentalists everywhere (even in the White House) the end of history is a long, long, way off.
BLOB – Last week’s reference to public funding should have been $2 per vote, not 2 cents.