Liberal democracy seemed invincible, triumphing over the forces of fascism and communism. Two decades later, this supremacy is seriously challenged. Information dynamics in the technological age and geopolitical alliances threaten the liberal democracy of the 21st century. Will we move to communism in the coming years?
About the triumph of liberal democracy
Liberal democracy triumphed in the 20th century, fascism and communism collapsed, and by the end of the century the United States and its democratic allies in Asia and Europe were on the rise, both economically and militarily.
Even China, which remained an autocracy, liberalized its economy and parts of its society during this period. Even those scholars who refused to accept Francis Fukuyama’s “end of history” were generally inclined to argue that capitalism and/or liberal democracy promoted peace, happiness and prosperity.
Two decades later, this idea is deeply contested.
The tide of democratization and social liberalization has turned.
Meanwhile, China, the rising superpower of the early 21st century, has made a comeback an interventionist economy and a more totalitarian society under Xi Jinping.
Chinese rival
No doubt about it Chinese cities are much cleaner and safer than San Francisco or New York.
During this time, China can produce electric vehicles, batteries and computer chips in abundance, while America has yet to show that it can do the same.
China can provide rich housing for its population (sometimes too much) while America does facing a chronic housing shortage.
China’s power is not limited to manufacturing either: TikTok is so well-designed and addictive that it has surpassed US short video services in their home market.
And despite the difficulties of the United States, the situation of their liberal democratic allies is even worse.
Meanwhile, China is rallying a strong network of allies – Russia, Iran and North Korea – putting an end to the idea that autocracies cannot work together and creating a coalition that could already outmatch the West militarily.
Toward the Export of Chinese Communism
Will the Chinese model win?
Can universal surveillance, control of speech, suppression of religion and minorities, and command and control of the economy really be the keys to national power and stability in the world?
How could this be true when the same things failed so completely in the 20th century when fascism and communism collapsed?
Why did the market economy win over communism?
Hayek he had a theory that explained why capitalist economies did better than managed economies.
His theory focused on the aggregation of information. The function of the economy, as he understands it, is basically to give people as much of what they want as possible given limited resources.
Et people themselves have much more information about what they want and how to use productive resources efficiently than a central planner.
The market function according to Hayek is aggregate these small pieces of scattered useful knowledge to better inform manufacturing decisions.
According to Hayek, markets achieve this through prices. Prices are information.
If broccoli is expensive and cauliflower is cheap, that tells farmers they should produce more broccoli and less cauliflower. And so on. In a planned economy, Ill-informed central planners could mistakenly decide that cauliflower is perfectly fine and we should produce more of it.
Tesla or BYD?
Let’s compare China’s flagship EV, BYD, with America’s flagship, Tesla.
Both are approx equivalent in terms of turnover and are widely regarded as two of the best manufacturing companies in the world.
But the financial contribution required for their construction was very different. The growth of Tesla required an extraordinary effort by Elon Musk, the country’s most flamboyant business star when it comes to sales.
Although the company’s Model 3 eventually became a runaway success, the capital cost of producing the vehicle was the company almost went bankrupt.
Musk had to engage in constant public fundraising, spends a lot of time on Twitter.
He had to show great creativity when it came to financial engineering and went so far as to cannibalize some of his other activities. And it’s not even clear that this effort would have been successful without moving much of Tesla’s production to China.
BYD, on the other hand, never had to scramble for funding. Although she went through a series of very difficult times, she continued to benefit from itgenerous and often subsidized financing from China’s state-controlled banks.
Today it has equaled Tesla in sales and it can be said that in technology as well.
The end of liberal democracy
We can outline a general theory the way in which liberal democracy may be far less suitable for the 21st century than it was for the 20th century.
WITH advances in information technology, the cost of gathering information may have fallen to such a low level that the benefits of liberal institutions— markets, elections and freedom of expression – can be mitigated.
So it may be that while China is making cars, Americans are arguing about transgender athletes.
While China manufactures microchips, Americans spend their time exposing fake economic statistics.
While China builds submarines, Americans spend their time in high frequency trading.
While China builds trains, Americans raise money for elections.
And so on. Meanwhile, thanks to the American-invented Internet, China’s leaders can make up their own minds, still inferior but far less evil than their Maoist and Stalinist predecessors, products to be created, policies to be implemented and ideas to be embraced.
Goodbye Liberty, make way for Communism
If liberal democracy is simply not the most efficient way to organize society in an age of cheap information, it simply means that the individual freedoms we have come to know and love are disappearing.
Sometimes one system simply replaces another after a major technological change— agriculture led primarily to the demise of hunter-gatherer groups, industrialization to the end of monarchiesAnd so on.
If the information age has overtaken liberalism, we will be living in very dark times and not much can be done about it.
We should continue to fight for liberal democracy and hope that technology and human nature can continue to triumph. Or invent a new system, new non-democratic but liberal institutions.
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Every day I try to enrich my knowledge about this revolution that will allow humanity to advance in the conquest of freedom.
