In conversation with Francis Fukuyama

“The real problematic legacy of neoliberalism was a denigration and delegitimisation of the state”

Andy Haldane speaks to political theorist Francis Fukuyama

@FukuyamaFrancis

Andy Haldane: I really enjoyed your latest book. Was one of your intentions, given the world isn’t overflowing with moderation, to set out, in non-polemic terms, the case for moderation?

Francis Fukuyama: Absolutely. The underlying argument is that you have a liberal tradition that we are steeped in and have taken for granted, and that those principles need to be defended and restated. Those principles can be abused by being taken to extremes and there are examples of that on the right and the left. In the case of the right, with the rise of so-called neoliberalism in the 1980s and 1990s, you had a group of economists and politicians – Thatcher and Reagan and the like – who took a good idea, that modern economies need to be based on private property and free markets, to extremes in which the role of the state was downsized and denigrated. This led to some real instability and a great growth of inequality in those countries that were at the forefront of neoliberalism: the US and Britain.

On the left, there was a similar expansion of the idea of autonomy. Autonomy is the basic moral justification for liberal society. As individuals, we all want to be able to control our lives and be able to make basic choices, but that doesn’t mean that unlimited autonomy is better than a more moderate approach. We need rules in our societies that allow us to coordinate action and create communities to provide for collective action and the collective interest.

Haldane: To what extent do you think certain flavours of the economics profession were responsible for this sort of contortion of liberalism?

Fukuyama: Professional economists bear some responsibility in giving a deeper justification to policies that were much more problematic than they pretended. Part of it was justified, because all modern economies by the 1970s had become overregulated and unduly rigid and needed to be made more flexible. But the Chicago School-types led by Milton Friedman gave a highbrow justification for what became fairly extreme policies and practice. Milton Friedman believed that a firm’s primary duty had to be to its shareholders to maximise profits and that it shouldn’t concern itself with any kinds of other social goods. This gave licence to thousands of business school graduates to focus very ruthlessly on bottom lines and not think about wider social consequences.

This critique of neoliberalism has been with us for quite a while and, in terms of corporate governance and certain types of policy decisions, that form of excess is the easiest to reverse. Joe Biden has done that in spades in the US, where the government has reinserted itself into supporting individuals. It really started with the pandemic but has been extended since. The deeper problems, though, are with modern states, because the real problematic legacy of neoliberalism was a denigration and delegitimisation of the state.

Haldane: Yet, in the past 15 years, the state in pretty much every country, certainly all the Western governments, have had to step up in enormous scale and scope, first for the global financial crisis and latterly with the pandemic. Will this turn the tide in favour of the state or is this another example of states having become too big and too powerful?

Fukuyama: It varies by country. The United States, unlike most European countries, including Britain, has a very deep political culture that’s very anti-statist. We have a libertarian fringe, which really thinks we can get along pretty much without a state. You could say, quantitatively, the state is back in terms of rates of taxation and government spending and so forth, but I’m not sure that in the United States, at least, the quality issue has been addressed. That’s not true in Europe where there is a much deeper, more bureaucratic tradition and respect for bureaucracy. For example, in the United States, there is a shocking statistic that the number of federal government employees under the age of 30 is something like less than 6% of the workforce. If you’re talking about a government that is trying to stay on top of very fast-moving technology – such as crypto currency – you’re not going to do it with a bunch of 60-year-olds.

Haldane: I’m struck by the fact that, in general, people don’t like or trust bankers, but they quite like their local bank manager. They don’t necessarily like politicians, but they might quite like their local politician. The same can be said of big business vs local community businesses. Is this less about the state, per se, and more about the degree of decentralisation or devolution of powers?

Fukuyama: That’s absolutely true. Just in terms of basic accountability it’s much easier to hold a local government accountable where the scale is smaller, the effects of state action are more visible, and the mechanisms of accountability are much more direct. If you consider the national government in any modern democracy, they are gigantic bureaucracies and you can only affect them through votes that come in multiple year intervals, and the signals that voters send by voting a particular way are often just completely lost in all the extraneous noise of election campaigns. Federalism or devolution, or subsidiarity, is critical but is made much more complicated by some policy domains – including central banking – needing to be maintained on a more national level.

Haldane: In the UK there is not a great ideological war being waged between the main parties but debates about degree; relatively small differences around the size and role of the state, the private sector and tax levels and so on. My sense is that is much less true in the US?

Fukuyama: Back in 2016, a lot of pundits were saying that there was this populist wave represented both by the Brexit vote and by the election of Trump. I would much rather trade Britain’s position for ours because of the basic moderation of British politics. Boris Johnson was forced from the prime ministership, basically, for holding parties and then lying. Donald Trump has been lying non-stop sin important things, like who won the 2020 election, and yet he’s still a major contender and may come back as president in 2024. There seems to be a normative constraint that still exists in your politics that has just gone missing in the United States.

Some of it has to do with our racial history that we thought we had overcome with Obama’s election, but which is clearly still very much with us. Religion has always been a deeper trend in the United States, with our evangelical fringe, than in Britain. Some of the problems I discuss are uniquely American – and will be more destructive because of its size and power – but there are big populist movements in other parts of Europe, such as Hungary and Poland, where there is a similar divide between more rural conservative people and liberals that live in big cities who have access to the global economy, better education and the like.

Haldane: If people feel that their voices haven’t been listened to, that may lead them to gravitate towards populist leaders that they think speak on their behalf. Are there lasting lessons for the models, the institutions, of democracy that we have in place, including more deliberative, democratic models of various types that enfranchise a wide and representative group of the citizenry to help inform an issue?

Fukuyama: I’m not sure that simply more democratic participation is necessarily the answer. In the United States there was a whole series of reforms beginning in the 1970s to increase popular participation, and candidates of the two parties are now selected through popular primaries. This has had the very paradoxical effect of increasing polarisation because, for example, with popular primaries, rather than having the professionals in the party select candidates they think will be nationally viable, you leave it up to popular choice. But in a primary election, who votes? It’s the activists. Part of the reason that the two parties have been taken over by their activist wings, particularly the Republicans, is precisely because primaries have essentially empowered the most extreme voices within the party.

This could be restructured and bounded by institutions. There’s a movement in the US to replace our ‘first past the post’ system with some form of proportional representation that allows for the representation of more than two ideological positions. This is something that might serve to reduce the kind of extreme polarisation that we have seen and would make it much easier for a third party to get going.

Haldane: What role do you think social media has played in fostering intolerance and in stretching the boundaries of debate to their contorted extremities?

Fukuyama: Not just social media but the internet in general has had a huge impact. When the internet was privatised in the 1990s, a lot of us thought this would be great for democracy, because you had various intermediaries that were controlling access to information – governments, but also big corporations and legacy media organisations – and this would democratise access to information. But it turned out that, in most democracies, those gatekeepers actually played a very useful role in terms of certifying certain facts and creating consensus around at least a kind of empirical understanding of what was happening in the world. The internet in general has completely undermined that. If you Google a question like ‘are Covid vaccines effective?’, you’ll get thousands of websites that will claim they’re not. People who want to reach certain conclusions will find the internet a very useful tool because they’ll find a lot of people around the world who agree with them, and it fortifies these information bubbles that they live in.

The interest of the big internet platforms has always been in virality; they have a big interest in getting as many clicks and views as possible and this means that they do not promulgate reasoned, factual information. We’re in a quandary right now because we recognise that some degree of content moderation is needed but we don’t know who should do it. We don’t want governments to be the ones that decide what’s factual, but we also don’t want these big corporations to make these very complex political decisions, and there’s a lot of evidence they haven’t been making them all that well.

The ‘surprise’ about the impact of social media stems from a questionable assumption, which is that the more you learn about diverse people, the more you’ll tolerate and understand them. A lot of times the opposite happens, and tolerance actually decreases. Digital technologies permit mobilisation of people, both for good purposes but also for bad ones. It allows entire countries to live inside information bubbles in which social media is largely controlled by the state or by other powerful actors. What’s happening in China is really unprecedented, with their social credit system where initially the state assumed control over intimate details about banking and transactions but now it’s also health and other data. This has allowed them to essentially track the day-to-day movements of every single one of their citizens. This degree of information and surveillance has never been possible previously in human history.

Haldane: To what extent could the roots of this polarisation be put down to the economy not working as well as it has in the past? I’m thinking of the stasis in the real pay of the median US worker since the 1970s, which we’re now seeing elsewhere. I’m also thinking about the rises in what has been called deaths of despair, of that poverty, not simply in the pecuniary sense, but the poverty of expectations. That sense that generational progress as a social norm is coming to an end; that people are questioning the social contract and the institutions of democracies.

Fukuyama: It was an important trigger and probably a necessary condition for the kind of unhappiness expressed by working class voters all over the rich world. But it is not sufficient explanation. For example, the median income of a Trump voter in 2016 was higher than that of a Clinton voter. The people who stormed the US Capitol on 6 January were, for the most part, employed, they ran businesses, they were not desperate factory workers out of a job.

The UK’s David Goodhart captured this well in the ‘somewheres and nowheres’ dichotomy. He argues that there has been a cultural element that has to do with a lack of recognition for the kind of struggles in the perspective of people who are more culturally conservative and that this has bred a tremendous amount of resentment and added a lot to the emotional polarisation that characterises what starts out as a question of economic inequality. There are many people who are not suffering personally or economically who nonetheless are very angry.

Haldane: I am speaking to you from the UK in a week where temperatures have reached 40C [104F]. Given that climate change is the ultimate global challenge, could it be something around which we reunite, or do you think that could be another lightning rod issue over which people disagree?

Fukuyama: Again, I think this varies by country. Certainly, it’s been a very polarised issue in the United States, but in Northern Europe it’s been an area of substantial consensus. If you imagine going forward, a world in which you don’t just have 40C heat waves, but even more extreme types of events, that consensus may increase. The question that I’m wrestling with and planning to write more about is, what governance mechanisms are best for coping with both the mitigation and adaptation to climate change? My personal view is that it needs international cooperation but that the bigger obstacles to dealing with it effectively are at a nation state level. Nation states are going to be the fundamental actors and will have to agree to cooperate, rather than some larger transnational entity because I just don’t think that is a practical or normatively good idea. All countries have an interest in economic growth, that’s the fundamental driver of carbon emissions, but they also have a larger collective interest in keeping those emissions under control, and it’s a particularly acute conflict if you are a producer of fossil fuel energy. You are basically trading off long-term liabilities for short-term pain, and that’s not an easy choice for any political system to make.

There is a view that we need to move to more authoritarian government to deal with the climate emergency. That’s both empirically and normatively wrong. The world’s authoritarian states are not responding responsibly. China is building coal-fired power plants domestically, and 90% of its Belt and Road energy initiatives are based on fossil fuels. Democracies are more transparent and have some form of accountability, and so are more likely to respond to the signals that populations give out about how serious they think the problem is.

Haldane: Turning to another crisis, the war in Ukraine presents a near and present danger to democracies everywhere. In response we have seen a coming together of nation states, the Nato alliance and beyond. Is there a chance at least that some long-term good might come from that?

Fukuyama: That depends largely on the military outcome of the current conflict. If it remains stalemated in a very bloody war of attrition, then there will be increasing calls in the West to force some kind of settlement on Ukraine. This won’t solve the long-term crisis because I don’t think Russia has mounted this invasion out of insecurity. It basically wants to gobble up as much of Ukraine as possible. On the other hand, if Ukraine makes some progress in the coming months in liberating some of its territory, particularly in the south, reopen access to the Black Sea, then it’s possible that the Nato countries in Europe, in particular, can persuade their citizens to tough it out because there’s light at the end of the tunnel.

It depends on whether people think that there’s actually a way forward in terms of pushing Russia back, which is why we need to supply Ukraine with the weapons they need so that they can do this. If this doesn’t happen in the next few months then unity will dissipate, very rapidly.

Haldane: Despite all that’s happened in the 30 years since you wrote The End of History, you seem to be inherently optimistic?

Fukuyama: The only ground for optimism is by taking a very long view of things. If you look at the progress of human civilisation over the centuries, it’s never been linear. For example, the 1930s and 1970s saw big reversals in both material progress and in political and social institutions. But there has been an expanding realm of democracy and equality that has continued over the centuries, and I don’t think that process is fundamentally going to go in reverse in the long run. But I’m not a futurologist; I have no idea what’s going to happen. I can only express hopes, and some observations, about the way that history has unfolded in the past.

Political theorist Francis Fukuyama is a Senior Fellow at Stanford University’s Freeman Spogli Institute for International Studies and Director of the Susan Ford Dorsey Master’s in International Policy at Stanford. His most recent book is Liberalism and its Discontents

This article first appeared in the RSA Journal Issue 3 2022.