Martin Wolf, head of Economics at the Financial Times and considered one of the most influential economic journalists, maintains the theory that capitalism and democracy are a successful marriage but that it is going through a maturity crisis. It is the thesis that he defends in his book “The crisis of democratic capitalism”, which has just appeared in Spanish and which he details in conversation with La Vanguardia.
You were born in 1946, just after World War II, and in the book you describe yourself as a child of the catastrophe. What does it mean?
Something quite simple. My parents were both refugees from Hitler's Europe. My father was Viennese and Jewish, my mother was Dutch and Jewish. Virtually all of his relatives were murdered. And they met in London at a party. There is no universe in which my father, a Viennese intellectual and writer, and my mother, a provincial Dutch girl, could have met and I would not have been born. So my existence is entirely a product of the great catastrophe that destroyed Europe.
Have Hitler's ideas returned in today's Europe?
There are echoes of those ideas. What we are seeing is the return of nationalist, repressive, authoritarian and socially reactionary ideas. We are going through a period of great upheaval that has led many people to feel disoriented and when this happens, people become tribal. They tend to be xenophobic and authoritarian, they look for a great leader to save the nation. And in this sense, there are ideological echoes.
If democratic capitalism has been a success story for many years, why is it now in crisis?
My argument is that democracy and capitalism represent a marriage of complementary opposites. They need each other, but they are in tension. Capitalism is something like one dollar one vote and can generate enormous inequality and insecurity. What has gone wrong is that for a long period we were very complacent. Globalization, new technologies and growing inequality were accompanied by social and cultural changes that undermine people's confidence in democracy; and the financial crisis made everything much worse because it destroyed the credibility of capitalism.
Is the main reason for this crisis inequality?
It is a necessary condition, but not sufficient. There are other elements. We could have managed growing inequality well with very dynamic economies. But if you combine rising inequality with low productivity, many people feel they risk absolute decline.
You say that capitalism cannot survive in the long term without democracy and democracy cannot survive in the long term without a market economy. What do you understand by long term?
What we are seeing in China is interesting. It was successful for three decades in moving the communist system to a more market economic system. But now we see a reversal of this process, because the Communist Party and its leader decided that the capitalist system was subverting the authoritarian system. This shows that they have reached the limits of autocracy within a market system and are reinstating the authoritarian system. What I was wondering, how long is the long term? Probably 30 years.
It's a long time
It's a generation, which is not much in a human life.
Did this crisis of democratic capitalism begin with Donald Trump?
No, certainly not. It became obvious, really obvious with Trump. The important thing with Trump is that, for the first time, a politician reached the highest office in the most important democratic country and that this politician was not a Democrat. I think he symbolizes this transformation, but he is the product of a long historical change, which was already evident, for example, in the Bush administration. At a certain point, a large enough number of people decided that traditional conservatism was no longer acceptable, and they were looking for someone who embodied a different form of conservatism. And Trump catalyzed this in the United States.
What will happen to democratic capitalism if Trump is elected president again?
I think we would have a pretty terrible problem, it is an immense danger. The United States is the most important power in supporting liberal democracy and markets. People don't like to hear it, but we live in the world that America created.
Now, if the United States elects an isolationist man, indifferent to alliances, to the preservation of democracies, who is hostile to the rule of law and who has now surrounded himself with passionate ideologues, then I believe that a new Trump mandate could be a decisive disaster.
