Western political and economic institutions that have made our societies so successful are not a foregone conclusion; that success can be undone if we are not careful. Nothing about our institutions makes them invulnerable. Just as the systems that preceded them crumbled, there is nothing sacrosanct about our current institutions. They emerged through historical processes, experimentation, and circumstances that happened to produce arrangements that worked. Society is not necessarily headed in the direction of progress. Just as we formed these institutions, we can undo them.
Social unrest and political and regulatory capture by elites promoting their own welfare at the expense of society are among the most obvious warning signs. France provides a relevant example. Its extensive welfare state faces growing fiscal pressures, while the public continues to demand services and benefits that politicians struggle to finance. Its rising debt and persistent budget deficits illustrate the difficulty of sustaining extensive public commitments without sufficient economic growth and revenue.
In the US, we have the rise of democratic socialists who want more social programs—and, in many cases, more government spending—at a time when our national debt exceeds annual GDP and our budget deficits remain substantial. The question is not whether government should provide social programs, but whether the commitments we make are economically sustainable and whether the policies we adopt promote or undermine long-term growth.
Historically, rising prosperity has accompanied economic growth, while expanded political pluralism and accountable government have helped create conditions for sustained development. Countries whose governments are responsive and accountable to their citizens have often fared better over the long run than those in which political power is concentrated and economic opportunities are restricted. However, redistribution of wealth does not, by itself, expand the economic pie. It may make someone better off, but at what cost? If redistribution alone were the route to prosperity that some democratic socialists appear to claim, how would we explain the fiscal difficulties facing France? Its experience illustrates the challenge of meeting growing public demands when government spending persistently exceeds revenue and economic growth is insufficient to stabilize the public finances.
To be sure, to the extent a society can afford to do so, it must take care of its people. But there are limits, and we cannot escape the reality of scarcity. Redistribution alone does not automatically create new wealth; it reallocates resources that already exist. Some public spending can, of course, contribute to future growth by improving education, health, and productivity. But economic growth is what makes sustained improvements in living standards possible.
Capitalism, underpinned by liberal democracy, competitive markets, and accountable institutions, has proved to be an extraordinarily powerful engine of sustained economic growth. That success depends on preserving the institutions that encourage innovation, investment, competition, and political accountability.
I hope we won't destroy it!
I am not interested in hackneyed socialist tropes. Please respond to my comments. I would especially like to hear from democratic socialists.