We are living in an era of multiple crises: Covid-19; a crisis of economic disappointment; a crisis of democratic legitimacy; a crisis of the global commons; a crisis of international relations; and a crisis of global governance. We do not know how to deal with all of these. This is partly because it is hard to develop the needed ideas for reform. Yet it is far more because politics cannot deliver the necessary changes.
The Financial Times series on the new social contract brought out several dysfunctions: over-leveraging of corporations; the disappointments of western millennials; corporate tax evasion; and the low pay of many of the people on whom we have particularly depended in the Covid-19 crisis. In my own piece, I referred in addition to some of the longer-term dysfunctions, including the hollowing out of the middle class and the decline in trust in democracy, notably in the US and UK.
In 1944, two influential books were published by émigrés from Vienna. One, The Road to Serfdom, by Friedrich Hayek, argued against the incoming tide of socialism. The other, The Great Transformation, by Karl Polanyi, insisted that this tide was the inescapable result of the 19th-century free market. These books both contain truths. But, if we are to understand what is happening today, Polanyi seems much the better guide. If we wish to avoid a political breakdown, we should not seek to suppress markets, but we must surely temper their gales.