View all newsletters
Have the short, sharp Spear's newsletter delivered to your inbox each week
  1. Wealth
February 13, 2023

Book review: The Crisis of Democratic Capitalism

By Spear's

Martin Wolf’s The Crisis of Democratic Capitalism covers a lot of ground but ultimately fails to recognise viewpoints that differ from the author’s own, says Sam Ashworth-Hayes

This is a book motivated by fear, first and foremost. Wolf says as much in his opening: he exists because prosperous and stable societies collapsed with startling speed, sending his parents fleeing to England for safety. This history, in turn, informs his worldview; those who take ‘peace, stability, or freedom for granted’ are ‘fools’. And after a brief window where liberal democracy stood alone and triumphant, the wolf is again at the door.

The core argument of The Crisis of Democratic Capitalism is simple: the synthesis of liberal democracy and capitalism is fragile, and facing a period of great danger. Long-term economic trends – labour replacing technology, declining productivity growth, globalisation, demography and what Wolf refers to as ‘rentier capitalism’ – have devastated the lower middle class.

Good blue-collar jobs have gone, never to return; mortality rates for those rose as a function of ‘deaths of despair’; rising inequality saw the very richest get richer even while the middle class was hollowed out. In these circumstances, it is hardly surprising that increasingly large shares of the population believe that a system which has failed to deliver the prosperity it promises is not fit to continue.

The best of a bad bunch

Unsurprising, but still deeply misguided; to borrow from Churchill, market democracy is the worst form of government apart from everything else we’ve tried. Wolf’s attempt to save democracy and capitalism from their own unique excesses forms the spine of his book.

Over 386 pages he covers a variety of topics: the dual histories of capitalism and democracy, the tensions between them, their symbiotic relationship, a brief history of the modern economy and its travails, the case against culture as the cause of populism, the case against populism directly, suggestions for revitalising capitalism, revitalising democracy, and a brief survey of world government dynamics. This is, needless to say, a lot of ground, and by necessity much of the discussion is quite cursory.

This is something of a disappointment, because the book wants to sit on the same sort of shelf as Sapiens, Why Nations Fail or Guns, Germs, and Steel – books based around a big idea or insight, which synthesise academic literature to produce a compelling case in its favour.

Instead, it feels more like a very extended op-ed. Papers and books are referenced to build a case, but rather less so to criticise it. This style of writing is very compelling in 400 words but slightly less so over 400 pages.

Content from our partners
Why investors should consider investing in nature
HSBC Global Private Banking: Revisiting your wealth plan as uncertainty abounds
Proposed non-dom changes put HNW global mobility in the spotlight

Too much, and too shallow

It’s also frustrating, because there are occasional glimpses of a more interesting book – or, more realistically, books – trying to get out. A little under one third is devoted to Wolf’s preferred solutions – wouldn’t it have been better to cut the section on prehistoric human governance in order to make more room for them? It might only be six pages long, but it speaks to the larger problem that the book could usefully have been two: one on how democracy and markets function together, and one devoted specifically to the concerns of the here and now.

Or, rather, the there and then, because another issue with this book is that it is six years late. As Wolf notes in his acknowledgements, he began writing it in 2016 and finished in 2022. The central problem of history, as they say, is that it does tend to keep on happening, and it is difficult not to feel a little sorry for the author chained to his desk, constantly revising his thesis to account for the latest turn in America or the most recent global crisis. Sisyphus, one feels, got off comparatively lightly.

The genesis of the book in that fevered year is clear in the animus against certain individuals and events. One segment remarks of the Republican decision to nominate Donald Trump – a ‘would-be tyrant’ – in 2016 that ‘history does not repeat, but it rhymes’. The history with which this decision is supposed to rhyme is the rise of Adolf Hitler – possibly a little hyperbolic.

A snapshot in time

With this said, it would be a mistake to write this book off as a time capsule from 2016. Wolf has poured a great deal of thought and research into making his case, and many of the points he makes are up to date. But it does mean that in places the text reads a little oddly.

Many references are made to the twin dangers of Brexit and Trump, and then as a corollary Boris Johnson’s role as a sort of Trump-lite. But the reader – a few months in the future – knows that Trumpist candidates were trounced in the 2022 midterms and Boris was booted out over the summer. That the dangers of Trump are posed in relation to 2024 feels like a patch applied to an older argument.

Similarly, some arguments buttressed by references to general conclusions from papers and books start to look a little less structurally sound once you pull at the threads.

In one section, Wolf lists Sweden as one of the countries with no major backlash to immigration. Some 40 pages later, he devotes a segment to the rise of the right-wing Swedish Democrats. Similarly, at one point the case is made that immigration wasn’t really politically salient in the UK until after the financial crisis. Why ‘did it boil up again in the Brexit vote?’, Wolf asks. There is a simple answer to this: it didn’t. The rise in the political salience of immigration essentially just tracks the rise in net migration to record levels.

Unpopular populism?

But perhaps the biggest issue – and an odd one for a book so broad in its scope – is that there is something missing. While the core argument discusses the danger of populists and populism, very little room is given to these people – and more importantly, their voters – in their own words. They are viewed instead through the prism of Wolf’s own views, or at best through the second-hand analysis of other academics and writers from Wolf’s side of the aisle.

This is a missed opportunity. If the thrust of your thesis is that economic anxiety acts as a catalyst, bringing the latent toxicity of culturally conservative populism bubbling back to the surface, shouldn’t you check in with your opponents that that is, actually, what motivates them?

At times, Wolf finds himself caught between Fukuyama and his discontents; democracy is not inevitable, but there is also no stable alternative to it. Any project which proposes to replace the elite he believes has failed is, itself, doomed to fall into the embrace of populism. Economic growth and revitalised citizenship – civic nationalism – represent our surest guards against this trap. But what if cultural factors do, in fact, matter?

My solution to this is simple: I can recommend Wolf’s book as a summary of what a certain type of centrist thinks of the world, and how to fix it. But, much as a meal needs wine, it needs a pairing. My recommendation is to find writing from the other side, to see if Wolf’s adversaries match the description he allocates them. 

Order your copy of The Spear’s 500 2023 here.

More from Spear’s:

What’s next for populism?

Select and enter your email address The short, sharp email newsletter from Spear’s
  • Business owner/co-owner
  • CEO
  • COO
  • CFO
  • CTO
  • Chairperson
  • Non-Exec Director
  • Other C-Suite
  • Managing Director
  • President/Partner
  • Senior Executive/SVP or Corporate VP or equivalent
  • Director or equivalent
  • Group or Senior Manager
  • Head of Department/Function
  • Manager
  • Non-manager
  • Retired
  • Other
Visit our privacy policy for more information about our services, how Progressive Media Investments may use, process and share your personal data, including information on your rights in respect of your personal data and how you can unsubscribe from future marketing communications.
Thank you

Thanks for subscribing.

Websites in our network