A DECADE AFTER THE GLOBAL FINANCIAL CRISIS
Sri Lanka’s polity:
The iphone was the catalyst of the smart device revolution, first introduced in the June of 2007 by the Apple’s iconic CEO, latesteve Jobs. A year later the fall of America’s fourth largest investment bank, Lehman Brothers triggered an economic meltdown of an epic proportion, making many drawing parallels to the great depression of the early 20th Century.
The Great depression of the 20th Century, was a definitive moment that shaped outcomes of global political landscape, it reversed the achievements made by liberals in the Western world, especially that of liberal internationalism and its price project the League of Nations established as a collective security arrangement to prevent the break out of a second world war. The political impact of the economic crises was so deep it cleared the way for a wave of nationalism to take over Europe, mainly in Germany and Italy. The Nazi party won 37% of the vote in the July 1932 German election, which propelled Hitler into power.
LIBERAL WORLD ORDER
The WW II that followed shaped the political economic landscape of the 20th century and created a global order with all its idiosyncrasies, manage to prevail with liberal democracy as the leading framework of ordering international and domestic politics and economies. Events of the 21st Century are seriously challenging this established political and economic order. The first assault was on the security order with 9/11 attacks of 2001. The more wide ranging impact of the shakeup was the 2008 economic crisis that engulfed Wall Street and dragged most of the European economies down through secondary shocks.
FINANCIAL CRISIS OF 2008
The last decade can be identified as a decade of disruptions, the term disruption is not used in a negative sense in this article, it is used to provide as analytical framework to identify some of these global transformations that were triggered by the economic tsunami that overran most of the financial centres of the geo-political west. These disruptions within a limited span of time have unprecedentedly changed the global politics, economic, cultural and intellectual landscape.
The primary victim of the 2008 debacle is the dominant liberal democratic governance framework which encompasses, values, ideas, institutions and intellectual vigour of the liberal project. The liberal project championed global governance, democratization of politics, liberalization of economics, expanded the rights regime but all the while waging a brutal war on any alternative in the name of democracy. George Bush invaded Iraq in 2003 in the name of democracy and regime change.
What is central to understand is not the pure economics of the 2008 melt down but the larger socio political impact, Princeton University Professor of International Relations, Harold James, writing in a recent column argues that, Lehman Brothers’ collapse revealed a flaw not just in finance, but in twentyfirst-century politics and society.
PLIGHT OF LIBERAL DEMOCRACY IN THE AFTERMATH OF 2008
Liberal political systems thrived and grew exponentially after the end of the Cold war, yet the End of history momentum did not manage to contain or check the emergence of a global super class that controlled every aspect of social political life. These new oligarchs, started dominating politics, education, media and decided over matters of war and peace. Liberal politics and institutions became the incubators and service providers to this super class, Joseph Stiglitz Christened it as the top 1% in the US.
This liberal political machinery kept on propagating post material values ranging from environmental rights, climate change to LGBTQ rights while at the same time corrupting political systems and hacking the liberal order into their own advantage. This mismanagement primarily back fired in the financial sector with the fall of Lehman Brothers exposing the underbelly of the subprime mortgage market in the US and a vast credit culture of Europe.
AMERICA UNHINGED
The crisis dented the primacy of the US in multiple ways and means and this is where it starts to be relevant to Sri Lanka. The economic crises affected the US in multiple ways it slowly but steadily started eroding its global standing and its long term reliability that most of its allies and friends depended upon for security. The US strategic posture and its military interventions we all rewired and the Obama administration had to create a strategy of the lighter foot print.
Transformation of how wars were to be fought in the 21st century was significantly affected by these financial crises, technological disruptions enabled States to look at cheaper but effective ways of waging war by increasing dependencies on Cyber to autonomous systems designs. This is why there is an increasing dependency on robots at war from Drones in skies to autonomous submarines and missile systems.
America’s ability to promote democracy and institution building encountered a local and global resistance from political groups that blamed the liberal political systems and their pluralism as the key culprit that weakened the political systems and leadership of Western nations.
They attacked the core of liberalism claiming that good governance, global governance, post material values of liberalism had grossly undermined the role and life of ordinary Westerners as the liberal internationalist adventures had left behind a trail of poverty, stagnation and industrial demise in Western societies.
EUROPE UNRAVELED
The rise of populist politics and a rebooted nationalist politics which became evident as the primary force of Western politics could be traced back to the 2008 financial crisis. European politics leads the way, every European parliament today has a populist representation, and the alarming fact is that some of these parties are gaining support at exponential pace.
Populists have strong presence in Greece, Hungary, Italy, Poland, Slovakia, and Switzerland where they account for majority of representative in legislatures.
In Austria’s 2016 presidential election, Norbert Hofer, the farright Freedom Party candidate did lose but he secured 46% of the vote. Macron may be the only liberal European globalist standing, but he had to fend off Marine Le Pen who received nearly 35% of the vote. Few days back in Chemnitz, one of the most accommodating Germany, witnessed clashes between far right groups and socialists. It also witnessed the far right wing groups calling for all foreigners to be attacked. Signs of a clearly faltering liberal regime throughout Europe, even in most stable democracies such as Germany.
SRI LANKA’S UNCERTAIN FUTURE
With the recent conclusion of a most anticipated protest by the newly established, Sri Lanka Podujana Peramuna (SLPP) in Colombo, what we are witnessing is a clear swing towards the rise of populist politics shaped by a resurgent nationalist idea. Sri Lanka’s political system and liberal institutions are facing the pressures of a waning liberal order, rising authoritarian, democratically induced dictatorships or nationalist regimes as alternatives which are seen as successful by Sri Lankan intelligentsia as benevolent models as in China, Malaysia, Philippines even Japan.
Populism has the capability to channel anger and resentment, its most successful as a protest movement, when it is in actual power it has a fundamental problem of institutionalizing its values. Populist movements in Sri Lanka and globally are successful as powerful political alternatives but are less capable when they come to office. Purely because any political movement that is not driven by coherent political will and with no clear political strategy can do more harm than correct the flaws they intend to fix.
The greatest tragedy in the crisis of liberalism of the last ten years since the global financial crisis is that, despite liberal political elites responsible for most of the political conflicts, erroneous nation building projects, devastation in the Middle East, the alternatives present do not seem to be capable of fixing our broken systems.
The biggest danger in a volatile liberal system as in Sri Lanka at the moment is that of a total succumbing to the geo political rivalries and geo-political rivals increasing capabilities to shape the politics of this country.
Author is the Director, Bandaranaike Centre for International Studies - (BCIS)