by Branko Milanovic
Branko Milavonic is Lead Economist in the World Bank research group and a visiting professor at the University of Maryland School of Public Policy. His most recent book isThe Haves and the Have-Nots: A Brief and Idiosyncratic History of Global Inequality.
To understand last week’s riots in England, we have to place them into their wider contexts. The geographic context includes the protests that the young have staged in France, Greece, Spain, Portugal, Israel, and most recently, Chile. The English riots are but the most recent example.
For the other broad context, we have to go to the undeniable success of pro-market reforms introduced during the Thatcher-Reagan years, and “underwritten” by economists like Milton Friedman and Friedrich Hayek. The market revolution went through almost 30 years of uninterrupted ideological success (1980 to 2008 or so), dominating policy-making and public discourse, and winning over large parts of the public, first in the United States and Europe, and then increasingly in China, Russia, India, and the rest of the world. It was a two-pronged revolution: the privatization of most functions that previously belonged to the state, and the promotion of a view of the world according to which economic success is regarded as revealing intrinsic moral worth. Failure became associated with low personal merit. Only the latest financial crisis shook the previously undisturbed confidence of the neo-liberal elites.
The protests certainly differ in their particulars, but violent or non-violent, spearheaded by an “excluded minority” or not, they each had clear direct causes: increased tuitions, high rents, high unemployment — causes that we could broadly place under the label of the general unhappiness of the young. Because the successful neo-liberal revolution somehow failed to win them to its side — those who, for its continuation, matter the most.
How did it happen? The reason lies in inequality of incomes and wealth that the neo-liberal reforms have produced, combined with an incessant ideological emphasis on material success and consumption as key desirable features of life. While this ideological bludgeoning is perhaps indispensible to stimulate consumption and growth, its effects on those who cannot afford all the desirable luxuries was ill considered. Indeed, the young too “bought” the ideology that wealth equals ethical superiority but found themselves on the wrong side of the equation. The venues that could have led them to wealth were closed — by rising unemployment, cuts in social services, higher costs of education, higher rents, and not least almost open corruption and immorality of the elites.
Edward Gibbon, the historian best known for his Rise and Fall of the Roman Empire, wrote of soldiers “enervated” when faced with many luxuries of ordinary peaceful life. Similarly, to the youth whose chances of success were slipping, the wealth of consumer civilization around them provided “enervement.” They reacted like the Roman soldiers. What they knew they could not get by ordinary means, they decided to grab by extraordinary ones.
Two factors make worse the predicament of the young, whether in Puerta del Sol in Madrid or Tottenham in London. First, their hopelessness that hard work and ambition will be sufficient to provide them with all the goodies that older generations or those born luckier enjoy. They see the old welfare economies disappearing, while politicians, businessmen, and music stars cynically seize society’s riches. Second, they don’t have an alternative social blueprint. If they truly believed that a different world is possible, they would have organized into political groups, not mobs. But they do not, and apparently nobody these days does. After two months of protests, the M-15 movement in Spain barely managed to come up with a timid and impracticable list of a dozen of proposals for change in economic and political life. Here was a true case of a failure of imagination.
The neo-liberal economic revolution’s victory was complete: nearly all have accepted its value system (no less those who rioted in London last week). In that sense, it has produced, as prophesized, the “end of history”: the realization that this is the best political and economic system mankind has devised, and that nothing better lies beyond the horizon.
The problem is that the neo-liberal revolution has failed to explain what to do with those who do not prosper in the new system and yet adopt its values. The young men and women robbing stores are not, as some believe, an example of the failure of liberal market reforms. On the contrary, they exemplify the reforms’ overwhelming success. But unfortunately, the protesters also reveal the reforms’ ultimate Achilles heel: people who — as the Spanish demonstrators put it — are without future, without the idea of a new and better world, and without fear.
The challenge, should we choose to accept it, is to figure out a way of engaging a generation that doesn’t seem to want to be engaged.