Advanced capitalism, advanced democracies and national autonomy : symbiotic most of the time

Abstract

In this lecture I look at the relationship between the state, advanced capitalism, democracy, technology regime change, populism and globalisation. My recent book with Torben Iversen, Democracy and Prosperity: Reinventing Capitalism through a Turbulent Century (Princeton 2019) argues that from a long term perspective the performance of advanced capitalist democracies has been highly effective – certainly compared to any other political economic system. From the perspective of the hundred years since the end of the First World War – arguably the most turbulent in recorded history (apart from the C5th CE) – living standards have increased massively, and extreme poverty eliminated. By 1920 all the early industrialisers had become democracies, and most remarkably remained so (absent 35-45 and Czechoslovakia). Why such resilience? We argue that advanced capitalist systems are embedded in advanced democracies; that those in the advanced sectors and aspirational electorates only vote for governments promoting advanced capitalism; thus normally advanced democracies drive advanced capitalism, promoting competition and providing infrastructure. From modern economic geography, knowledge is increasingly embedded in skill clusters and agglomerating cities; hence advanced capital, whose profitability depends on knowledge, is politically weak being tied down and not footloose. Electoral backlash occurs as a result of technological regime change (I explain why); but populist parties are only durably successful when they can deliver desired change. Embedded knowledge by increasing specialisation promotes globalisation; and globalisation in the advanced world, operating through multinationals with knowledge based subsidiary networks, reinforces the autonomy of the advanced nation state. Thus we argue for a symbiosis between the autonomy of the advanced nation state, advanced capitalism and democracy – in opposition to the great theorists of capitalism and the state, from Schumpeter, Hayek and Lindblom, Marx and Poulantzas, to Streeck and Piketty.