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In Search of a New Political Economy

The late-twentieth-century assumption that democracy and markets would ultimately triumph everywhere has since been met by an intellectual backlash that is even more wrong-headed. To chart a better path forward, we will need to revise our thinking in several policy domains at once.

BOSTON – When Francis Fukuyama published his famous 1989 essay, “The End of History?,” he captured the mood in many Western capitals at the time. Not everybody agreed with him that “the endpoint of mankind’s ideological evolution” had been reached, but few could deny the resonance of his message. In anticipating “an unabashed victory” for “economic and political liberalism,” he was channeling both the emerging policymaking consensus and what had already become the standard approach in much of academia.

This late twentieth-century consensus rested on two distinct but synergistic pillars: political liberalism and economic liberalism. In the political domain, democratic institutions had the wind behind them and seemed to be taking root inexorably.

Humanity had been subjected to authoritarian despots and outright lawlessness for much of its existence. But ever since democracy had been “invented” in its modern form, the idea had been spreading around the world. Following the exhaustion of the alternatives (absolutism, fascism, communism) in the twentieth century, many Westerners concluded that their model would ultimately triumph everywhere, even in places with little or no democratic history, such as the Middle East. Ordinary people would demand a voice, and even iron-fisted autocrats would not be able to resist the implications of this “Western idea.”