(de)Regulating capitalism and democracy

In his provocative 2003 book, The Future of Freedom, Newsweek editor and CNN host Fareed Zakaria argues that the 20th century was defined by what he calls two "broad trends":

1) The regulation of capitalism
2) The deregulation of democracy

Both these trends, Zakaria, argues, "overreached". by the 1970's, he argues, capitalism was regulated to such an extent that the free market was taxed, licensed, controlled and nationalized to death. Thus governments spend the last quarter of the 20th century "deregulating industries, privatizing companies, and lowering tariffs." In contrast, Zakaria says, democracy has moved in the "opposite direction" to capitalism. Quoting John Dewey's ironic remark that the "cure for the ailments of democracy is more democracy", he suggests that the "deregulation of democracy has gone too far." And that's why, Zakaria says, most Americans hate their politicians and why "public respect for politics and political systems in every advanced democracy is at an all-time low."

At first glance, Zakaria's observations now appear rather dated. After eight years of George W. Bush, the common wisdom is that capitalism has been excessively deregulated while it's democracy that has been muzzled and now needs to be freed from the shackles of the neo-conservative state. Writing, for example, in this week's New Statesman, Will Hutton suggests that there the consequence of the regulate capitalism will be an the increase in democracy. Thus, he says, Obama's support of public service broadcasting, trade union rights, higher taxes on the rich and multilateralist foreign policy will all create a more harmonious society and, thus, he assumes, a more vibrant democracy.

But I wonder if the causal relationship between regulating capitalism and enriching democracy really is as simple as Hutton suggests. I suspect that Barack Obama's most significant legacy will his impact on American democracy and not on capitalism. It will be his experiments in direct democracy and his ability to manipulate the American people through the democratization of media rather than his relatively unimaginative economic policies which will make him profoundly different from previous American Presidents. On the eve of an Obama Presidency which promises an authentic style of leadership rarely seen in American history, the questions about deregulated democracy raised in Zakaria's The Future of Freedom are now perhaps more relevant than they've ever been.