Now Substack is fading as some writers have already recognized. Read this article by publisher Scott Carney. My criticism of Substack is in these past articles and all points of criticism still stand - algorithms bias, third world bias (writers from many developing nations can’t enroll into payment model), arbitrary and hidden rules of moderation etc (1, 2). Now let me elaborate further on problems of Substack - 1) Rising mediocrity and Substack itself promoting & awarding mediocrity 2) Lack of creative destruction in writing style, ideas and narrative 3) Identity crisis of Substack.

Substack mediocrity

Most small writers already know this by now that Substack revolves around few top writers who Substack rewards disproportionately. Discoverability is the biggest problem for smaller writers who struggle to build an outreach for their content. Ideally, Substack algorithms should provide a balancing mechanism which can promote smaller writers to some reasonable degree. Substack doesn’t and leaves small writers with the task of promoting their work. But how? And Substack feels comfortable in business model of retaining top writers and earning a commission from their paid subscription as it feels a safe bet.

This creates problem in two ways. Firstly, many of the top writers aren’t some extraordinary content creators. Some are but many are not. People like Noah Smith & Matthew Yglesias are idiots. Their top position on Substack is partially due to their early entry on the platform and partially just by chance. Think of it as a free market where the early movers get rewarded disproportionately while late comers who may offer better product or services, however, struggle to find footing in the market. And winner in a free market doesn’t necessarily mean that his product is actually superior than his rivals.

So these early movers and top Substackers earn big money on Substack. This was all well and good as long as audience (consumers) kept flocking to Substack and liked their content. But what happens when audience start losing interest in top Substackers? At that point, the audience (consumers) may wanna try a new creator - a different writer with different writing style & narrative - to subscribe. But due to lack of discoverability of smaller writers on Substack who may be more talented and which audience (consumers) may find appealing, the audience (consumer) however fail to connect to them. So consumer may simply walk away without renewing his subscription and he also doesn’t create a new subscription to some new author.

It’s also worth noting that the top Substackers are mostly commentators of conventional wisdom (whether in politics or economics or any other field) and they are - literally or figuratively - the conventional writers of pre-2016 era who occupied the mediocre editorial boards of mainstream media once upon a time. And frankly speaking, to be popular, you need to be mediocre nowadays. Heterodox and avante-garde creators may provide fresh content and newer ideas but it’s not as highly popular because of people’s habitual attraction to conventional opinion.

Second problem with Substack which I’ve known since long but forgot to mention in previous articles is Substack’s advice to creators which basically is that new creators should promote their content on other social media platforms to build subscriber base and larger following. But there’s not much logic in trying to promote Substack content on Facebook, X or Instagram especially for smaller writers who don’t have a fan following. Why? Because X, Facebook & Instagram are platforms of very different nature in comparison to Substack. So how can content creators build new Substack subscribers through promotion on X & facebook? To give you an analogy. It’s like a South Indian chef is being asked to build a customer base by opening a restaurant in traditional Chinese district or Spanish neighborhood or Miami area or Korea town. There’s no compatibility between the customer preferences and chef’s services.

The logic of Substack suggesting content creators to cross promote their work on other platforms was probably that new content creators will somehow lure new consumers (audience) from other platforms. But this is very difficult especially in times when platform like X (formerly Twitter) has degraded to a great extent and many intelligent users have abandoned X platform. And social media platforms these days are generally based on attention seeking, short form, clickbait type addictive content and this doesn’t fits well with long form writing style of traditional Substack.

Substack lacks creative destruction

What was the original idea of Substack? It was a platform for independent writers to publish their content. By content, it means mid to long form essay type articles and usually of characteristics which you cannot otherwise find in mainstream media and magazines. Articles can be on politics, economy, culture, Science, sociology, history etc or a brew of these multiple themes. The mainstream media as we know has become completely bankrupt and doesn’t publish content of this type and actually doesn’t publish any interesting content at all.

Just like any industry, the Substack also needed creative destruction in its business of content creation (or content promotion more precisely because Substack itself doesn’t create any content) to retain & expand its customer base. And for that, it’s necessary to promote avante-garde and heterodox writers as much as possible. Otherwise, Substack will just become like pre-2016 mainstream media which peddled boring conventional opinion in their op-ed sections. And so Substack disproportionately rewarding few writers and putting them on top of the pyramid is actually making Substack boring & mediocre.

And when smaller writers started realizing that they cannot find an outreach on Substack, they either abandon the platform or reduce the frequency of posting. For simple reason - Why would they invest their time & energy in creating content on Substack which doesn’t reach viewers? You may have noticed many abandoned blogs on Substack where creators stopped publishing content.

And secondly and I couldn’t emphasize this point enough which I have already covered in previous article. It’s how Substack has treated writers from many developing nations as ‘second class’ writers and denied them access to paid subscription model. So while discoverability is already a problem with Substack for smaller writers, the attitude of Substack towards writers of developing countries is much worse. So there is little motivation & incentive for writers from these countries to publish content. And believe me that there are many quality writers in these nations who, if incorporated into payment system, will expand content diversity and depth on Substack. But perhaps this is what Substack actually doesn’t like even when this sort of diversity and competition will actually propel creative destruction on Substack.

On a more intellectual level, I would like to point out an interesting phenomenon on Substack. Substack is projected as a progressive cosmopolitan community of writers in contrast to X (which is now heavily tinged with right wing content, racism and vulgarity). One feature of a progressive community should be a certain degree of equality among its members. So why does Substack provides a user from America with privilege access to paid subscription system but not to users in Brazil or India? But that’s not the only point. Have you ever seen the top-of-the-pyramid writers of Substack ever raising this issue about this greatly unfair discrimination between writers of first world and third world nations? Have you heard Paul Krugman or Heather Cox Richardson ever questioning why writers in developing nations aren’t getting paid?

Substack Identity crisis

Substack is facing an identity crisis as it’s trying to compete with other social media platforms like X, facebook and Instagram. One of the reason why Substack introduced Notes feature was an attempt by Substack to transform into a hybrid social media platform that is a cross between its old self and X, tiktok & Instagram. I am familiar with Notes feature and it’s quite attractive (addictive) with its short video reels & especially new trend of AI videos, photos, memes etc and short form messages like microblogging Twitter (X) and tiktok.

A short AI video on Substack feed

There is a logic in Substack trying to emulate reels & microblogging feature of X but it diverts Substack away from its original concept of long form writing. Since last few years, the social media platform like X have degenerated into vulgarity and disinformation which has lead to many users abandoning X. Perhaps Substack wants to capture this audience and somehow incorporate them into Substack community. Substack Notes might be a ‘sanitized’ version of X which was once popular among people.

I mentioned how it’s difficult for Substack writers to build a subscriber base through content promotion on other social media platforms. However, there’s a flurry of activity from users of other Social media platforms like tiktok who are promoting their reels content on Substack Notes. And in a strange irony, while traditional Substack users cannot attract audience from other social media platforms, the users of other social media platforms can do exactly this on Substack more successfully through Notes feature.

In Conclusion

One thing should be kept in mind. We can criticize Substack for the above mentioned problems but Substack isn’t obligated to provide us a decent service. Substack is a private company and its only purpose is maximizing profit. If Substack made profits through business model of traditional long form writing efforts of publishers, that’s well and good and Substack being nice is only an incidental outcome to its primary objective - profit making. Tomorrow if Substack can make profits by changing its business model and becoming more like tiktok or X (or even possibly becoming vulgar in process), then Substack will be happy to adopt such model. Substack has no obligation to publishers or audience of providing what they wish for.

I have witnessed the enshittification of Google, Twitter, eCommerce giants (like Amazon), video game industry and so many other things. And I wouldn’t be surprised if some years down the line, Substack is another ‘enshittified’ platform like X and Facebook.

Let’s review the Supply shocks

Covid Pandemic 2020 to early 2022

The supply shocks began with emergence of Covid pandemic in Feb 2020 which disrupted global supply chains (my articles on pandemic induced inflation - 1, 2, 3). Briefly speaking, the Pandemic supply shocks were due to global lockdowns and planned shutdown of economy. These lockdowns came in various phases as world faced multiple waves of virus - originally in early 2020, then in mid 2021 (Delta wave), then in late 2021 (Omicron wave), then in 2022 (China’s zero Covid policy in response to Omicron).

The impact of these supply chains disruptions was peculiar & unique. During the Covid supply chain disruptions, the Oil prices crashed while prices of medical supplies (like masks, sanitizers, ventilators etc) skyrocketed. Then supply chain disruptions impacted food prices, groceries, consumer durable goods etc. Empty shelves in supermarkets especially during early period of pandemic was a common sight - a lot of consumer goods that came from China stopped coming.

Stranded shipping containers at US port during pandemic

Even if goods were being manufactured, problem was their transportation & commerce. The discombobulation of labour markets in US meant that there were no truckers and port workers to unload and transport the stranded goods at ports to warehouses and their retail destination. However, as Covid subsided, the economy & labour markets also got back to normal pretty fast. While some economists like Larry Summers (a client of Jeffery Epstein and now disgraced) predicted a decade of wage-price spirals similar to 1970s. That never materialized as team transitory did won.

Covid supply shock was the only shock which we could leave behind in rear view mirror but we didn’t know that world will face more political and economic shocks that will reverberate for a long time.

Ukraine War - First phase 2022 - 2024

In 2022 just as world was recovering from pandemic disruption (as vaccines were developed & mass produced) and experts started to put pandemic downturn behind, a new economic shock came from Russia’s invasion of Ukraine - a mindless misadventure by Russian dictator. Ukraine war supply shocks were peculiar. They raised the price of Gas in Europe as supply of Oil & Gas from Russia was disrupted, not to mention the blowing of Nordstream pipeline. The price of Oil spiked high but soon after, it crashed disastrously. This was due to western sanctions against Russian economy & energy sector in particular. There was also food price spikes as Ukraine sea route which was a major food transit (especially wheat & cooking oil etc) corridor from where large part of Africa received its food supplies got disrupted due to attacks. So the early shock of Ukrainian war impacted nations who were most poor & dependent.

The Russian Oil trade continued from 2022-2024 as Russia sold its oil dirt cheap to third world nations to finance its wars. The sanctions against Russia were not watertight and West was implicitly aware of the situation. It let it slide. Russia sold oil cheap to nations like India which greatly benefited but only temporarily. India even refined Russian oil & sold it back to Europe. All this was well known & allowed to happen because Europe couldn’t afford to completely divest from Russian energy. But this would change in 2025 as I explain below.

The first round of supply shocks of Ukraine conflict were limited because Russia & Ukraine did not go to total war immediately as both believed that some sort of negotiations will soon begin after Russia initially failed to take Kiev. There were also some short-lived compromises for Sea trade like one mediated by Turkey, and Russia was also allowed to trade its oil through back channels though at very low prices amid sanctions. Starting in 2025 Ukraine declared total war on Russia and both nations started targeting each other without any regard to trade & commerce.

Trade Wars declared by Trump regime - 2025 to present

In 2025, Trump entered White House and declared trade war against the world. I have written much about it and won’t repeat everything for sake of brevity. In brief, the Trade war was a madness, an outrageously foolish policy that needlessly disrupted global economy. First the tariffs were introduced on April 2 - the ‘Liberation Day’. But these were not one time thing. The tariffs changed by every week & every day through arbitrary declarations and Truth Social posts at midnight. There’s no point in getting into reasoning basis of these tariffs because there is no basis.

See-saw tariffs of Trump regime which changed every week or even every day

Nobody knew what tariff rates applied on which country at any given time - even the Trump regime didn’t knew. And various exemptions were doled out to various sectors of economy & the market players, most notoriously the exemptions for Computer products & components which supported AI investments . The biggest disruption, at least theoretically, was in NAFTA (USMCA) - US, Canada, Mexico - economic partnership, especially the auto sector which exists as an integrated entity. The production is globalized in today’s world and various parts of final product cross national borders several times before final assembly. Trump regime never heeded to these complexities of today’s globalized economy.

As bad as tariffs were, the actual impact of tariffs was surprisingly muted. Some experts predicted Armageddon - the supply chains will come to a halt, the international shipping will stop, the store shelves will go empty, the inflation will surge, the investment will collapse due to great uncertainty - which interestingly did not happen. American economist’s back of the envelope calculation showed that inflationary impact of trade war turned out to be only 0.8% ! Tariffs undoubtedly harmed US as well as global economy and we would never know what US economic growth would have been without them (a counterfactual) but the worst case scenarios of tariffs breaking the US economy did not materialize, at least not yet.

The legality of tariffs was contested in US courts and they were declared illegal. A reprise but Trump regime immediately started implementing new round of tariffs on flimsy grounds. As I am writing this article, Trump is threatening 50% tariffs on Canada again and threatening new tariffs on Spain. And for what reasons? - There’s no reason.

The AI Boom - Computer parts Skyrocket starting 2024

The inflationary impact of first Covid wave was in consumer goods, groceries, medical supplies etc. The inflationary impact of Ukraine war was on gas supplies (more prominently in EU) & food (in Africa). But another supply shock emerged which was different from other shocks. This was emergence of AI boom - whether it’s a bubble or not, the jury is still out. There wasn’t really a strangulation of production due to closure of factories or disruption of supply chains due to war - the supply shock in Computer components was due to diversion of supplies to specific area called Data centers. The massive investments in Data centers started gobbling up a large chunk of global Computer components production - mostly DRAM & Memory chips - which smothered the needs of average consumers. The memory chips & RAM - the crucial parts of personal computers - doubled, tripled, Quintupled & jumped even more over a period of two years. And it’s still going up.

RAM price inflation is extraordinary since 2025

As I mentioned, while the impact of wildly erratic tariffs turned out to be rather muted, the impact of AI boom caused widespread inflationary impact. The electronics in general which is equipped with memory chips & specific semiconductors became expensive - laptops, desktops, gaming consoles, automobile electronics, Smartphones, tablets etc - and the prices are going up & up (1, 2). We still haven’t reached a peak or a plateau so far.

For many years, price trends of computer hardware was sternly downwards. The computer chips always get faster & always get cheaper, the ratio of cost to computing power always went down. But that trend started to change due to AI boom and even before that in 2010s, although to a limited extent, due to Crypto mining. Large amounts of GPU power is used in this completely parasitical and anti-social business which diverted Graphics card away from consumer market.

In conclusion, the Computer spare parts and all electronics that is tied to it has become costlier and will remain so as long as AI boom is flourishing. While various economists claim it to be a bubble, it hasn’t burst yet or showing any signs of deflation at the moment.

Ukraine war’s Supply shocks make a comeback in 2025 & 2026 - War comes home to Russia

Ukraine war which by 2026 is in fourth year took another turn. Trump regime strangulated Ukraine’s military aid starting in 2025 and Ukraine was losing manpower on battleground. Ukraine had to improvise furiously to deal with military situation. By 2025, Ukraine had developed Drone technology in terms of quality & scale which tilted the balance of war. Ukraine built Drones on enormous scale and changed its military strategy which so far had been defensive up until 2025.

Ukraine declared total war on Russia with intense attacks on Russian military infrastructure, Oil refineries, shadow fleet ships, defense industry & civilian infrastructure targets INSIDE Russia. The penetration of Ukrainian attack deep inside Russian territory changed the calculus of war. Russia’s air defenses are useless against Drones. Drones are manufactured cheaply & attack in waves of hundreds & thousands, rendering missile defense ineffective. Even if 5-10% of Drones reach their targets, they can cause massive damage.

Targeting of civilian infrastructure by Ukraine - Wildberries (Russian eCommerce equivalent of Amazon) warehouse - blown up by Ukrainian Drone attack.

Russia from 2022 till early 2025 was able to finance its war - although with shrinking revenues amid low oil prices - through oil trade. Starting in 2025, Ukraine put a squeeze on this. Russian refineries were blown up, shadow fleet tankers were destroyed & sunk in Sea of Azov & black sea. The result was catastrophic for Russia and also for some other countries like Cuba who’re dependent on Russian oil.

People waiting in long queue for Gas fill up in Russia

As the tide of war is turning in Ukraine, Trump regime is also accepting the new realities. The loopholes of sanctions regime are closed which existed 2022 - 2024 and Russia is finding difficult to market its oil. US is placing secondary sanctions on nations which buy Russian oil and even otherwise, there’s much less Russian oil on the markets with Ukraine destroying as much as half of Russian oil refining capacity. The attacks on Russian energy infrastructure are so massive that Russia - a giant gas station, for the first time, is facing gas shortage. Miles long queues of vehicles in Russian cities for filling their tanks is indeed a shocking sight.

Ukrainian commercial ship with Corn supply hit by Russian missiles

As Ukraine started intensive attacks inside Russian territory, Russia as usual intensified attacks on Ukraine’s civilian targets. The Sea of Azov and Ukrainian coastline is also coming under Russian Missile & Drone attacks. But more importantly, the attacks are not limited to military targets as food & oil ships are now fair game in this brutal conflict.

The Iran war & Strait of Hormuz in 2026

In February, US and Israel declared war on Iran. The primary driver of war was Israel which assassinated Iranian Supreme leader at the onset of conflict. I have already discussed Iran war in previous article and explained how no deal is possible to resolve the crisis (refer 1, 2). As US & Israel assassinated Iranian leadership, Iran started to retaliate through two main ways. Firstly, Iran started attacking US military bases in middle east (Kuwait, Bahrain, UAE, Jordan etc) and secondly Iran closed Strait of Hormuz. Iran claims that it has right to weaponize trading routes as a strategy to defend its sovereign interests while US & NATO project freedom of navigation and condemn the obstruction of international shipping lanes. While there’s little point in arguing about legality of claims & counter claims, it’s undeniable that all parties, especially US & Israel, have a long track record of making mockery of international law.

Nearly 20% of Oil & LNG pass through Strait of Hormuz but some nations are disproportionately more dependent on oil supply from Strait of Hormuz. My home country India is facing immense pressure due to reduction in Oil & Gas from the Strait (40% of India’s crude & 60% of its LNG come from here). Although there are other nations like Japan who’re also impacted by Strait of Hormuz closure but the impact of this crisis is much more severe for poor backward economy like India.

As Iran blockades Strait of Hormuz, America started bombing Iranian civilians infrastructure like water treatment plants and bridges, thus intensifying the conflict. A new Supply Shock is probably in the pipeline as Iran may mobilize Houthi rebels in Yemen to block Bab al-Mandeb Strait.

The impact of Supply Shocks - First world vs third world and Rich vs Poor

The supply shocks and inflationary pressures they create have vastly varying impact on different nations and different social groups. Take example of Strait of Hormuz crisis. While the impact of this crisis is felt worldwide, it’s much more severe for third world nation like India. This is for two reasons. First is that India is a poor backward country, heavily dependent on non-renewable energy. Second, the inflationary impact of energy supply shock deeply penetrate Indian economy and hurt hundreds of millions of people who’re at bottom rung of poverty level.

For affluent nation like America, Oil supply shock means paying a little more at Gas pump which people can afford while making some grumblings. For people in nation like India, oil supply shock means people finding cooking gas unaffordable, inflation creeping into every essential commodity because of intensive non-renewable energy dependence. Food costs, rents, commodities, transportation etc - everything is impacted by oil price rise.

People wait in long queue for refilling LPG cylinders which is primary cooking fuel in India

Similarly, the affluent nations like America face a small uptick in inflation rate due to supply shocks but their superstores always remain loaded with food stock and essential goods. But when international shipping lanes in Black Sea or Ukrainian territorial waters shut down due to war, the people in Africa can’t get basic food like wheat & cooking oil - they starve.

Even the pandemic supply shocks had highly uneven impact on first world and third world nations. The first world nations - America & EU - cornered the medical supplies and vaccines while the third world nations scrambled to get whatever meager essential medical supplies they could buy on global markets. This disparity of impact of supply shocks between poor and affluent nations is almost universal.

Monetary policy can’t cure Supply shocks - Central Bankers are helpless

In Western world, Central bankers are worshiped like Demi-gods who are believed to be providing optimum monetary policy prescriptions to economic ailments. But that’s not the case and especially so when it comes to supply shocks. In recent speech Fed governor described the current times as ‘one transitory shock after another’ that are relentlessly plaguing the global economy and creating headaches for policy makers and central bankers. Central bankers have no real instruments to remedy these shocks. In fact, the best response by central bankers to these shocks is to NOT intervene mechanically to these shocks like blindly following Taylor rule to set interest rates.

Illustration - Taylor rule is not a remedy. Disinflation during post Covid era.

And deciphering the inflation dynamics is also getting peculiar for central bankers. For example, the Fed struggled hard to understand how and where is inflation getting entrenched during supply shocks and what index suitably captures the inflation problem (1, 2).

Let’s be clear. Fed doesn’t have ability to move stranded ships at ports or find truck drivers to move cargo on highways or Open Strait of Hormuz or stop the wars raging in Ukraine or middle east or increasing the production of memory chips. Moreover, Fed doesn’t have ability to stop Donald Trump from announcing new tariffs policy in midnight tweets or embarking on ‘liberation day’ type of disruptive policy. All this Fed can only watch in agony and especially with added frustration when President personally degrades Fed technocrats. And agony is worse for helpless politicians and central bankers of foreign countries who are, for no reason, are inflicted with economic misery by people running White House.

Supply Shocks - Man made vs Natural disasters - Hyperglobalization amplifies supply shocks - Breakdown of international order

The supply shocks that began since 2020 can be categorized into man made vs natural. The Covid pandemic and supply chain disruptions that ensued were natural shocks for the most part. But Ukraine conflict, Liberation day tariffs and Iran War are all man made disasters, and even more interestingly, can be observed as menace created by few old men - Putin in Russia, Trump in America and Bibi Netanyahu in Israel. Putin and Bibi have outstanding arrest warrants from international courts for crime against humanity. And Trump? - He’s the man who was charged with nearly 100 criminal counts in America, but given broad immunity by Supreme Court. These are the people who have taken the world to the brink.

It’s convenient to lay all the blame on this trifecta of deranged criminal politicians but the problem is deeper. The problem really lies in breakdown crisis of international order and diplomacy. There are no meaningful institutions to establish some kind of ‘international rule of law’ and even definition of such law is not conclusive. The old institutions - United Nations, WTO, International criminal court etc - are impotent and incapable to provide security and stability to the world. The world itself is based on platitudes that are decayed and obsolete. Democracy, free trade and free markets as being the best & only models of development are such kind of platitudes.

Markets create inequalities and inequalities create political instability. When profit maximizing private sector offshores its production, it doesn’t bother about communities that are left behind jobless - they are left on the mercy of markets but markets don’t provide them with replacement of lost opportunities. These unemployed & underemployed people accumulate, and overtime transform into sociopolitical force but without any intellect who then can be easily manipulated by political conman and demagogues. Democracy in such unequal society produces deranged populists like Donald Trump. This is the paradox of liberal democracy.

On Russia, it’s crucial to remember that shock therapy of market economy unleashed chaos & disasters in Russian society and out of this chaotic carnage emerged gangster capitalism of dictator Putin. Russia could well have been integrated into European common markets and security architecture but it was left to drift astray. On this I would strongly recommend three books - Collapse: The Fall of the Soviet Union, Triumph of Broken Promises and The Godfather of the Kremlin. On Israel, nothing more needs to be said other than that it’s a criminal apartheid State ruled by fanatics which exercises strong influence over western foreign policy.

On elementary level, world doesn't have a balancing mechanism or at least a mechanism that can establish harmony of interests among weak & strong, rich & poor nations. Inequalities are intranational as well as international, of military power as well as economic power. Instead of addressing these national and international imbalances, they are instead brushed aside with platitudes of free trade and sanctity of markets. As long as West (US & EU) enjoyed competitive edge over other nations, they preached the platitudes of free trade to rest of the world. When nations like China attained a competitive edge to beat market players of western economies, the West opened their closet to revive protectionism - industrial policy, tariffs and trade barriers. The mainstream economists who preached free trade started suggesting tariffs.

While Trump’s tariffs are certainly foolish, there however is now a recognition that some sort of protective trade barriers are necessary to protect domestic industry. This was already evident in Biden’s half baked attempt of Industrial policy. And today, EU’s auto industry cannot compete with Chinese EV makers and unfettered free trade may wipe out auto companies of Europe. And going by the free trade doctrine which West itself preached for so many decades - that should be natural order of things. But it is unacceptable. Economics is much more than profit/loss of balance sheets of unfettered market competition. Similarly, certain protective barriers are needed to safeguard nation States from anti-social activities of tech companies. This is reflected in EU’s regulatory fightback against American social media giants & internet companies.

We live in hyperglobalized economy with global imbalances that were allowed to grow enormously over the decades. China is producer of large segment of consumer goods & rare earth minerals, Taiwan is the global center of chip manufacturing, a large portion of global oil & gas flows through specific (& constrained) middle east corridors, US Silicon Valley is the global center of software development & social media empire etc. And although the majority of final products may get produced in few countries, the components of these products (and they are many) are manufactured in complex web of transnational value added supply chains which form another layer of complex & concentrated industrial centers around the world. If these chains break at one or more points, the entire supply chain comes under stress. Hence it was always essential for hyperglobalized economy to function in environment of global peace and stability. If that peace breaks and breaks so violently as we are seeing today, we get upheaval of supply shocks.

The problem is compounded by the fact that now there’re no global institution or an arbitrator that can step in to resolve the disputes/grievances of parties or to deter a State from making aggression. The world becomes free for all fighting match where parties - nations & economic blocs - exercise their powers aggressively to attain advantage over others or to defend themselves. This creates environment for military conflicts and trade wars, and Supply Shocks are automatic outcome of that. And at the end of the day, there’s no winner from these supply shocks but the nations who’re already poor and backward are the biggest losers.

Paul Krugman in conversation with HCR raises an interesting question about Wealth inequality - How America survived the guilded age? Meaning, how did American democracy and constitutional system survived the era of Robber Barons in last decades of 19th century guilded age? The question is in context of present mayhem unleashed by American oligarchs & corporations (Musk, Bezos, Koches etc) who have destroyed American political system & democracy by extensively meddling with their wealth (and other means) in politics.

Although the present level of wealth inequality by far surpasses than that of guilded age of past, but plutocracy and monopolies (big business cartels) had already started to emerge in the economy during the guilded age and money was already influencing the politics of that time but there are a lot differences between past and present which I will explain in this article.

Early Stage of Capitalism - The Past

Capitalism of late 19th century (1870 to 1900) was very different from Capitalism of late 20th century (1980s onward) and Capitalism of early 21st century. There was certain harmony of interest between Capital and Labour during the guilded age - this is a critical point. And since there was a certain harmony of interest between Capitalists and workers, there was also a certain balance of power between Capitalists and Political democracy. Guilded age was a phase of Industrial Capitalism where Capitalists made enormous wealth as second industrial revolution began - technological innovation boomed, productivity rose, the markets & trade (exports) greatly expanded.

But most importantly, the Capitalism of this era was labour enabling. Meaning, the increasing avenues of production (mechanization) required labour which created tremendous opportunities for skilled (as well as lowly skilled) workers in industrial economy as well as tertiary sector. Now of course, there were still shortcomings in this period. Like workers (labour & tertiary jobs) didn’t have adequate workplace protection, insurance, pensions, safety nets etc (these will steadily come in next 50 years). But still an opening was created for upward social mobility. The Capitalists needed workers for production. For Capitalists to become rich, they needed labour to produce so that Capitalists can sell that produce and make profits.

No matter if Capitalists despise labour, they simply cannot make profits & wealth without them and no matter if labour only earned a small piece of profits as wages, they were still better off than not working in those industrial jobs. This was harmony of interests between Capitalists and labour. And some decades down the line, the labour prosperity will be at peak of its fortunes. The Blue Collar workers would enjoy handsome wages in industrial sector (like Ford auto plant) as well as decent protection (insurance, social security, workplace safety etc) - This was the gold age (which unfortunately won’t last long).

As long as there’s a certain harmony between social classes, there wasn’t an antagonistic political relationship between oligarchs and common people (proletariat & peasants). Of course, oligarchs of Guilded Age era may have been scoundrels but they did not have contempt for democracy like the oligarchs of today. The Capitalists were making high profits in certain harmony with workers, it didn’t make a lot of sense for Capitalists to unnecessarily rock the boat by excessive meddling in democracy.

Type of economy - The Past and Present

The Capitalism of guilded age and for several decades after that was vastly different in nature than that of today. This is not surprising because new goods & services arrive with technological progress. The second industrial revolution was about material production - engines, automobiles, electrification, construction, urbanization, machinery, mining, transport, railways, mass consumer goods, sewing machines, soaps, clothes (although refrigerators & washing machines only became common by 1940s) etc. All these things raised living standards of people. The labour worked in factories and produced things of which they also consumed a significant part of.

The industrial production (at least in America) during guilded age and second industrial revolution was also localized - the workers were Americans although there was major influx of migrants from Europe. And after first world war, the anti-immigrant sentiment suppressed immigration of workers into America. America also exercised protective tariffs to support its domestic industry which made it more competitive globally. But more than trade, what interests me is the type of economic production.

Expansion of Railway lines, electrification, new urban townships and industrial cities etc greatly benefited people in guilded age. The production was also tangible - new appliances, consumer goods, gadgets, machinery etc was life changing for people. This is a lot different from today’s American economy. In previous article, I emphasized how America no longer builds stuff. There’s very little expansion/upgradation of Infrastructure after golden age years. Even the infrastructure that was built decades ago is now dilapidated. There’s no comparison between infrastructure of cities of modern China and today’s America.

And what about production? A large part of American economy is now INTANGIBLE - type of goods & investments that doesn’t have conventional material basis. For example cloud computing, software, data & analytics, tech services, new AI trends etc. Even many types of material production of current times brings little improvement in people’s lives. How has latest model of iPhone really improved people’s lives compared to 10 years old model? How will Windows 12 markedly change people’s lives compared to Windows 7? Similarly, how has Facebook, X and Instagram made your life much better, if at all? Trying to measure material benefits of these intangible things is controversial & difficult. How have they really improved people’s lives?

But paradoxically while the new goods and services of intangible types do not bring significant changes in quality of life (I know I am exaggerating), the corporations that provide these goods & services, however, have made great wealth & achieved great power. There’s another way of looking at intangible economy - it’s more rent seeking. Intangible economy has the potential to be scaled enormously but it’s actual material benefits are much less visible. For example while Cloud & digital services, social media and computer/smartphone usage has exploded in last two decades, the stuff that qualifies as necessity of life has become out of reach. This manifests in affordability crisis - housing has become expensive especially in big cities. The education and healthcare has gotten expensive. This is reflected in high personal debts of people - Student loans strangulating people’s dreams and medical bankruptcies destroying savings of people are common.

The general trend of jobs in intangible economy is labour replacing rather than labour enabling. As I emphasized, there was a harmony of interests between labour and Capital during the guilded age. But now, with most of production either automatized or offshored, the Capitalists don’t need labour.

Note that I am skipping the negative outlook of Tech sector - the addiction & mental health crisis, hate mongering & disinformation on astronomical scale, malignant social engineering - which has created social discord across the world and undermined democracy in many nations. If we try to weigh these negatives, it’s difficult to confidently measure on how much society has really benefited from 21st century technology.

Capitalism of Present

The Capitalism of present is vastly different from past. There’s little or no harmony of interests between labour and Capital today. The production of corporations is now highly globalized and no longer corporation needs labour in America for its industrial production. The corporations are also not native to a particular country - they have become transnational - having no convergence of interests with national economy. The saying no longer holds - “what’s good for America is good for General motors”.

You may wonder how corporations make profit if they do not employ labour from local economy. After all, it’s the spending power of labour which dictates rate of profit for Capitalists. In an economy with stagnating wages, unemployment or underemployment the suppressed demand will also diminish Capitalists profits. This is true to some extent. The late stage Capitalism is actually about underutilized Capital, a significant output gap and various inefficiencies. But Capitalism has evolved to at least partially able to keep the consumption going despite underemployment, wage stagnation and output gap. How? Through debt of course.

If you don’t have sufficient disposable income, you can always pile on debt to afford your lifestyle (or basic necessities). Today, people are riddled with all kind of debt - student debt, housing debt & secondary mortgage, car loan, credit card debt, personal loan etc. The personal (household) debt keeps Capitalism going. Then there’s also vast government spending that supports Capitalism. Think of all the direct as well as secondary impact of $1 Trillion of defense spending. And government spending on social services (medicare, medicaid, unemployment benefits etc) and all kinds of expenditure also supports the economy to significant extent.

Age of Democracy - The Past and Present

Last decades of 19th century was age of democracy in western world. Although the concept of universal suffrage in guilded age was still far from modern standards (like lack of women’s suffrage, exclusivity of suffrage to propertied class in UK etc), the idea of democracy by then was deeply embedded in public opinion at least in the developed industrial world (most of West) and would eventually materialize fully in coming years. And mind you that America was a special nation which in terms of democratization was already ahead of Europe due to its 1776 revolution. In sum, Democracy was a popular concept in America as well as industrial western world by end of 19th century.

Surely, some plutocrats and big bourgeoisie may not have liked Democracy but they did not have contempt against Democracy either. Why? Because they were already making huge wealth and were in certain harmony of interests with labour. Democracy was seen as natural order of things and Capitalist class learned to live with it & continue making big wealth. Liberal democracy was an epoch of Capitalist society in old guilded age.

But today the political environment is different. Democracy has lost appeal in much of ruling class in America. Although politicians and oligarchs may publicly preach platitudes about democracy and so called American values, they genuine don’t believe in those things. Many oligarchs see Democracy as an idiotic concept. Also note that modern economy is now ruled by enormously large transnational corporations who’re as powerful as sovereign nations. These corporations decide investment, production, consumption, employment, technological advancement of the nation.

The politicians are cretins who participate in parliamentary circus (public hearings, empty speeches & other formalities) for spectacle of public consumption. The legislation, regulations and key policy decisions are drafted and dictated to politicians by lobbyists. Does it matter for Corporations if the President is 80 year old patient of dementia (who chants Build the wall) or an astute smart talking Black man (who chants Yes we can)? For oligarchy, it makes little difference. America has become a Dollarocracy, and for many oligarchs the personality & populist demagogy of politicians matter little as long as they control the strings of political system.

The oligarchs of today are also different from Robber Barons of guilded age in at least three aspects. First obviously is the fact that while Robber Barons had achieved monopolies in guilded age, their wealth and power was still no match compared to wealth & power of today’s oligarchs whose monopolies of corporations have become transnational and even global. Secondly, the Robber Barons of past did not have the instruments to manipulate public opinion and subvert democracy on a cosmic scale. Surely, Robber Barons owned newspapers and bribed politicians but that scope was limited. The extreme concentration of mass media (TV news, newspapers, magazines etc) & its vast outreach, and not to mention social media platforms in control of today’s Oligarchs, in total, has tremendous power to shape public opinion. Bribery in Politics is also pretty much legalized and more than that it’s now seen as acceptable norm in politics. The organized business of full time lobbyists, think tanks, PACs & Super PACs - all putting huge amount of money (& dark money) into politics and the revolving doors is not just tolerated but now well accepted norm. All this power of money as well instruments to shape public opinion has given tremendous leverage to today’s oligarchs over political system. Old Robber Barons never possessed such great leverage.

The oligarchs of today

Thirdly, the Oligarchs of today have contempt for democracy. Most of oligarchs hide this contempt but some don’t even try to hide it as they openly invade into political arena. People like Elon Musk (the first ever trillionaire) and Peter Thiel (who claims freedom & democracy are incompatible) are prime examples. Although I wouldn’t put too much weight into this but it’s also argued that old Robber Barons had certain aristocratic traits, a dignity of self restraint at least in public life. Such dignity was expressed in their symbolic philanthropy. But look at someone like Elon Musk for whom the cruelty & vulgarity are virtues. For example, women & children died because Musk (DOGE) cut American aid to poor nations. That doesn’t upset Musk, rather it makes him proud & happy. For an oligarch who plans to settle human colony on Mars - either he’s a great con artist to sell this idea to the markets or he’s simply delusional. It’s musingly said about today’s oligarchs that they are cranky and delusional. This differentiates them from old Robber Barons.

In Closing

The liberal Democracy survived the plutocracy and inequalities of guilded age because of several reasons. To begin with, in guilded age, Democracy was genuinely popular concept among public and Capitalists learned to live in that environment rather than trying to undo it. Capitalists and labour were also in certain harmony of interests as Capitalism of guilded age era was labour enabling although labour did not get adequate share of profits. The Capitalists did not have contempt for political democracy and so abided by its formalities.

The Capitalism and society of late 20th century and hitherto 21st century is vastly different from old guilded age. The corporations & oligarchs have become transnational & much more powerful to the level (or even greater) of sovereign nations. There’s no harmony of interest between labour & Capitalists as jobs are automatized or offshored. The production and investment of today is also intangible which although has created enormous wealth for Oligarchs but its actual material benefits are much less visible. The affordability crisis, the stagnating incomes of labour, the declining standards of living, the dilapidated infrastructure & crumbling cities of America reflects that intangible economy has great material shortcomings.

The oligarchs of today have contempt for democracy and are also cranky, delusional and sociopathic. The age of democracy has also waned as ‘markets’ have become guiding force in political and social life. With unprecedented influence of media & social media over public opinion, the democracy is reduced to a formality where people are manipulated to generate specific electoral outcomes. While Democracy thrived during the guilded age, Democracy withers in late stage Capitalism.

The Economic power of America was represented in various aspects. First of course was its enormous industrial capacity including its defense sector which helped allies to win world war 2 and this defense industry would continue after the war ended (it would mold itself for cold war). Second was America’s public investment in infrastructure and social security which modernized America and raised living standards of its people (the New Deal era, the Great society project). Third was America becoming the financial center of the world which attracted global Capital. The wealth of America was on display when foreign leaders visited American cities thriving with urban development and opulent display of wealth.

By end of 1980s, the Soviet Union was a declining superpower which was plagued by political instability, economic stagnation and malaise in general. This malaise was commonly reflected in scarcity of essential public goods. Soviet Union (and its satellites), once great power, was now heavily dependent of foreign loans and critical imports like food grains. With Gorbachev’s initiative to lift iron curtain, the Soviet politicians were able to visit America in more cordial settings. One such visit was of Boris Yeltsin in 1989 (soon to be future President of Russia), who was shocked by witnessing the affluence of American life. At the time, Soviet Union was facing acute food shortages and out of stock food shelves was common sight in Russia. Yeltsin was astonished to see America supermarket stores loaded with abundance of food. And there were no long queues of people desperately trying to get food as was in Soviet Union at the time.

Yeltsin at American supermarket in 1989

America has been for a large part of 20th century - from second industrial revolution till great recession of 2008 - generally recognized as frontier of economic progress. But thereafter, things started to change. The change had actually began a lot earlier whose seeds can be traced in Reaganomics or even further back but the full reflection of the change actually came only in 2010s when stagnation and paralysis of America became clear. And of course, epitome of that is rise of Trump regime although I will not delve too much on Trump here. Now we get back to theme of article that I am trying to sketch - the abundance moment.

America impressed foreign leaders, intellectuals and everyone in general whoever visited America. It was not just America’s liberal values that attracted people but also its material display of power; its industry, infrastructure, glittering cities, automobiles, superstores, skyscrapers, public schools etc. America built stuff and mass produced things, and opulence of this materialism was extraordinary - this was called the affluent society. The abundance moment was impression which America made on foreign visitors who then idealized American society as pinnacle of economic progress. American affluence was something they wished to emulate in their home country.

Today the same level of opulence that impressed people is not so much in America today but instead in China. The enormous network of High speed Rail, the vast number of newly emerged urban cities & engineering marvels of top notch infrastructure, the skyscrapers, the extraordinary display of technology (self driving cars, sophisticated robots etc), the expansion of Chinese firms into cutting edge sectors like Chips & clean energy, the special economic zones etc. The rate of economic development of China is incredible considering that it was ravaged by second world war, got independence from Colonial powers in mid 20th century and even still remained a backward agrarian economy by the 1970s.

What about America? America - the great superpower who was among the victors of WW2 - today is a paralyzed nation with no direction and purpose. I am not just talking about Trump regime but America in general of last three decades or so. The infrastructure of American cities is crumbling - the water system, the railways, the schools, the ports, the bridges etc. There is great private healthcare like in Mayo Clinics while the rural hospitals are shutting down in America. America no longer builds stuff. The States like California & New York are the hubs of technology & finance but there’s no adequate housing for the people. The California high speed rail project is delayed by 20 years while a private corporation can get all State clearances to build Data center in two months. The once great industrial cities (like Rust belt) and the southern States are now the poorest regions of America riddled with high crime and social catastrophe (opioid crisis, falling family structures, incarcerations etc).

And how does America governs itself? The political process of America has become so dysfunctional that it can’t even pass spending bills without a bloodsport. The government shutdowns, debt ceiling brinkmanship and political paralysis over budget is now a routine affair. While American people suffer from this paralysis, the politicians however always manage to find bipartisan consensus to fund a Trillion dollar defense spending. Much of the American infrastructure was built around New Deal era & Golden age. Thereafter, it became a general political consensus that government has no business to be in business. When financial institutions failed, it’s the government’s business to deliver bailouts but not for broadly supporting the economy and to tackle unemployment. Such was American government’s attitude in post GFC era.

As government withdrew from its economic responsibility, the infrastructure dilapidated, inequalities skyrocketed, the wages stagnated, the living standards declined. All these things were left to be dealt by ‘markets’ which never provided any solutions. Rather they exacerbated the problems. And look at regions of America which are wealthy. Parts of California and New York which are center of finance and technology. They are cities full of billionaires but their infrastructure is mediocre & light year behind Chinese top tier cities like Shanghai & Shenzhen. New York is also known as Stinking City. And you can’t redevelop these cities because of NIMBYism which keeps raising housing prices. Home ownership rate in California is 55% (US overall has 65%) while China has home ownership rate of 90% - no match for US.

To be sure, America leads and will continue to lead for foreseeable future in terms of depth of its financial markets and preference of dollar as a reserve currency. Huge amount of Capital from across the world will continue to chase Wall Street. But Capital and depth of financial markets do not necessarily translate into growth and economic development. What is the depth of Chinese financial markets? Nothing compared to America. Yet China’s economic development is astonishing. America is still attractive and still impresses people but for different reasons; you can be enormously wealthy in America like the first Trillionaire Elon Musk. The prospects to make wealth in America are tremendous as evident from rise of centi-billionaires & oligarchs. But at the same time, there is little improvement in living standards and quality of lives of average people whose wages stagnate and inequality is skyrocketing. Today America is symbolic of wealth, not for economic development & progress.

Admittedly, China is not a panacea and it has many underlying issues - the demographic problems, suppression of domestic consumption, environmental concerns, labour conditions etc. A major shortcoming of China is political system that atomizes people and the lack of rule of law. China thinks in terms of aggregates - prioritizing national interest and disregarding people’s individual interest - which at times has been detrimental to China’s national interest itself (one child policy was perfect example of this). But there is one thing where China succeeds and America fails badly.

America believed in markets, and general principle that purpose of all policy is establishing a market economy - market economy is be all and end all of everything. Markets are believed to be the magical fountain - they would deliver growth, wealth, jobs, economic development, social progress etc. For China, establishing markets was not the goal in itself. Yes, China moved to market economy but government assign strategic objectives for national economy. You can call it Capitalism with Chinese characteristics or Socialism with Capitalist ingredients. Whatever you call it, there’s a very visible hand in China which guides market forces to achieve certain goals. And America? It’s economic policy discourse lost in idiotic debates about size of deficits, equilibrium, laissez-faire, demand & supply curves, supply side tax cuts to drive growth etc. By the way, some pundits cheered for industrial policy of America which wasn’t really the case.

So American economic policy drifts astray. And American politics? With Trump regime in power, nothing further needs to be explained on course of things in America. You already know it.

(George Orwell)

Who is most responsible for Iran conflict? If you were to follow Historian Timothy Snyder, the ONLY person responsible is Donald Trump. You can read Snyder’s articles on his Substack in which he analyzes Trump’s attack on Iran. But take note. In all these articles, Israel doesn’t come to mention once. Not once. It’s true that Donald Trump is an unstable imbecilic clown who has made a mess of the situation but the person who started the Iran conflict is NOT Donald Trump. The conflict is started by Israel and it has goaded America into the war. The man most responsible for starting Iran conflict is Bibi Netanyahu. Donald Trump is secondary.

Donald Trump doesn’t have any ideology or strategy or any planning or a specific policy towards anything. He’s an imbecile who functions mainly on two foundations. First is his irresistible whims, petty but visceral vindictiveness and delusional beliefs. Second is the manipulators around him who exploit these pathological tendencies of his. Much of his whims & delusional beliefs are born out of his personal vendettas like his revulsion for wind mills. The background of it is his personal grievance with Scottish government over wind farm near his golf course. Similarly his whims about Nobel peace prize which he feels is unfairly denied to him (if Obama got it, why not him?). There are many such personal grievances of Trump which shapes his delusions.

There are variety of manipulators around Trump who exploit his pathological tendencies. There are oligarchs like Elon Musk and Peter Thiel. There are proto-fascists like Stephen Miller & Steve Bannon. There are idiots like Howard Lutnick and Peter Navarro - the trade & tariffs advisers. Trump himself has zero intellect or knowledge about anything. Trump cannot do complicated things let alone plan for foreign wars. On middle east policy, the Israelis are the biggest manipulators of Trump. This is not just case with Trump. Israelis & Zionists always had a strong influence over US middle east policy, they finance politicians across political parties, they manipulate Trump just like they manipulated Biden before him.

Current Iran war cannot be explained without including the role of Israel which I believe is a major one. You also have to understand broader picture of middle east. The Iran conflict is part of the chain which began with Israel starting Genocide in Gaza in 2023, attacks in Lebanon in 2024, US overthrowing Assad in Syria and finally attack on Iran. These events started when Biden was in White House. The events after Trump took over White House continued along their previous trajectory where Iran is the last domino. Let’s pause again and go back to Timothy Snyder.

Timothy Snyder poses himself as a great humanitarian and condemns Russia’s Genocide of Ukrainians. But Snyder has never uttered a word about Genocide in Gaza. Take note that Snyder is a Historian and hence bound by certain professional principles. A historian must document events with impartiality as a neutral observer. He cannot OMIT events or document them with a personal bias. A historian keeping silence on Gaza genocide is not only morally wrong but also disqualifies him from professional integrity. Snyder’s analysis on Iran conflict without mentioning the critical role of Israel is again a betrayal to his professional integrity as a Historian.

The role of Israel in Iran conflict and broadly in middle east is central and events in middle east are impossible to comprehend without Israel’s policy in the region. It was on pressure of Israel that Trump in 2018 withdrew from Iran Nuclear deal - An international agreement which involved UN permanent superpowers and was reached after a decade of negotiations. American policy on middle east has long been ‘Israel first’. This remarkable fact is omitted by Snyder. An ordinary commentator can do as he pleases to omit or twist his analysis but not a professional historian.

The attack on Iran started with Assassination of its top leadership and this by all accounts was carried out by Israel. US attack was focused on Iran’s military capabilities, Missile & drone facilities and other infrastructure. The most critical part of attack - the assassination of Iran’s head of the State (Supreme leader) - was carried out by Israel. Now you can make the case that Israel is a junior partner of US in attack on Iran although I claim that it has bigger role. Whether Israel has the bigger role or small role, you can’t just ignore the role of Israel in current middle east situation. Snyder has conveniently ignored it completely and very deliberately.

Israel’s policy is wicked and it’s in its nature since many decades. It now has embroiled America into catastrophic war in middle east, and then quietly receded in background. This was what Bibi always wanted. Get the war started and let America deal with it. War once started will become out of control and especially with bunglers & idiots in Trump regime (like Hegseth & Rubio), it would be impossible to dial down the conflict. And not to mention Trump’s own mental instability because of which it would be impossible for him to take any meaningful decision. Israel understood all this dynamics and precisely for this reason it goaded American buffoons into this catastrophic blunder. Even if by some remote chance, there’s a possibility to wind down the conflict, Israel will always sabotage it by breaking the ceasefire and assassinating Iranian leaders.

Not just American pundits like Timothy Snyder & others, but American media also has long been misinforming the public. While people blame Trump regime for energy price shocks & rising Gas prices, media doesn’t educate people that Israel shares equal blame in creating these shocks in middle east. Much of the media in America is also pro-Israel and connected to lobbies like AIPAC. American media is thoroughly corrupted and has been misinforming people since decades. American pundits are also intellectually bankrupt and/or intellectually dishonest who have misinformed American people since many decades. Israel is ruled by fanatics and malevolent political class just like Trump regime but America media has always portrayed Israeli regime as the poor ‘victims’.

Timothy Snyder who criticizes the inhumanity of Putin regime is completely silent on inhumanity and genocidal war crimes of Israeli regime. You can check his numerous articles & interviews. He has never uttered one sentence on Israeli war crimes. Genocide in Gaza was a historical event and if a historian is completely silent on such critical event, it exposes his intellectual dishonesty and moral decadence.

Trump is an imbecile but even still he has some sense of self preservation. His problem is his instability which deters him to self preserve. The war in Iran is highly unpopular as Americans face its immediate impact on gas prices. Then there’s Congressional elections coming in next 6 months which, given the unpopularity of Trump, will flip at least one house of Congress. And if the war goes really bad, it may even flip the Senate. This will bring Trump closer to another impeachment. The bunglers in White House are trying to make a deal with Iran so as to put an end to this deeply unpopular war. But they can’t, precisely because they’re bunglers and additionally Israel will sabotage their efforts by breaking ceasefire or some other provocation. Trump regime is thus in precarious jam.

Israelis don’t care about Trump just like they never cared for Biden. They used Biden like a tissue paper and disposed him off. While there were several reasons for Democratic Party’s loss in 2024 elections, the loss in State like Michigan (with sizable Arab-American voters) was due to Biden’s support to Israel and enabling Genocide in Gaza. Israel’s role in always cynical. It blatantly meddles in American politics to the point of destroying political careers of American politicians and dragging US military into war.

Note that while Timothy Snyder has much criticism about Russian meddling in US politics, Snyder has never uttered a word about blatant Israeli meddling in US politics which is on a lot bigger scale and which has undermined American interests since many decades. It’s astonishing that Snyder has never criticized AIPAC’s influence in American political affairs. Why? Snyder who poses as defender of Democracy however has maintained a wicked silence on subversion of American democracy by Israelis.

Why Snyder is mute about Israeli meddling in American politics?

Given such great omissions by Timothy Snyder and his betrayal to his profession of History, I am forced to make conclusions. Is he intellectually dishonest? For sure. I can go further. Is Snyder a closet Zionist? Probably. Make your own conclusion.

Substack vs Legacy media

The legacy news media - the mainstream news - has lost its value and credibility. Media enterprises are just tentacles of oligarchs and they don’t provide actual stories and insight. Substack was supposedly a platform where former journalists, editors & pundits (along with many ordinary people) created a haven to disseminate ideas and analysis. In legacy media, journalists could only present their stories with certain perspective that was dictated by their bosses. And certain stories & analysis could not be presented at all if it didn’t fit into narrative of legacy media. Such was the state of media and it’s getting worse every day.

On Substack, there are no boundaries for writers. They can write from their heart & mind on subjects without any censors. Take example of me. I would never get a job with any legacy media in my country (India). On Substack, I can write freely. But American pundits still don’t write freely. What’s stopping Timothy Snyder from writing about Gaza Genocide and Israel’s blatant interference in American politics?

I give you another example. Economist Paul Krugman is among the top Substackers and has recently written numerous articles on Iran conflict & its economic consequences. Yet, not in a single article he has mentioned the role of Israel in starting this conflict. How can you comprehend Iran conflict without including the single biggest actor - Israel - into the picture? Krugman also levels a lot of resentment against Iran war on idiocy of Trump regime but at least half of this resentment should be leveled against Israelis. On that Krugman is mute.

What forces gag American pundits on Substack and why they stay silent on certain issues? I don’t know.

People see acts of serial killers (like Ted Bundy) as the most grotesque form of violence. But our systems commit overt violence probably a million times worse in terms of scale and human destruction. The wars, the conflicts, the incarceration industry of America, the policing etc are all Structural violence that are of overt nature. You don’t see them as violence at all because of how your thinking is nurtured (conditioned) from an early age and accustomed to these types of violence.

Bert Waldron was an American military Sniper with over 100 Kills, Chris Kyle was American military sniper with over 150 kills. What differentiates them from Ted Bundy? A PCL-R test? These soldiers having a ‘stable’ psychological profile compared to serial killer Ted Bundy? But end result is the same - a soldier in military carries out enormous violence like a serial killer. Now Ted Bundy was a sadistic Psychopath and military soldiers are not (let’s presume so). But think deeper. What’s normal, in itself, is a political & social construct. Why is that the military service which creates violence is a justified, accepted and even glorified norm?

There’s another level of thinking. A soldier doesn’t see his acts as violence at all or he recognizes his violent actions but able to justify them due to psychological conditioning - the military training. He is trained with utmost discipline that he’s defending great values of country, liberal way of life and American democracy. Soldiers are not intellectuals, they are …. well …. just soldiers. They’re trained to follow orders and not to think. What about serving the country and protecting American way of life? It’s mostly a propaganda. American troops fighting in Iraq or Afghanistan or Vietnam or X Y Z third world country aren’t fighting for America. Perhaps for profits of Exxon Mobil or Raytheon or Lockheed Martin? Perhaps for no purpose at all.

If you take apart the psychological conditioning, the propaganda of patriotism and national duty, you will see that military soldiers are just killers. Some nations recognizes it well and don’t have any qualms to ignore the veneer of patriotic propaganda on military objectives. Russia is recruiting military troops from its penal colonies to fight in Ukraine (1, 2). The idea is simple. The unscrupulous hardened criminals in hellish Russian penal colonies are given a chance to ‘redeem’ themselves. They are asked to deliver success on battlefield and in return they will be given amnesty for their crimes.

Let’s look at Air force Pilots, the most disciplined & handsome people in military, and also much glorified. You probably have seen the film Top Gun with actor Tom Cruise. An Air force pilot is modern day equivalent of Nazi Gas Chamber operator. He pushes a button to drop bombs & Missiles on the targets. He also, like a field soldier or a Sniper, is conditioned psychologically to carry out his military service. He’s not an intellectual who can contemplate the consequences of dropping of bombs & Missiles. The Israelis dropped bombs & Missiles on Gaza on a destructive scale multiple times of Japan’s Atomic bombing. A lot of these bombs & missiles are fired from fighter planes. And what are the targets? Civilian hospitals, refugee camps, food aid convoys, civilian infrastructure (like water). In fact, most deaths in Israeli bombings are of civilians and intentionally so. It’s a Genocide - a well intended plan to exterminate population of Gaza.

US has a long track record of killing civilians in various conflicts. And not just accidentally but fully intentionally. Bombing of civilian infrastructure like schools, hospitals, residential buildings, weddings etc by American military is well documented. US attack on Iran school which killed over 100 children is a recent example. The trend of killing civilians goes long back. Recall the US military spraying agent Orange in Vietnam which had catastrophic ecological impact, and which killed hundreds of thousands of Vietnamese, and also producing variety of long term damages like birth defects. Agent Orange even killed hundreds of thousands of American soldiers over time who were exposed to the chemical.

Systems creates violence most efficiently and brutally

A while back I read William Shirer’s Rise and fall of the Third Reich which mentions an interesting incident. Nazi policy on eastern front was extermination of Slavic people - Poles, Russians, Jews etc. Prisoners were executed in cold blood. In 1941, Heinrich Himmler was overseeing the murder of prisoners captured in Eastern front. Killings were organized by firing squads. The scene was chilling and greatly disturbed Himmler when he witnessed the brutality of murders first hand. The soldiers who committed these brutal murders in excess suffered from psychological trauma. Himmler wasn’t concerned about morality of these murders but psychological impact of these killings on German soldiers.

Later Nazis built more efficient ways of mass murder, most notoriously the gas chambers at extermination camps. The extermination camps was a SYSTEM of mass murder where everyone just followed orders. The chemical companies manufactured poison capsules. The trains and locomotive systems carried prisoners to extermination camps. The prisoners were asked to take bath and enter the gas chambers (which they believed to be shower hall) where they suddenly find themselves locked in. The poison capsules were dropped in chambers which produced the deadly gas. The dead were later removed from chambers and burnt in mass graves or in special crematoria. The whole SYSTEM was organized like a clockwork with every person in the chain having fixed role. The chemical company itself didn’t kill the prisoners, it only sold Poison gas capsules to German forces. The drivers of locomotives and Trains that transferred the prisoners didn’t kill them, they only carried them to extermination camps.

Nazis thus built a SYSTEM of extermination of people. Who owns the responsibility of mass murder in such SYSTEM? Shirer also mentions an interesting fact that chemical companies who manufactured poison gas capsules were later able to evade from their culpability in mass murder. That’s how systems work. Various moving parts of system don’t decide what they are doing. They sometimes don’t even know what they are doing. SYSTEM compartmentalizes the whole thing into routine tasks which people follow as their job.

A while ago, I wrote a comment on Dr Bandy Lee’s Substack about Joe Biden’s culpability in Gaza Genocide. The amount of bombs dropped on Gaza are multiple times the Atomic bomb dropped in Japan in terms of destructive power. UN and ICC also recognize that Bibi Netanyahu is committing Genocide in Gaza. Israel drops Missiles & bombs on Gaza and so its culpability is clear. But doesn’t America gives Israel much of those Missiles and Bombs as a part of military aid? Doesn’t America protect Israel in UN security council? Without US weapons aid and diplomatic support, can Israel commit all these crimes? Hence Biden was also an accessory to Genocide committed by Bibi.

But blaming Biden is not sufficient. The real problem is SYSTEM of which Biden is just one VARIABLE. What is the system? System comprises of long standing inertia of foreign policy, written & unwritten geopolitical conventions, influence of foreign lobbies which have corrupted politics, the enterprises of defense industry and their unscrupulous pursuit for profits etc. Politicians and bureaucrats are just variables embedded in this whole system who pursue their routine tasks. Tasks which are mostly pre-decided for them.

Dr Lee says Presidents should be given a PCL-R test to check for psychopathy. Trump may fail a PCL-R test but Biden & Obama may pass it easily. Crimes against humanity were also committed by Biden & Obama regime, and past regimes before them in some capacity if not directly. If PCL-R test was administered on LBJ, he would pass it easily yet he embroiled US in catastrophic Vietnam War. A war with millions of casualties and war crimes.

Impersonalization of War

Why the wars & conflicts of 20th and 21st century have been so deadly? Is it only because the world is now ruled by Psychopaths? You may say so about Hitler & Stalin or Putin today but can’t extrapolate this narrative to everyone. Was Harry Truman a Psychopath, for he ordered the Nuclear bombing of Japan? Were British Generals psychopaths, for they ordered the carpet bombing of Dresden? Were US politicians and Generals Psychopaths, for they ordered the dispersal of Agent Orange in Vietnam? What about people who pull the trigger on orders that come from above? The pilots who drop the bombs or people with trigger who press it to launch Missiles - Are they also psychopaths?

US military dropping Agent Orange in Vietnam

Historian Eric Hobsbawm explained why Wars of 20th century were so brutal and resulted in enormous amounts of civilians deaths. Here is the excerpt from Hobsbawm’s book The Age of Extremes.

……… Another reason, however, was the new impersonality of warfare, which turned killing and maiming into the remote consequence of pushing a button or moving a lever. Technology made its victims invisible, as people eviscerated by bayonets, or seen through the sights of firearms could not be. Opposite the permanently fixed guns of the western front were not men but statistics—not even real, but hypothetical statistics, as the ‘body-counts’ of enemy casualties during US Vietnam War showed.

Far below the aerial bombers were not people about to be burned and eviscerated, but targets. Mild young men, who would certainly not have wished to plunge a bayonet in the belly of any pregnant village girl, could far more easily drop high explosive on London or Berlin, or nuclear bombs on Nagasaki. Hardworking German bureaucrats who would certainly have found it repugnant to drive starving Jews into abattoirs themselves, could work out the railway timetables for a regular supply of death-trains to Polish extermination camps with less sense of personal involvement. The greatest cruelties of our century have been the impersonal cruelties of remote decision, of system and routine, especially when they could be justified as regrettable operational necessities.

So the world accustomed itself to the compulsory expulsion and killing on an astronomic scale, phenomena so unfamiliar that new words had to be invented for them: ‘stateless’ (‘apatride’) or ‘genocide’.

The ongoing Ukraine Conflict is so brutal and deadly. Why is it so? Because it’s largely an impersonal war fought mostly with remote high tech technology. The battlefield is like a Video game where both sides are exploiting Drone warfare to the fullest. Recall that Drones were first mobilized by America in war on terror in early 21st century to carry out assassination of terror suspects in South Asia & Africa. But now Drones are much perfected, miniaturized and economized (a lot cheaper to build on mass scale). Each wave of drone attack comprises of hundreds (or thousands) of Drones which are sent on enemy targets including civilians & public infrastructure.

Ukrainian Drone operator

Dan Davies wrote book The Unaccountability Machine which explains how our institutional systems - governments and corporations - generate undesired and sometimes even fatalistic outcomes. Davies explains how these outcomes are product of SYSTEMS and not individuals that man the systems. In such systemic failures, nobody is responsible of the outcome and everybody is responsible at the same time.

While overt violence - the drones, the missiles, the bombs - are used extensively to mass kill people, people can be also killed by economic blockades and sanctions. In Gaza, a lot of people were killed because of blockade of relief aid enforced by Israel. Before US sent troops to bring regime change in Iraq (on lies of WMDs), America used the pressure of economic sanctions that killed hundreds of thousands of Iraqis. Economic sanctions are as deadly as bombs & missiles. The logic behind sanctions against unfriendly regimes is that it will create economic misery and cause internal revolt in those nations. But in reality, the brutal regimes weather sanctions easily while common people die.

The economic sanctions are designed by technocrats and bureaucrats of government. They are psychologically healthy people who will pass PCL-R test easily. Yet, their routine office work will consequently lead to mass deaths in some foreign country. When Secretary of State Madeleine Albright was asked whether hundreds of thousands of deaths were worth it to bring a regime change in Iraq. She said ‘Yes’ without flinching.

Environmental violence is also among the most potent forms of violence. The attack is first carried out against the natural ecology and since humans are embedded in ecosystem, the humans ultimately bear the catastrophic impact. Dr Lee describes Nuclear attack as an environmental violence in her book. Similarly, Agent Orange was an environmental violence. Environmental violence today is orchestrated on a large scale by our economic industrial systems, not individual psychopaths. Man-made Global warming is prime example of environmental violence orchestrated by our economic industrial systems. Almost all of our economic growth in 20th century is built on fossil fuels. By end of 20th century we started to see the consequences of the mindless consumerism of market economy.

We can develop alternate source of energy and in fact renewable energy has become quite economical. Yet we find it very difficult to make the transition because we are in a market economy. Energy transition means junking of fossil Capital (Oil & gas fields, internal combustion engine technology etc) which is proving difficult because the economic industrial lobbies care more about their profits than the health & survival of this planet. The fossil fuel companies have thrown enormous amount of money in political lobbying to protect their interests. This again is a Systemic problem, not just of individual CEOs or shareholders of fossil fuel companies. The fossil fuel companies wanna maximize their profit - a simple philosophy of Capitalism. A planet dying in the process doesn’t enter into profit-loss equations and balance sheets of oil & gas companies.

Policing and incarceration industry

Economists have long studied connection between unemployment, economic opportunities and community outcomes. Communities which faced economic downturn like closure of factories & erosion of jobs have faced devastating social impacts. The crime rate rise, drugs and alcohol consumption rise, incarcerations rise, family structures break down, marriages fall apart and this social crisis become contagious which also drags down the next generations. The story of de-industrialization of rust belt in America and its social consequences are well known. In a way, the seeds of Trump phenomenon lay somewhere in the post-industrial carnage of American communities.

Economists, especially of institutional heterodox strand, contemplate policies that can maximize employment with healthy living wages. These policies contradict laissez-faire / Neoliberal economic philosophy and thus shunned by policy makers and politicians. A failing economy will produce a failing society. Unemployment, social insecurity, increasing debts, homelessness etc increases crimes and civil disorder. Rather than fixing economy & restoring the communities, the government resorts to fixing crime as Law & Order problem. More ruthless policing, longer jail sentences, curtailing civil rights and packing up prisons with delinquents are seen as the solutions. The legal system is not meant to rehabilitate people, it’s meant to isolate delinquents from society. This is the approach taken in America today. The poor, the Negroes, the women, the children, the immigrants etc - the most vulnerable of society - suffer the most.

Economic decline leads to devastating impacts for communities. In 1980s & 90s, thousands of American factories shut down and relocated to China & other third world nations. These factories employed millions of workers in America and when they closed, the communities faced catastrophic effects. Why American business owners chose to move their factories out of America? Not because they were wicked or psychopathic. They simply followed the profit motive of capitalism. The labour in China & third world countries was cheaper which gave them good profit incentives. Such is the nature of our economic system. The economic decisions that cause devastating impact on society often happens not due to some evil design. Rather they are just incidental outcome of profit-loss equations and impersonal business decisions. This is how Capitalism works.

The oligarchy that emerged out of American Capitalism also destroyed American democracy. The politicians today are just agents of oligarchs masquerading as representatives of people and their allegiance lies with interests of economic industrial lobbies. US can more accurately be described as Dollarocracy - one dollar one vote. And since oligarchs own the most wealth, they control the political system including the Courts.

Bad systems produces unfit leaders - People look for convenient scapegoats

Unfit leaders are product of bad systems. Inertia is a strong force and in long running systems people don’t see the systemic failures as what they are. Rather they look for convenient scapegoats. Today, people attribute crisis of America to psychiatric illness of American President. Dr Bandy Lee claims that problem America faces is NOT political but psychiatric. Let’s examine this point.

After 2021 coup attempt, Trump would’ve been sent to prison for multiple lifetimes. He was indicted on nearly 100 criminal counts including espionage, insurrection and defrauding America. Yet all these investigations failed to produce anything. The US Supreme Court gave total immunity to Donald Trump thus compromising the entire system of checks & balances in America. Then American oligarchs poured huge amount of money in his 2024 campaign. Trump was given media and social media platforms to gaslight America once again. In 2024 elections, people chose to vote for Trump despite his criminal and disastrous track record. Trump was thus enabled by political system to come to power.

Even today, Trump can be removed anytime from office by impeachment & conviction if he’s such a disaster. Yet, he continues to enjoy his Presidency. The reality is that American Parliament (Congress & Senate) is thoroughly corrupted and dysfunctional. American courts are thoroughly corrupted. American institutions like Justice department, media, military, State department etc are all corrupted. What America faces is a SYSTEMIC failure of its political system. This systemic failure has been going on since many decades and Trump is the final product of this long process. Tomorrow, Trump may go but problems of America will remain under different set of politicians.

What America faces is a political crisis, a crisis of its liberal democracy & capitalism. It’s not a crisis of Trump’s psychiatric illness although undoubtedly Trump is mentally unfit and has aggravated the pre-existing problems of America. America’s political crisis is manifesting into a psychiatric crisis. Underlying the madness & instability of Trump lies the undisputed fact that American political system put this unfit man into power and continues to keep him there.

Some more questions need answering on which we can speculate. Why would American oligarchs propel a demented madman like Donald Trump into power? Are they also malignant and corrupted? Obviously yes. But more than that, American oligarchs hate ‘rule of law’, system of checks & balances and idea of government itself. The transnational corporations have become enormously powerful, their revenue is greater than GDP of many countries, they own the politicians and media. They don’t want to operate under government oversight or national territorial laws or any societal norms. They don’t wanna be bound by any restraints. What’s the best way to destroy the system of government and rule of law? Make a madman and an imbecile clown like Donald Trump President who will destroy American democracy like bull in a China shop. If I can exaggerate and overgeneralize - Donald Trump is a conspiracy to destroy American State and its public institutions.

Systems spiraling out of control and producing more & more violence

The SYSTEMS - the political, economic, geopolitical setup of institutions - that we built in last 100 years or so have become dysfunctional and failing. Democracy failing in post colonial & third world nations was expected. But the Democracy where it worked well for so long is also now failing. It’s interesting to note that UK - the mother of Parliamentary democracy & birthplace of first industrial revolution, and America - the birthplace of second industrial revolution and beacon of liberal democracy, are now focal points of great political upheaval. The Brexit and MAGA movement are symptoms of this upheaval.

Our economic structures built on hyper-individualism and market society which produced giant transnational corporations is creating great social & political instability. The impact of economic decline & inequality ruptured society. Crimes, Drugs, family breakups and societal anger increased. This was capitalized by extremist politicians like Donald Trump. Donald Trump is a product of disease of which he promises to provide a cure. Trump claimed American dream is dead and he will make America great again. But he plunged America into deeper misery & anarchy. The political violence is rising in America. Some pundits forecast 20 years’ of violent crisis and a possibility of civil war in America.

Our geopolitical system is breaking down. It was never a benevolent system. The order of 1945 - 1991 was based on multipolar power balance which was driven on a cold war where nations built thousands of Nukes. Cold war was not a creation of psychopaths and wicked men but born out of systems - geopolitics, foreign policy and defense industry - which were mostly managed by rational & intelligent people. These people were not mad & irrational, for they ensured that cold war doesn’t turn hot. We still live in the shadow of cold war where although political ideologies may have dissipated but animosity between nations still remains.

1991 - 2016 was a unipolar world order under US hegemony where rule of law started to break down due to US unilateralism, middle east wars and economic warfare (US bullied nations through economic sanctions). Then came 2022 Ukraine war where another superpower & permanent UN security council member unleashed naked aggression. The UN elite members - the five superpowers - were supposed to be guardians of post war world order. What international order world can have when these members themselves started waging wars of aggression? Then came Gaza Genocide by Israel followed up by broader wars in middle east all enabled by US and Europe. The post world war 2 order is now at its brink. We are probably one war away from its total collapse.

Conclusion

It’s true that mentally unfit and malignant leader will produce worst outcomes in a failed system and aggravate the existing problems but even a mentally fit President will be forced to take unfit & destructive decisions in a failed System. The decisions are product of system and President although has great authority is actually constrained to work for the system. Donald Trump is undoubtedly the worst product of the American political system but even mentally fit leaders before him failed in many regards because they were part of system which itself has failed.

When society is faced with tragedies, it avoids to face its real causes. People want convenient narratives and simple solutions. A convenient narrative is that Trump is a psychopathic dictator or a malignant narcissist. This may well be. But it doesn’t explain why or how our System brought him into power. A political system is supposed to be a filtering mechanism that brings most competent & intelligent people into public office. Yet, in last several decades, the filtering mechanism has started working in reverse. It’s bringing the most incompetent, corrupt, charlatans and idiotic leaders into power. Why is it so?

How can we correct our political system is the relevant question. How can we reform our economic system to break the oligarchical control over politics is real question. How do we fix our broken institutions like Supreme Court, parliament and media are the real questions. These are the questions that should be the point of origin to discuss new ideas. A convenient narrative offers convenient solutions. For example, instituting a Psychiatric evaluation of President and a PCL-R test. But what kind of test is there for diagnosing the malignancy and unfitness of SYSTEM?

Suggested readings

Violence by Dr Bandy Lee

The Age of Extremes by Eric Hobsbawm

Indian private sector is driven by monopolies of oligarchs that have expanded and penetrated into diverse sectors but without any innovation. A conglomerate (Adani group) owns coal & gas mines as well as ports as well as Airports as well groceries business as well as multimedia business as well as Real estate. Another conglomerate (Tata) produces automobiles as well as groceries as well as appliances as well as Information technology services as well as Real estate as well as defense equipment. Another conglomerate (Reliance/RIL) owns telecom business as well as news media empire as well as eCommerce retail business as well as Oil refineries as well as financial services etc.

Underlying factor of much of Indian private sector is oligarchical drive for expansion and rent seeking, rather than making any concrete technical progress. In this aspect, India is similar to post soviet Russia. With few exceptions (generic medicines etc), India’s exports are otherwise driven by commodities like Farm goods (Rice), precious stones and Petroleum products. Indian conglomerates are generally noncompetitive in global markets (few exceptions like IT services) even after pouring massive govt subsidies into them. Some of the conglomerates are even noncompetitive in domestic sector, relying on large state subsidies, (unmerited) govt contracts and bank bailouts (debt reliefs-evergreening of loans) to stay profitable.

To understand the reason of this problem - the lack of creative destruction and entrepreneurship - you have to understand the broader political problem with India (start here 1, 2). The problem with India is very much structural and cannot be resolved by piecemeal policies. I will also explain how attempts to nudge Indian economy with patchy policies - like Digitalization campaign, Make in India and Startup India - have failed to bring any concrete progress.

The biggest problem of India is its political system which is totally incompetent, malignant & paralyzed, incapable to do even most basic governance and policy making. On this, I won’t repeat much as everything worth stating is written in two above mentioned articles. Investment and innovation in an economy doesn’t just appear magically out of private sector but is an endogenous outcome of a complex process in an ecosystem which requires proficient institutions & policies, good governance, economic certainty & demand, Infrastructure etc. In modern economy, government itself has key role in driving innovation by incubating R&D, industrial policy and range of proactive participatory roles in economy. All these things Indian government ….. let me rephrase ……. Indian political system is incapable of doing.

Shortcuts and quick fixes to growth

Indian policy makers have tried to use shortcuts to achieve economic development. The wonders of digitalization - the use of electronic money - was projected as great panacea. Replacing informal cash transactions by digital transactions using mobile wallets and formal banking system was much hyped. Today, people buy groceries and vegetables from local vendor by mobile wallets but how has it really changed Indian economy? The poverty, the mass unemployment, the economic stagnation, the corruption, the scarcity of public goods remains the same. Even so called cash transactions have not come down and instead rose enormously after demonetization implying that although people did switch to digital money but corruption on cash transactions never stopped.

Cloud computing, digitalization of government records and services did produce some benefit but that by no means was enough to propel the economy. And much of digitalization is still patchy with faulty government portals, broken databases, lack of security and accountability. For example, what’s good about digitally filing RTI (Right to information) application when government department will just deny you the information. The process may have been digitalized but the bureaucrats behind the process and their attitudes towards public hasn’t changed. Similarly, although many government services have been digitalized, the bribes still remains the norm to get those services. Overall, the digitalization was a good start which has been lost in the execution but is conceptually a good idea. A corrupt and incompetent government bungles and messes up executing good ideas.

(Also we don’t know the true extent of lapse of cybersecurity apparatus of government which government proclaims to be full proof but time & again there have emerged scandals of massive data leaks. Full scope of these breaches are not known.)

Then there was Make in India campaign launched more than 10 years ago. The gist of it was emulating China’s manufacturing boom in Indian economy. The flying Geese came from Japan, to Taiwan, Hong Kong & South Korea and finally to China. Maybe flying Geese can also come over to India and India can build its economy by becoming a hub for global manufacturing. But India failed to expand its manufacturing share of GDP even by an inch after nearly a decade.

Here I like to expound on some reasons for failure. The companies aren’t impressed by loud trumpets and fanfare of government schemes. The companies weigh their investment prospects on merit. India’s infrastructure is broken & bad - the transit connectivity (roads, highways, freight, ports etc), reliable energy & water supply etc. There’s no proper planning for establishing industrial hubs & economic zones. Even the basic policy for land repurposing and usage is long in limbo. Then there’s lack of skilled labour, training & skill development centers, good institutions for regulation & arbitration. Basically, the ecosystem to make India a manufacturing hub is not there.

So Make in India failed to materialize. Ideally, a government with common sense would look to fix the basic problems of infrastructure, institutions and other bottlenecks but it never did. But government tried another shortcut of Startup India campaign. A call for entrepreneurs to mobilize and create new business ventures. Here in India, we have habit of jumping things. The government tries too hard to jump from A to E by skipping B, C & D in process.

Things like Startups are based on intangible investments which require good IP laws, mature financial markets and proficient institutions for arbitration among other things. If hard infrastructure is one side of things that businesses require, the other side is soft infrastructure - mechanism to resolve disputes, courts to adjudicate matters in reasonable time, laws with clarity and basically efficiency of whole legal system. But these institutions are either non existent or just not mature & efficient enough to encourage investments in India. The clogged Indian courts & lethargy of justice system is well known & not worth repeating for sake of brevity. So Startup India didn’t materialize.

Here I like to assert that although jumping developmental steps is sometimes possible but Indian economy is so backward that you cannot jump from A to E without skipping B, C & D in many areas. For example, if you have lagging telecom sector on 2G technology, you can jump to 4G & 5G technological investment. India was slow to catch up with world on digitalization but digital technology with tendency of getting cheaper & more efficient with time, you can afford to make late adjustments by skipping some steps. In early 2000s, Indian oligarchs of outsourcing industry (people like Nandan Nielkani etc of IT sector) convinced politicians that road to India’s economic growth is through digitalization.

Outsourcing industry was a easy picking fruit because government didn’t even had to pluck it, it fell on government’s lap by itself. In globalized world, the wage differential in service sector between developed nations and third world nations meant that businesses outsourced a part of their services to India. For a brief period 2000 - 2020, India enjoyed this fruit. Digitalization was a simple enough idea because it sidestepped the messy problems like Land reforms which India could not achieve even after more than 60 years of Independence by 2000s. Here, the Neoliberal mindsets of people like Manmohan Singh (India’s much acclaimed former Prime minister) and outsourcing oligarchs converged and gave birth to digitalization of India’s welfare system.

Vast majority of Indian population is poor and depends upon some kind of welfare support (food grain, subsidy on cooking gas, rural employment guarantee etc). The premise was that there’s a lot of corruption & misappropriation of public money in this system, so tying every government welfare program with Biometric (finger prints, eye scans) record of every Indian citizen will absolve the system from corruption and financial misappropriation. This was proclaimed to be critical piece for good governance in India. But good governance requires creating good institutions, Court system and healthy legal system, public accountability mechanisms etc, all which government completely ignored. Why? Because it appeared messy.

There’s a lengthy debate about the right to privacy and security concerns of government’s Biometric program but let’s sidestep it. Creating a Biometric based welfare system didn’t mean that government had to ignore other critical areas for building institutions of good governance. So the blunder of government was not really Biometric program, problematic as it may well be, rather the problem was government believing it to be a solution of everything.

Another warning sign that India’s institutional set was failing badly came in early 2010s with popping of Real Estate bubble. Markets create growth but they also create conflicts which require institutional mechanism for resolution. India witnessed real estate boom starting in late 2000s which created big investments in new housing projects in major cities. But there was no institutional and legal protective mechanism for home buyers to keep real estate companies in check. Millions of people invested their savings in home ownership and so started the boom. But then variety of problems occurred - land disputes, siphoning of funds, bad investments, corruption etc. Many real estate projects got stuck and investments failed. But there was little remedy for home buyers to reclaim their savings or get a delivery of homes in stalled projects. There was no proper mechanism for bankruptcy resolution and restructuring of real estate companies that were insolvent. Result? - Millions of people lost their savings and cities were left with abandoned ghost townships. Indian government did wake up to the crisis and created specific institutions like IBC & RERA courts to clean up the mess but it still is too little and too late.

Similarly, the failure to nurture institutions and trying shortcuts is visible broadly in economy. As financial services & banking have been digitalized, it also created lucrative business for organized crime to scam people in newer ways. India invested very little to overhaul its justice and law enforcement system which made cyber criminals to operate with impunity. Another problem India faces is very low participation of women in labor force. This has variety of reasons like lack of formal economy, educational disparity, social backwardness etc but one reason is also that Women are generally unsafe in India which acts as a deterrence for them to explore employment opportunities. The crime against Women is at alarming levels and government only reacts in knee-jerk way like provisioning of death penalty for serious sexual crimes. But stricter laws & special provisions alone are not a remedy for this, real solution lies once again in overhauling the entire justice and law enforcement system in India.

Investment often requires resolving complicated sociopolitical conflicts - land reform, urbanization, human capital development (more on this below), center-State relationship etc. Even after nearly 80 years of independence, India hasn’t made sensible land reforms and land usage policies. The infrastructure remains broken (light years behind China which India wants to emulate). The courts don’t function or work only at snail’s pace with tens of millions of legal disputes pending in various courts and corruption rampant there. Today, Agriculture Land needs to repurposed for industry & factory, rural India has to be urbanized for creating cities & townships. Farming has to be mechanized extensively. New jobs in economy will be knowledge based and in service sector, not in farm sector & manufacturing. All this transformation has to be achieved to adapt to 21st century economy but present political & institutional setup of India is too paralytic and dysfunctional to make it happen.

Here I like to expound on need for independent & proficient institutions in healthy functioning of Democratic governments. Some foolish pundits in India promote the idea that corruption & bribery is good as it bypasses bloated government bureaucracy & paralytic institutions in India. Corruption & bribery cannot substitute for institutional mechanism for sustainably resolving sociopolitical conflicts & establishing rule of law. While Bribery is a quick fix to speed up things, it also creates an arbitrary and socially destructive mechanism of government functioning that lacks rule of law, competence and fairness. Organized crime groups thrive in such environment. It’s no surprise that Mafias have penetrated Indian politics - a phenomenon referred as criminalization of politics. Land Mafia, Sand Mafia, Mining Mafia, Timber & forests Mafia etc - various sectors of economy are grabbed by organized crime groups who also control politics.

Foolish Indian pundits cheerfully equate India’s corruption with China. Autocratic China also lacks certain formal mechanisms for governance but that doesn’t mean that there is lack of competence and planning in government administration. Lack of formal institutional mechanisms is in fact subsumed to an extent by internal deliberation by proficient technocratic planners in China. China’s party apparatus comprises of scientists, engineers, Statecraft professionals & technicians. India’s political system comprises of uneducated, incompetent and moronic gangsters whose sole purpose is marauding society.

In an autocratic regime like China, the Communist party apparatus is technocratic brains of government. In a democratic regime, the brains of government is the proficient institutions. In developed western nations, these institutions are called Weberian - technical, high skilled, efficient bureaucratic, impersonal - which run national affairs like clockwork. In Indian democracy, neither do we have competent & skilled political leadership, nor do we have Weberian institutions. Is it surprising that nothing gets done in India?

India failed to adapt to economic & technological transformation over the decades. Below I mention the consequences of this failure.

Closure of curtains on opportunities and rising contradictions of Indian economy

New technology trends - AI, sophisticated Robots & automation - will change India’s economic competitiveness on global stage dramatically. AI revolution will wipe out much of India’s software and outsourcing industry. Bots will replace telemigrants in many areas. Software management, digital services & routine tasks will be greatly automatized & cloud controlled, minimizing the use of labor. Gone will be the days when middle & lower skill workers in India with good English speaking & computer skills have comparative wage advantage over western nations. Automation will be a lot cheaper. Humans can’t compete on costs with automation no matter if they work 70 hour or 100 hours a week.

Demographic dividend is already becoming a demographic nightmare. Windows of opportunities don’t stay open forever. From 1990s to 2000s, India had an opportunity to emulate China’s model of lifting economy by developing itself as a manufacturing hub by attracting global industry through comparative wage advantage. But that window has now closed or considerably shrunk. Sophisticated automation & industrial robots drive production in manufacturing today which closes opportunities for India’s young population. What jobs can hundreds of millions of Indian youth find? Not in Manufacturing. In services? A lot of it will be automatized due to AI. That leaves only low wage services like food delivery and janitorial work. In fact, these food & grocery delivery jobs are increasingly a major service sector jobs in economy. The problem is that they pay very little & there’s no social mobility in these dead end jobs.

The contradictions of Indian economy will grow bigger & bigger as India fails to modernize. The worst of it is agriculture sector which has very low productivity and burns half of India’s labour force. Unsustainable farm practices (ground water exploitation, overuse of fertilizers etc) is doing tremendous ecological damage to India. India is big exporter of water intensive crops like Rice & Sugar. This gives short term gains to farmers who’re overlooking the long term ecological damages. More than half of India is already facing acute water scarcity and farm production will increasingly face disruptions due to Climate Change (erratic monsoons, flash floods, temperature variations etc).

India’s automotive industry is obsolete based on polluting & inefficient oil & gas internal combustion engines (ICE) while world is moving towards EVs. The pollution in Indian cities have reached cataclysmic levels - 5 times, 10 times, 50 times the safe air quality limits - creating variety of serious health problems. Indian auto markets is a dumping yard for foreign automakers as well who find it convenient to dump their obsolete ICE technology in Indian markets. Here I like to expound on idea that you need a cumulative progress to build industry. That means taking timely incremental steps. Making incremental progress may appear slow but down the line it unlocks enormous rewards when you reach a certain momentum. Then your steps grow by leaps & bounds.

Silicon valley in America didn’t emerge overnight, it emerged through a complex decades long evolutionary process. The evolution of computers began with US Space program and military industry which slowly culminated into private software development which served both defense industry & private sector. The private sector applications of software industry widened, internet emerged and networks were created. Then came the tech services boom (& bust) which propelled technology companies. Many failed but also winners emerged out of them which reaped astronomical rewards. Then emerged social media, smartphone revolution, mobile applications and all kinds of internet stuff. Fast forward a little we now have large scale investments in AI.

Another example. China first produced conventional ICE automobiles and became a global manufacturing hub for auto spare parts. Then Chinese companies very timely got into Batteries, semi conductors and EV technology, building a robust supply chains of EV technology, spare parts, charging ecosystem which was also propelled by renewable power boom. Then China combined semiconductor industry, AI and EV to build self driving vehicles - these are now common in Chinese cities. In near future China may go into Air Taxis and next generation personal transport.

Once a nation develops an ecosystem - set of cohabiting industries - it achieves a distinct first mover advantage over other countries. Today, it’s difficult to re-create Silicon Valley in any other country. It’s difficult to beat Chinese EV companies in global or domestic market (foreign countries are relying on tariffs & import restrictions to protect their domestic EV automakers from Chinese competition). The first movers establish unassailable lead and reap big rewards. On the other side, the nations which refuse to move timely or don’t move at all in modernization, start developing internal contradictions which keeps on increasing.

Today, India faces an uphill battle to make EV transition. Reason is that Indian companies failed to take timely transitional steps and rather invested heavily in obsolete ICE Capital. Delaying the transition meant that ICE industry got bigger & bigger and so transition costs got higher & higher. Suddenly, it becomes too difficult and disruptive to start adopting new Capital intensive technology when you have accumulated a large Capital of obsolete technology. The problem also lies with the Indian government. Had government pushed for stricter transition targets & provided adequate incentives for automakers, the road to transition would’ve been easier.

India’s energy system is obsolete although some improvement with Solar energy capacity are made recently. Much of the Coal power plants operate on obsolete emission standards. The grid system is dilapidated. The Nuclear energy sector is almost non existent in overall energy share despite India commissioning first Nuclear power plant more than 50 years ago. Recent renewable energy is an easy picking fruit and a great boon for India which has for long struggled with energy scarcity. Interestingly, even as energy scarcity is not a problem as it was until two decades ago, still there’s not a great pickup in industrial capacity. This indicates that a whole set of things mentioned below needs to be done to encourage industrial development instead of piecemeal approaches and shortcuts.

EV transition also requires modernizing grid & creating charging ecosystem. India never made all that investment. The current dilapidated grid cannot stand the power requirements of wider EV use. This goes back to my point that delaying investments continue to pile burdens and future problems. Time is of the essence and timely industrial transition & institutional modifications are necessary to keep economy healthy.

Another area where India suffers greatly is urbanization drive. Indian cities are unplanned, crumbling, filthy & polluted mess. Industrial, commercial, Agriculture & Residential zones all overlapping each other. Since government didn’t create right policies and institutional mechanisms for proper urban development, the vacuum was filled by land mafias who settled vast majority of population in illegal colonies & slums. In National Capital Delhi, half of population lives in illegal colonies & slums. When millions of people are settled in illegal colonies, it’s difficult to get them evicted. Then for vote bank politics, political governments regularizes illegal colonies. This unplanned growth created strain on ecology as ground water extraction & deforestation went unchecked. Small scale factories were also setup in these unplanned colonies which aggravated pollution.

If you look Metropolitan cities today - Delhi, Mumbai, Bangalore etc - they are unfixable mess. Re-zoning and relocation to clean up these cities is almost impossible given the great magnitude of conflicts and legal problems it now entails. If you genuinely want to redevelop Indian cities today, you wonder where to start in this mess. The underlying problem is failure to timely make a proper land policy - policy to convert agriculture land for urbanization, to repurpose agriculture land to industrial use, redevelopment of residential buildings, zoning to separate various activities like industrial, commercial, residential etc.

The dynamics of 21st century economy

The manufacturing sector was thought to be the key to unlock India’s demographic potential. Tens of millions of people were supposed to go into manufacturing which would pay better wages than farm sector. This thinking is similar to China’s economic strategy on 1980s, 90s & 2000s. Three things need to be understood in this regard.

1) While India’s manufacturing industry failed to take off due to above mentioned problems. Even if we remedy the problems and nurture manufacturing industry starting today, it won’t create the same high scale of jobs as it would’ve two decades ago. The reason is technological transformation of automation & robotics which has wiped out comparative wage advantages of low wage labor in third world as it once enjoyed. The technological transformation will even wipe out many service sector jobs that were once secure.

But main point is that manufacturing industry, although must be encouraged & nurtured, won’t be remedy to India’s demographic crisis.

2) While manufacturing jobs of present & future are scarce due to changing nature of technology, still another reason that manufacturing jobs are hard to come India’s way is that China isn’t letting go of manufacturing. Western world let go off manufacturing easily as transnational companies chased comparative wage advantage outside of first world. But China’s economic & industrial policy go much deeper than simplistic market mechanisms. The synergy created by diverse set of sectors - manufacturing, semiconductors, AI & Digital technology, infrastructure & renewable energy etc is so powerful that China doesn’t want to let go off any of these wheels from its economic engine. In short, China doesn’t plan to de-industrialize like America did several decades ago. China is climbing up the value added chain but it’s not letting go of the lower rungs of ladder.

3) To adapt in 21st century, India needs to think differently and think broadly. India missed out on opportunity in exploiting the benefits of transformation where first world outsourced its manufacturing to countries like China. India will also suffer from technological transformation that will soon wipe out a lot of outsourced jobs in telemigrants & software services. How will India put its hundreds of millions of youth to work? Even when times were favorable, India bungled on opportunities. What will happen when times get tough? With economic uncertainty and crisis also comes political & social instability.

Policy ideas and reforms

Government has to invest aggressively in building infrastructure, developing good institutions, resolve complicated issues like Land reform, invest in public goods (basic education, human resource development, water & electricity supply to cities as well as industries etc), build planned cities and economic zones, draft good policies etc. Only when government nurtures such an ecosystem, the private sector may be confident to make investment. But even all this is not sufficient to jump start investment in India. More needs to be done.

You see, India is a laggard nation which at current stage cannot be competitive with other nations. Other nations (like China etc) which have already developed their ecosystem of corporations and manufacturing industry have distinct first movers advantage over Indian counterparts. This comparative advantage of Chinese corporations cannot be emphasized enough and thus Indian companies are currently no match to compete head to head with them in global as well as local markets. So India needs a competent industrial policy. Analyst Kyle Chan proposes the kind of industrial policy India needs (1, 2).

India needs to do three things. 1) Open its economy in orderly manner to expose Indian private sector to foreign competition. This will force Indian enterprises to either become efficient or close down if they cannot. 2) Entice foreign corporations into India by orderly giving them slice of Indian markets. As we remove bottlenecks of Infrastructure etc mentioned above, foreign firms will find prospects in Indian markets and start investing. 3) Make foreign firms access to Indian markets on conditionality of local tie ups with Indian firms so as to make India climb up in value added chain and enabling technology transfer to Indian firms.

Foreign firms will get profits out of Indian markets. Indian firms will earn profits but also get technology & experience which will propel India’s manufacturing system. This is similar to China’s strategy to develop economy. Also India needs to suppress idiotic Swadeshi movement of localized production of goods - this has no value in today’s globalized world. India needs to throw the incompetent, un-innovative and rent seeker oligarchs under the bus. These special interests groups since long have been manipulating government to sustain their noncompetitive, inefficient and corrupted empires.

Another shortcut India often tries is amending labour laws. Although some labour laws need amendment but the benefits of other reforms are much exaggerated. A failure of Indian policy makers is their narrow minded approach of trying to reap benefits in global competition by diluting labour laws. With sophisticated automation, AI and newer technologies on horizon, Indian labour laws are not the real impediment to investment but the whole variety of above mentioned problems. Today quality of labour is preferred over quantity. That’s why government’s investment in education & human capital development is critical.

Profit motive deters investment in poor and backward economy - Remedy is Capital investment by Government

Here, I like to expound on another fallacy in thinking of policy makers who urge private sector to make big investments. Indian Prime minister - a comical character with no knowledge of economics - demand private sector to take big risks and make large investments (1, 2). Private sector works on profit motive. It will produce and invest subject to condition that it can harness sufficient profit in the process. But in a backward economy like India where majority of population is in abject poverty, the profit incentive is very little for private corporations to make large investments. It’s simple math. Output from production & investments has to be consumed by somebody. The equation must balance. But with a depressed demand in a typical poor economy like India, there is not much incentive to make investment if there are no consumers.

The problem of profit motive can be compensated by government which has power of sovereign money. The government can work on long term investment goals without compulsions of profit motive. But this power of sovereign money has to be used responsibly otherwise it can create inflation. The problem with India is that politicians and bureaucracy are highly corrupt & incompetent. The resources of treasury are looted for personal gains (awarding government contracts to crony oligarchs), building symbolic vanity projects, giving freebies & loan waivers (populist vote bank politics) etc. This spending doesn’t create productive investment and down the road only creates inflation.

The failed public projects are notorious in India. The bridges that collapse, the highway roads that caves in at first rains, dam projects that trigger landslides - all these are common examples of shoddy public works & corruption. A new $100 million tunnel project in New Delhi was built without proper technical planning, causing it to flood in rains thus making it unsafe. Government wastes big money to build vanity projects. These projects are also meant to siphon public money into crony enterprises which are connected to politicians. Many politicians are in fact businessmen with stakes in various companies. Recently, $390 million was wasted on public project of building a tall statue. What’s the benefit of that?

Indian Neoliberals created PPP (public private partnership) model to build infrastructure but it’s just another scheme to siphon public money into coffers of cronies. In such schemes, government shares financing cost of project with private firm. Then government transfers lease or ownership rights of Capital asset to private firm which it exploits by extracting excessive rents. Toll expressways and Metro rail systems are common examples of these projects. This is similar to privatization model of post Soviet Russia where organized crime has plundered State assets for their personal gains. The result of the above mentioned abuses and corruption of government is that people see government solely as a source of looting public money.

Neoliberal pundits push for PPP and privatization model for infrastructure development but this is not conducive to Indian economy. A lot can be learned from China where Chinese State owned enterprises (SOE) build critical infrastructure. China’s SOEs are not lethargic incompetent institutions like Indian public enterprises. Kyle Chan gives insight into structure and functioning of China’s SOEs and how they are indispensable in China’s economy policy. Similar practice needs to be adopted in India to restructure government enterprises. India’s infrastructure development, at current state of economy, has to be built very much by government.

Much of India’s R&D spending is currently driven by government. This is not a bad thing and this spending actually needs to go much higher along with reforming human Capital development (discussed below). Private sector will start making more investments and R&D when economy matures. When private sector sees more certainty in economic climate and better growth prospects, it will automatically start planning long term.

The problems in Human Capital development

Recently, India is centralizing human capital development with hyper-competitive higher education system. I will write a separate article to explain major problems in this approach. India’s education system (human capital development) is a grossly inefficient machine that destroys human Capital. India uses top down approach to harness human Capital. The condition of primary & secondary schools is pathetic, teachers in these schools are grossly incompetent. Little or no investment is made in primary & secondary education to nurture child potential at early age. Rather, the government uses hyper-competitive exams system to filter out few selected candidates and awards them seats in higher education. The whole process is like creating 50 higher education & employment opportunities while destroying potential of 500 students & candidates. Ashoka Mody briefly mentions this point in relevance to IITs in his book.

Even after filtering few selected candidates for education & employment opportunities, it doesn’t create significant result in terms of innovation and economic development. For three reasons.

1) As explained above, the private sector that employs these people don’t innovate & invest due to variety of problems in Indian economy. Private sector works on profit motive and demand deficient Indian economy along with deep rooted structural problems deters private sector to make investment.

2) Technical progress & innovation comes not just from theoretical knowledge but through aggressive implementation of knowledge into practical things. A fast moving economy which produces and builds more stuff will try newer things and more creative ideas - this is what drives innovation. A demand deficient economy which may have good human capital in terms of theoretical knowledge but produces and build on lower scale will likely have less innovation & slower rate of technical progress.

3) While a good degree of competition is healthy in an education system to explore human potential, it’s grossly wasteful to take a top down approach in developing human capital by shunning 90% of people. The pool of human capital has to be developed more broadly and diverse opportunities should be created across the pool, not just the top. An economy with diverse opportunities that utilizes larger pool of human capital will have more synergies for innovation in various sectors of economy. An economy with small pool of human Capital, limited scope of production and deficient demand will be slow in innovation.

When talking about problems in labour markets and human capital. While cretin politicians are busy with amending labour laws, they overlook the gross distortions in development of human capital created by idiotic quota reservation policies. Reservation in academics, employment and promotions on basis of caste, domicile, tribe etc needs to be abandoned. This is a political dynamite because political parties of all stripes have created such a strong inertia behind these idiotic policies that repealing them is very difficult. Today, some political cretins are even proposing reservation in private sector jobs. A sure shot recipe for disaster.

The remedy to economic disparity that victimizes poor people should be government’s investment in public goods - quality education starting from good primary schools & up to university level and free of cost to poor people, expanded intake in colleges & universities (the seats in higher education have to be greatly increased), rationalizing admission process & other social benefits, expanding new training institutes & courses for adult education & skill development etc. Give as much public goods as possible to poor people to help them compete but ensure that selection, promotion and employment is done on merit (whenever you mention about competence & merit as basis of economy, bastard Indian liberals develop an incurable itch).

Above, I mentioned need for reforming India’s State owned enterprises on model of China. These enterprises should be strictly organized on basis of merit (competence) and no recruitment should be made on basis of any Caste or domicile reservation.

Conclusion

I mentioned some ideas to make economic transition by well crafted industrial policy, reorganization of India’s State owned enterprises, aggressive government investment in infrastructure and R&D, developing human capital more broadly and gradually opening Indian markets to external competition. While India can certainly nurture manufacturing industry with these policy actions, the amount of employment generated in the process will still be insufficient to accommodate vast amount of young demography. While allowing certain market mechanisms to correct economic imbalances in India are necessary, markets alone cannot propel Indian economy without government participation where necessary. I explained how profit motive deters private investment in poor Indian economy and indispensable role of government to compensate deficient demand.

India also needs to develop good institutions especially legal & court system & policy mechanisms to resolve conflicts in market economy. Time and again India’s political system has failed the country. The incompetence & bungling, the policy paralysis, the populist politics, focusing only on short term goals and rampant corruption has severally slowed down economic progress of India since its independence. Economy needs timely adaptation to technology and delaying economic transition for so long has created grave contradictions in Indian economy which gets more difficult to resolve with passing time.

Delaying economic transition and ignoring the signs of stress in economy will create political and social instability. For a short term, the people can be duped by Caste politics & religious populism but not for too long. At some point, India also have to realize that the post-Independence political system in India cannot produce any solutions for 21st century.

Suggested readings

India’s Soylent Green model of economic growth

India’s lost decade

Bastards of Democracy

India’s Agriculture policy and rural economy

India is Broken

But why there is hesitation in NATO to join US in Iran war? To put it another way. Had Biden or Kamala Harris been President in US, Europeans would probably have come to assistance of US in Iran war. Three reasons why Europeans are now hesitating.

1. While Israel has goaded US into attacking Iran, there are no clear objectives of Iran war. Mind you that Europeans were signatories to JCPOA - Nuclear deal that ensured Iran doesn’t obtain Nuclear weapons. Trump tore it apart unilaterally. The publicly stated reasons for attacking Iran are all nonsense as I explained in previous article. What are the real reasons? There are no clear reasons, at least not that would interest Europeans (Ukraine remains priority of Europeans). So why would Europeans take a plunge in middle east quagmire?

2. There is a broader failure of US foreign policy which has forced Europeans to recalibrate their priorities. Recall the Trump’s Donroe doctrine where US wants to prioritize controlling of Western hemisphere. While Donroe doctrine is probably not the official US foreign policy but it has still forced Europeans to think if America will come good on its commitment to safeguard interests of Europe. America’s flip-flops on Ukraine has created serious doubts in minds of Europeans. So much so that they are even considering their own version of NATO. Recall the Trump’s threats to takeover Greenland. Such bellicose rhetoric coming from America has come as a shock to Europeans.

Recall the insults made by Trump

3. Europeans really don’t know who’s in charge in America. Europeans see American politics going into complete failure & paralysis where nothing makes sense. Trump’s mental faculties are failing badly & he’s probably not even aware of what’s happening in middle east. There are variety of manipulators behind Trump who’re trying to accomplish their own goals. Most notably is Zionist faction which has goaded US into attacking Iran. The politics of US is badly broken. The Congress/Senate is not impeaching & removing Trump. The US Supreme Court has given a broad based immunity to Trump. So a demented madman keeps raving his Psychotic midnight tweets. Is this how a serious nation works?

Does it make any sense for Europeans to join bandwagon of Trump regime’s foreign policy in this foggy environment when nobody knows who’s running America?

Europeans supported Trump’s attack on Iran on anticipation that there will be quick regime change. But that has not happened. While top Iranian leadership is killed along with its replacement, the regime still stands and Strait of Hormuz remains closed. Can this status quo go on forever? Will Europeans at some point decide that they have to get embroiled in Iran if for nothing else but to clean up the mess & reopen Strait of Hormuz?

Paul Krugman explains three reasons why Trump regime is telling a lie about negotiations but there are two reasons that he didn’t mention. Three reasons Krugman mentions are 1) Trump regime is habitual liar & nothing they say can be trusted upon 2) Iranian regime is in a strong position by closing Strait of Hormuz so it doesn’t have incentive to negotiate 3) Trump regime is doing insider trading because it’s totally corrupted.

Reason 1 and 3 are valid but I am not convinced by the second reasoning. Iranian regime has closed Strait of Hormuz but it’s then also risking a broader retaliation by US & NATO to reopen vital global supply route. Iranian regime is not winning by any means, instead it’s tethering on the edge and fighting for its survival. Now let me explain two additional reasons why Trump’s claim of diplomacy are false.

1) Iran doesn’t have any incentive to negotiate with US given the nature of Trump regime. There’s really no deal possible with Trump regime - an unstable, delusional & deranged man - who cannot be relied on keeping any agreement or treaty. Just recently, Trump blew up all trade agreements and treaties by declaring nonsensical tariffs against the world.

Tariffs was something Trump could TACO (Trump always chickens out) out of by giving waivers and stepping back. Finally American Courts also ruled that tariffs were unconstitutional.

But you can’t take TACO route to exit from a war. When Missiles are flying, leaders of foreign nations are assassinated and conflict has began, you can’t simply step back as in case of tariffs.

So Iran’s back is against the wall and even if it wants to negotiate, there is little sense in relying on Trump’s sensibility and restraint. You make a ‘deal’ today with Trump, he may walk out of it tomorrow or even by end of the day. Trump killed many key leaders of Iranian regime. Even if new leaders makes a deal with Trump, there’s no guarantee that Trump won’t renege on deal and assassinate them the same day.

2) Even if we suppose that Trump genuinely wants to make deal with Iran which is unlikely, it still doesn’t stop the war because there’s another key player in the conflict - Israel. In fact it’s Israel which has goaded Trump regime into taking the plunge in Iran. So for a deal to happen, Iran has to trust in sensibility of Trump as well as Netanyahu regime in Israel and this is almost impossible given the nature of both regimes.

So what’s the solution to this crisis. Three ways. First, Trump regime doubles down and convince NATO to assist in war to achieve a full military victory over Iran. That will open the Strait of Hormuz after regime is fully neutralized. Second, a global effort for diplomacy possibly lead by EU as guarantor to diffuse the situation. Third, a new regime emerging in Iran that makes unconditional surrender to America. First two options look unlikely and also won’t produce a quick result. Recall that last diplomacy on Iran Nuclear deal (JCPOA) took a decade to negotiate. US is still waiting for third possibility that existing regime will crack under terror bombing & assassinations, paving the way for some new puppet regime (like one in Venezuela).

I like to assert that situation in middle east is not something new and the wars ongoing there have been on drawing boards of Pentagon since more than two decades. The trajectory of wars (Afghanistan, Iraq, Libya, Syria, Lebanon and finally Iran) was planned long ago although possibly not in particular sequence. After collapse of Soviet Union and US remaining the sole superpower standing, the hawks in America got confident that they can do pretty much whatever they want. The original plans for redrawing of middle east had several reasons.

1) To take control of Oil reserves of Iran, Iraq & whatever rest in the middle east under US control. Other gulf States like Kuwait and Saudis were already subservient to US and they would be more so when US takes control over rest of the reserves of region. If dollar diplomacy is the carrot (Gulf nations kept their dollar earnings in western banks), threat of US military would be the stick.

2) Creating a greater Israel. US has been under strong influence of Zionists since long and middle east policy of America is Israel first. When US takes over middle east oil countries and install puppets there, it will also redraw the maps to enlarge Israel by carving out territories of other defeated countries.

Zionist’s plan of greater Israel

3) If you have a hammer, every problem is a nail. US always needed an adversary in post war era. For a long time, it was USSR during the cold war which fed the US military industrial complex. Military industrial complex is a perpetual machine that cannot be shutdown like a spigot. It started with giant production necessary to win world war 2, then the industrial apparatus was diverted to cold war. The Missiles, the Nukes, the conventional weapons, the unconventional weapons, the Jets, the aircraft carriers and all kind of military hardware keep churning out. This giant apparatus could not be shut down by flip of switch. So why not use it for war on terror and new wars in middle east?

General Clark explains middle east policy after 9/11

Now plans for middle east wars were prepared & ready to go. But how can such a proactive (aggressive) war policy be initiated without any actual threats. Then suddenly 9/11 happened. This put everything in motion.

Let me recap what happened in 21st century that began with 9/11 attacks.

The trajectory of middle east war plans got altered due to several reasons. First, US got stuck in Iraq after 2003 when it believed that it would be ‘mission accomplished’ in matter of days. Isn’t it interesting thing how nations who start the war believe that war would be over in a matter of days? Anyway, US got stuck in Iraq quagmire and then came the great recession. This put stumbling blocks in US & Israel’s plans for middle east.

But plans didn’t change much even when governments changed in Washington DC. The US backed insurgencies in Libya & Syria got the ball rolling again in 2011 without putting boots on the ground. This time, the drone warfare, Islamic terrorists (Mujahideen types) and PMCs were well utilized to substitute boots on the ground and Gaddafi was neutralized in Libya. But then US hit a snag once again due to return of Russia as a geopolitical player. This time Russia took the initiative in Ukraine by successfully annexing Crimea and starting insurgency in Eastern Ukraine. Simultaneously, Russia started backing Syria in middle east. This strengthened the Axis of resistance (Iran, Syria, Hezbollah & their supported rebels in middle east) that became a formidable force in middle east putting Israel & US on back foot for a while.

Iran Nuclear deal signed in 2015 after decade of negotiation

In mid 2010s, US had a moment of lucidity and started rethinking its middle east policy. What is the strategic purpose of redrawing middle east maps in 21st century? What is the strategic gain of US in creating greater Israel in middle east? With public opinion turning against foreign interventions, weakening of US economy due to GFC and trillions of losses in wars with little benefit out of it, this was a time when US thought of re-calibrating its middle east priorities. The indication of this was Iran Nuclear Deal which put US squarely against Israel. And 2017 was the high point of post Soviet Russia’s foreign policy. Crimea was successfully integrated into Russia & eastern front of Ukraine insurgency was stabilized (more or less), Assad regime was stabilized in Syria, Axis of Resistance was strong.

US was thrown into turmoil with arrival of erratic & unstable Donald Trump in white house. But it turned out that Trump would became an instrument of Israel and would go back to hawkish US policy towards middle east. Trump tore up Iran Nuclear deal which took over a decade to negotiate and Europeans were just mute spectators. Trump also started provocations in middle east like Assassination of IRGC Quds chief Qasem Soleimani. But suddenly came the Covid-19 pandemic and conflicts got frozen for a while in middle east and Europe.

Now let’s pause for a minute and understand the utter foolishness of Putin (starting in 2022) and America (starting in 2023-24). Russia never had the capacity to militarily takeover Ukraine in one go. The so called special military operation - a 3 day war - was a delusional plan. Secondly, NATO was losing relevance after collapse of USSR and US desperately needed a new adversary to feed/justify its enormous military industrial complex. It was Putin who revived the purpose of NATO’s existence by starting a war in Europe.

Ukraine war was worse than a crime; it was a blunder. So in 2022, Russia made the great blunder. It was a terrible miscalculation that war - special military operation - would be finished in matter of days. Butterfly flaps its wing in Europe and there will be hurricane in middle east in couple of years. You see, Russia had been the invisible backbone of Axis of resistance for many years. US & Israel had a restrained military policy in middle east as long as Russia was strong. But Ukraine war depleted and degraded Russia at an astonishing speed. Russia burned down its human resources and military hardware in deadly Ukraine conflict in very short time leaving Axis of resistance to be outflanked by US & Israel in middle east.

Coming back to middle east. With Russia - the invisible backbone of Axis of resistance in middle east - greatly weakened, US & Israel took out their plans from cold storage to reshape middle east. But what’s the strategic value of these 20+ year old plans in 2023? By 2023, the renewable energy boom was already in full swing. Oil is no longer a lucrative asset as once it used to be.

US obsession with oil since last 30+ years doesn’t seem to end even when Oil no longer has the strategic value it once did. The rapidly falling costs of renewable and storage batteries is displacing fossil fuel energy.

And what’s the purpose of creating greater Israel? Just to keep Bibi Netanyahu out of prison who otherwise would be staring prison? If contemporary history has taught us anything, it’s the fact that creating new mini States by redrawing national boundaries only destabilizes the region, create ethnic conflicts that last till eternity. But US didn’t learn the lesson. All the objectives of reshaping middle east were unsound (foolish) to begin with and re-adopting them 20+ years later was just insanity.

Today western pundits blame Trump for starting Iran war but Iran conflict is a part of broader middle east designs formulated long before Trump. After stumbling and slowing down for a decade (2011-2020), the plans were reinvigorated by terror attack in Israel (famously dubbed as second 9/11). It’s interesting that wars are preceded by a grand spectacle of terror attack (draw your own conclusion). Then started Genocide in Gaza, followed by Assassination of Hezbollah leadership in Lebanon, followed by overthrow of Assad in Syria and finally the attack on Iran. All that happened just in matter of 28 months or so. Russia quietly liquidated its position in middle east to focus on regional power politics. Assad regime which survived for 13 years of intense insurgency fell in matter of 13 days, such was the rapid collapse of Axis of resistance without Russian backbone.

There is a three track reasoning for starting war on Iran. First is official line which is complete bunk - that US wants to be humanitarian to help Democracy in Iran and Israel trying to stop Iran from building a nuke (which is always two weeks away). This is ludicrous and worth nothing to comment upon. The second reasoning is what I mentioned in beginning of this article - the real objectives for attacking Iran essentially means creating a greater Israel. Oil reserves are almost worthless now unless you suffer from Psychosis that Windmills are killing Whales and Solar energy is a scam.

But there is a third reason which some experts are trying to come up with which is equally ludicrous as the first reasoning. It’s basically a moral war of Liberal world order vs illiberal world order. It’s the alliance of liberal nations (US, EU, Israel) waging a righteous war against illiberal nations (Russia, China, North Korea, Iran, Axis of resistance etc) in struggle for political and moral values of the world. There is a new sun waiting on the horizon once illiberal world order is defeated. Now let’s debunk this reasoning.

First of all liberal world order is more like Wild West - a state of mind of romanticists who myopically see world from a binary viewpoint. Even if liberal world order is some existing panacea, the threat to liberalism is not really from outside but from within. The grave internal contradictions of its Democracy and Capitalism - of which symptoms are modern Republican party, MAGA movement, bankruptcy of British politics across the spectrum, Brexit, Tech Bros & their Technofeudalism, Out of control Oligarchy, Crypto madness, skyrocketing inequalities, sinking institutions and stagnating cities of post-industrial America, affordability crisis, opioid crisis, rise of anti-Science etc - are the real threat to liberal world order.

A war in middle east won’t solve above mentioned problems, it will only suppress these problems & aggravate them underneath which will continue to eat the foundations of liberalism. War may distract people’s attention from Epstein files, prolong the political career of Bibi Netanyahu & other Zionists and generate more profits for defense industry. But it won’t solve any fundamental problems of America domestically or in terms of foreign policy. US bellicosity, foolhardy adventures and my way or the highway attitude has already eroded a lot of credibility of America on world stage.

Something more to be said about so called illiberal world order - a term actually coined by BLOB. US policy was probably coming to senses in mid 2010s. Why make enemies when you can make allies? Forget about redrawing maps of middle east and shift away from Israel first policy in that region. Let Iran be re-integrated into global economy. A non-Nuclear Iran - guaranteed by JCPOA - will let US focus on other global priorities instead of endless obsession with middle east. Today pundits complain that Iran supplied Drones to Russia. But isn’t it America’s fault that it created a needless enemy out of Iran, cornered it and walked back on all agreements with it. US could’ve easily peeled off Iran away from Russia (& China) by abandoning foolish Israel first policy in middle east. There was a time when a much broader shift was made in US policy when it peeled off China from USSR.

Today Canada is planning to build closer ties with China. EU is softening to China. Is it fault of Canada? America is creating enemies out of allies under Trump but problem is not limited to Trump. American allies tolerate it as much as they can out of exigencies to stay under US protective umbrella. In major part of first two decades of 21st century, America and Israel destabilized middle east, as a result millions of refugees turned up at EU’s doorstep which created variety of political & social problems for Europe. Technology companies of America are interfering in politics of EU nations on a greater scale than Kremlin. Europe was worried about its energy dependence on Russia, now it has become energy dependent on US which comes with its own headaches.

Today, Europeans support US & Israeli’s attack on Iran but that support is not guaranteed if war goes bad. Europeans can support America’s aggression if there’s a quick victory in Iran (like overthrow of Maduro in Venezuela). If not, the rift between America and Europe will widen.

The attack on Iran

I discussed the background which lead to current Iran conflict. Now let’s look at conflict which started several days ago. Make no mistake. It has nothing to do with affection for humanitarianism or democracy in Iran. It has nothing to with Iran about to get Nuclear weapon (you’ve been hearing this since 25 years or so) or any imminent threat to America’s interests.

The current strategy to neutralize Iranian regime is different from traditional US attack in middle east - Putting tens of thousands of boots on the ground to secure the entire country as it tried to do in Iraq. But now there really is no clearly defined strategy. US is tying up piecemeal strategies and plans with duct tape and glue to produce something. A part of plan is simple. No boots on the ground for now. Just assassinate the top leadership of Iran and destroy their critical infrastructure.

US at first hoped that when it starts the attack on Iran and assassinate key leaders, some new regime will appear magically, possibly through infighting between existing factions in regime. But that didn’t happen. Then US & Israel continued the killing of Iranian regime bigwigs and their replacements. This sustained terror attack against regime may bring it to its knees but so far it hasn’t. US & Israel is escalating further by terror bombings and war crimes like destroying the energy and water infrastructure. But will it force Iranian regime into surrender? There’s also a possibility that US will finally put at least some boots on the ground to bring down the regime. I am not sure how it will do that.

India & other third world nations are facing shortage of Cooking gas (Liquefied Petroleum Gas - LPG) due to Iran war

The shutdown of Strait of Hormuz is the Achilles' heel which is creating problems. Since nearly 20% of oil (& other things like fertilizers etc) transit through this area, Iran’s one effective retaliation is to shutdown this trading route. But this will create more problems for third world nations and Europe rather than for America and Israel because it’s the third world which is finding it hard to foot the bill and arrange alternative supplies (like my country India which is now facing shortage of cooking gas). For Europe & America, the problem is hike in price of gas which they can tolerate for some time. The political ramifications of $5/gallon gas in America is somewhat exaggerated. But problem for third world is more acute as they just won’t find enough supply if the Strait of Hormuz remain shut for longer.

How things can go bad in middle east?

The usual attention of experts is on Oil prices due to closure of Strait of Hormuz and a long term quagmire in Iran. This is certainly a short and medium term risk. But there are also long term risks. Western observers claim that non-Democratic rule of Iranian regime had no legitimacy and won’t survive the conflict. May be so. But if legitimacy is critical part of discussion, then western observers should recall that almost no regime in middle east has any legitimacy and contains suppressed ethnic problems. Most of them are dictatorships and hardline Islamists (Saudi Arabia is prime example) where variety of minorities are suppressed.

Even if you dispose current Iranian regime which is a big if, what will come after? A new regime? Or a new quagmire that will open the Pandora box of instability and ethnic tensions in middle east? Today Iran is targeting US interests in middle east (Kuwait, UAE etc) which is creating headache for these nations. But real headache will be home grown insurgencies that may emerge in these nations due to ethnic tensions. Most of these middle east nations are thoroughly corrupted, their economies running on slave labor immigrants and cities built for accumulation of oligarchical wealth (Dubai is prime example). What kind of legitimacy they have?

What about greater Israel and redrawing of maps in middle east? Even if Iran is defeated, will Arab nations accept the new borders? All the ingredients of long term instability and ethnic conflicts exist in middle east. What will be impact of this instability on Europe? Will there be another migrant crisis EU has to bear as happened in last decade?

Trump doesn’t have a particular interest in war on Iran. His mental faculties are failing badly and he takes decisions as guided by his manipulators who’re also moronic & malignant. Trump started war with Iran without considering the consequences. War is not something you can TACO out of. When Missiles are flying and foreign leaders are assassinated, and importantly if war starts going bad, you can’t take the TACO route to exit the war.

There’s also a domestic threat of dictatorship. While some western observers fear that Iran’s retaliation on US soil will help Trump’s falling ratings & create a rally around effect, another possibility that’s ignored by experts is that Trump regime may itself create a false flag terror attack on American soil to consolidate power, subvert elections and extend its rule.

Iran conflict may turn out to be a military blunder just like Putin’s invasion of Ukraine.

Refer to my old article on concept of legitimacy. Legitimacy of political system is derived from two important aspects - perceptional legitimacy and substantive legitimacy. The two variants - Social and Liberal democracy - have a strong foundation in both regards. The Potemkin democracy has very little or no legitimacy at all. A central feature of any political system - whether democratic or otherwise - is rule of law - and is also a core feature of social and liberal democracies.

Without rule of law, any political system cannot be considered civilized and modern by any standards. Even economic prosperity is tied to conditionality that society has rule of law - healthy institutions of public & governmental accountability. Rule of law is a mechanism that removes/punish/prosecute people or entities that undermine well being of society. Rule of law punishes an ordinary thief or a big corporation or a criminal politician or a person/entity of whatever stature who commits act of kind that undermines society.

(understandably rule of law is an idealistic concept but one which a political system must aspire for in full. Realistically speaking, the rich & powerful can escape accountability even in developed democracies though they have good institutions)

Social Democracy

Social Democracy is a political system where market economy is the dominant player of economic production. The political structure is based on government (parliamentary or Presidential or hybrid) elected by universal suffrage and periodic elections. The rule of law, healthy institutions (typically of Weberian proficiency), human rights, civil rights, political stability and principle of separation of powers are characteristic features of social democracy. While the private sector largely owns economic production, the government exercise a policy to influence distribution of income (through regulation, taxes etc).

The government also provides economic rights to some degree (but not fully) like social safety net, education and universal healthcare. However the economic rights are limited in nature. Usually higher education is costly and government subsidies are insufficient. Government tries to influence social development indirectly like through subsidies and tax reliefs for buying a home or education grant for colleges. Government won’t build large scale public housing projects and sell it for affordability of people. Government won’t build & run large public universities to make higher education as a right. The government relies on markets to do things and participate only peripherally (like government will buy mortgage securities on secondary markets to indirectly promote housing).

The markets in social democracy are moderately regulated by government. The entrepreneurs are free to try new ideas, corporations are allowed to grow enormously and there’s also significant speculative areas in economy (finance, derivatives, crypto etc). There are giant corporations, oligarchs in social democracy but their influence is not as overreaching in political sphere relative to liberal democracy (discussed below). The percent of labour force in government employment & government enterprises is also significant although this trend in social democracies has declined since 1970s.

Social democracy is the closest a democracy has come to idealistic Classical doctrine of democracy (Schumpeter’s concept). Social democracies were typical of post war Europe that was reconstructed after destruction of first and second world war, and the great depression. Although the Europe of 21st century has significantly changed (especially due to Neoliberal currency union & collapse of USSR), there is still a significant strain of social democracy in Europeans nations, although more in nations like France, Sweden, Norway etc, and now less in nations like Greece and UK.

Liberal Democracy

When talking about Liberal democracy vs Social democracy, we’re essentially looking at contrast between American and European political systems.

Liberal democracy significantly overlaps with social democracy on many things like universal suffrage, Weberian institutions, principle of separation of powers, rule of law, private sector controlling economic production, civil rights etc but it also differs in certain regards. The markets in liberal democracy are similar to social democracy but have bigger role in economic production, and income distribution is also allowed to be shaped by markets to a greater degree. The government is passive in progressive taxation policies and regulatory function to fetter the markets.

(Starting in late 1970s, Reaganomics and Thatcherism was the early doctrine of liberal democracy put into action.)

The social safety nets are weaker in Liberal democracy. The economic rights are more restrictive than social democracy. The power of labor is more suppressed. The power of oligarchy in liberal democracy is stronger than in social democracy. The political and regulatory institutions of liberal democracy are much more tailored in interests of free markets (revolving doors are much more extensive in liberal democracy). The oligarchs and corporations have greater control over political spheres. Although elections as a process are free & fair in liberal democracy, much of politicians in liberal democracy, irrespective of party, are representatives of donor class. While citizens have right to chose their politicians and parties, there is narrow difference in economic policies of parties. Liberal democracy is also referred as Dollarocracy as it’s founded on principle of one dollar one vote.

To explain the policy contrast between liberal and social democracy. Think of universal healthcare system. After world war 2, UK adopted the universal healthcare system (work of Beveridge & Keynes). In contrast, Frances Perkins tried valiantly in New Deal era to push for universal healthcare in America but faced a stiff political resistance. In post war era, the New Deal programs were expanded (great society of LBJ) but US could never implement universal healthcare. Current US healthcare system is an inefficient wasteful system where government pours enormous money into health programs but the standards of healthcare is still poor compared to other developed nations (much of the money lands in pockets of rentier insurance companies and Big Pharma etc).

Another interesting feature of American Liberal democracy is that it was the birth place of Bastard Keynesians - the academic intellectuals that subverted Keynesian philosophy by creating Neoclassical synthesis. Neoclassical ideology, in time, translated into Neoliberalism. If you seek for ideological basis of modern social democracy, it was Keynesian philosophy and not Marxian Class conflict. Keynesian philosophy found its early followers in America but interestingly it was bastardized in America after demise of FDR. The pushback against Keynesian philosophy came strongly from America which also had a negative impact on social democracies in Europe.

(Keynesian philosophy on economy did not assert antagonizing relationship between Capitalists and Proletarians which was Marx’s central thesis)

Here I like to assert that I am measuring America as a liberal democracy by political standards of 2016 - a ten year time lag. Thereafter with arrival of Trump, American politics is turning into something different and I am yet to pass a judgement on current American politics as its in the flux. Although early signs indicate American political system is transforming into something worse.

Potemkin Democracy

If social democracy is closest you get to Schumpeter’s classical doctrine of democracy, Potemkin democracy is the polar opposite - the farthest away from classical democracy. Potemkin democracy is a system which lacks perceptional as well as substantial legitimacy. Typically in such kind of system, political elites, oligarchs and gangsters (the underworld - organized crime groups) are fused together for purpose to plunder society. These elites’ sole purpose is marauding society and its national resources without any restraint. Russia, Pakistan, India, Iraq etc are examples of this type of democracy. These nations are infested with acute poverty, inequality, social & economic backwardness.

The characteristic feature of Potemkin democracy is its Potemkin nature - it superficially has a universal suffrage, multiparty politics, periodic elections, a constitution, so called institutions of checks & balances etc. But all of this is a thin veneer without and actual function & foundation. In reality, there’s no rule of law in such society, there are no checks & balances and there’s no governmental accountability. The governments in Potemkin democracy are, and operate, like organized crime groups. Potemkin democracy is also referred as electoral autocracy because while on paper it has democratic institutions and periodic elections, the elected governments are autocratic and tyrannical without any accountability.

In terms of economy, these political systems don’t innovate & invent anything. They’re users & abusers of technology rather than creators. There’s no competitive industry in such economies and whatever limited amount of inefficient & polluting industry there is, it’s operated by oligarchs and is profitable only through large government subsidies and contracts. The markets (inefficient enterprises of Oligarchs) of these nations are insulated from foreign competition through protection barriers, licenses and tariffs. These nations, especially in third world, have extensive pollution and ecological damage due abuse of carbon intensive fuel, lack of environmental protections and unplanned growth.

The entrepreneur tendency in these nations is minimal and very much rentier rather than material innovation. For example, the oligarchs own oil & gas fields, ports, roads & expressways, foreign trade licenses etc. The economic activity is substandard production, low value added manufacturing, simple FMCG products, real estate, obsolete automobiles (polluting ICE gas engines), poor yield farm produce etc. These nations rely heavily on Capital imports, especially technology imports and selected oligarchs stand at front of supply chains to extract rents.

The organized crime groups and Mafias infiltrate parliaments and various elected bodies, and use public office to extract rents while enjoying immunity. For example, half of Parliamentarians in India have official criminal records (unofficially maybe 90% of them are criminals). From elite State agencies & intelligence and down to local police, all institutions are infiltrated by gangsters and organized crime. High level as well as Petty corruption is rampant in government departments. These criminal enterprises gravitate towards political sphere to seek shield of political office to run their criminal enterprises and maximize their rackets - black marketing, extortion, land grabbing, drugs, money laundering & other illicit activities. These organized crime groups are synergistically fused with oligarchs to plunder national resources of country.

Civil rights are significantly restricted in Potemkin democracy but not entirely absent. This is most felt in areas of journalism, academia, government bureaucracy and social activism where criticizing government or trying to expose a public scandal or doing humanitarian work or sometimes even stating simple truths can be harmful, even fatal. Journalists critical of government are typically relieved from media enterprises (media enterprises are tentacles of oligarchs who are friendly with government), social activists trying to bring public scandals & corruption to light are threatened into silence or killed if they don’t comply, Intellectuals in academia are easily fired if they criticize government’s policies.

There is very little rule of law and civil order in Potemkin democracy. There is some civil order, chaotic & patchy, in Metropolitan cities of third world nations (emphasis here on nations of South East Asia - India, Pakistan, Bangladesh etc) to an extent but outside these Metropolitan cities there is Jungle Raj where gangsters have a field day and there’s no effective law enforcement (you can’t differentiate between Police and Gangsters). The educated & middle class people migrate to Metropolitan cities where there is some civil order however patchy it is, and middle class people can find at least some opportunities to build secure life. Shortly below, I will discuss how this lack of security and economic opportunities cause brain drain and emigration from these nations.

The politics of Potemkin democracy is either centralized tyrannical (as in Putin’s Russia) or highly fragmented marred with dog-eat-dog infighting and paralysis in multi ethnic country (like India). The case study of Indian politics is made in my previous article and it can be applied to other Potemkin democracies as well by making few changes. For study of Russia’s politics, you can read Paul Klebnikov’s insightful book. Politics of Potemkin democracy is infested with violence as rival political factions (most of them are gangsters) seek to neutralize each other through overt violence or through using politicized governmental agencies. Governmental agencies (law enforcement, tax authorities, intelligence agencies etc) are handmaidens of politicians who mobilize them for their personal gains.

Illiberal Democracy

Illiberal democracy is a wide realm which covers many nations and difficult to pigeonhole into single typology. The characteristic feature of illiberal democracy is like this - There is separation of powers, human rights, market economy, periodic elections etc in illiberal democracy. But the institutions are dysfunctional & not-weberian although not totally malignant as in Potemkin democracy. The markets are not mature & deep like western economy, the government has paternalistic attitude towards economy (for better as well as for worse), the sociopolitical temperaments are not advanced enough to achieve broad freedom of expression and speech but some freedoms do exists.

The rule of law in illiberal democracy is patchy and precarious. There’s no uniformity and consistency in mechanism of rule of law but it’s not entirely absent. There is some degree of substantive legitimacy in illiberal democracy but not to the high mark of affluent social & liberal democracies. Generally, illiberal democracies are those nations which have not fully progressed or for some reason stuck in a stunted condition. Illiberal democracies are typical to South America, former Soviet States & satellites and other developing nations. Nations like Hungary, Iran, Argentina, Turkey, Georgia, Ukraine etc are some examples.

Civil rights are constricted in illiberal democracies or at least not at par with liberal & social democracies. For example in America, you can burn the Bible or American flag as a symbolic protest - it’s considered as freedom of expression. But you can’t do similar thing in Iran (Blasphemy can be punishable by death penalty). The freedom of expression and speech are limited and there are stiff penalties for offenders. Similarly, rights of women & certain social groups may be curtailed in illiberal democracy. The criticism of government is intolerable, and journalists, activists and academia are suppressed when they step out of line.

Illiberal democracies may be semi-autocratic in nature but not fully tyrannical as in Potemkin democracy. The central difference between Illiberal and Potemkin democracy is that in Potemkin democracy, the political regime is exclusively built for marauding and plunder of society while illiberal democracy may retain at least some consciousness of national interest and governmental responsibility towards society.

Stability of democracies

Both Social & liberal democracies are stable internally and territorially with few exceptions where political secessionist movements do exist though not violent in nature (like Catalonia movement in Spain, and Scottish movement in UK). The territorial boundaries of these nations are secure, the political system is civilized and stable and importantly there’s long tradition of peaceful transfer of power among political forces through civilized elections.

Potemkin and illiberal democracies are prone to civil conflict, riddled with balkanization and separatism. Multi-ethnic democracies of third world nations are most unstable in this regard where sub-nationalist and secessionist movements are always simmering and come to boil now & then. The government of these unstable nations have to rely on heavy handed tactics to tame & neutralize endemic insurgencies because political mechanisms of resolving conflict and enforcing law & order mostly do not exist.

Potemkin & illiberal democracies are also prone to brain drain and emigration as skilled labour choose to vote with their feet by migrating to developed nations for better prospects. For example, a lot of executives in Silicon Valley and doctors in America’s health system are Indian emigrants. Similarly, a lot skilled professionals have migrated out of Russia to settle in Europe. The migration is not limited to high skill professionals but even ordinary menial workers migrate if they can. For example, since wages for construction labour and domestic workers in India and Pakistan is abysmally low, they migrate to gulf (UAE, KSA, Kuwait etc) or other nations where they have somewhat better prospects.

For a poor unemployed people which are significant portion of population in third world, they have little choice other than starving. While Neoliberalism has diluted the social safety nets of social & liberal democracies, still they remain generous and affluent compared to other types of political systems. For poor unemployed people in liberal & social democracies in developed world, they have reasonable degree of welfare support from government although it has diminished in recent decades - but they will not starve.

The society and general population of liberal & social democracies has a tolerant and peaceful culture which includes tendency of assimilating immigrants. This assimilation of immigrants especially the high skill professionals (doctors, engineers, scientists, technicians etc) is also a critical factor in technological advancement of developed nations which are cosmopolitan hubs attracting best brains from third world nations.

(Interestingly Xenophobia is rising recently in certain Liberal and social democracies which is part of ongoing transformation in sociopolitics of these nations)

Creative destruction in Social and Liberal Democracy

Which economic system has greater power of creative destruction - Social democracy or Liberal democracy? It’s inconclusive. There are different set of opinions. America is currently ahead of Europe in cutting edge technology, especially AI & Computers. The proponents of America, which even includes European politicians, claim that unfettered markets and allowing monopoly transnational corporations (Apple, Microsoft, Google, Facebook, Amazon etc) to prosper has been a great boon for America. The excess regulations and anti-monopoly practices in Europe has constricted technological growth and productivity in Europe.

But there are more reasons to America’s rise. First of all, America had always been ahead on curve of industrial trajectory compared to Europe. The two world wars in Europe left much of its industry & infrastructure in rubble and enormous debt especially the first world war debt (after second world war, US was more generous and helped rebuilding Europe from scratch). By end of second world war, the industries of America were running full steam ahead while a destroyed Europe was only beginning to rebuild. I think that Europeans are as innovative & creative as Americans but America was around 20 years ahead in industrial trajectory by mid 20th century.

It’s a remarkable achievement for unified Europe to stand back on its feet by end of 20th century but it also made certain blunders. The Neoliberal currency union forged at the zenith of Neoliberal era (after collapse of USSR) put permanent fetters on economic potential of Europe. The lost decade of Europe after GFC due to self inflicted wound - the sovereign debt crisis in Euro area - that put major hurdles on European growth. While America too had been crippled by Neoliberal policies, still it had distinct advantages over Europe like dollar being a reserve currency & monetarily sovereign which allowed US to expand its deficits enormously & attracting Capital financing from the world.

The new technological innovations are also intangible types which occur in clusters. When such clusters form & get going in a region (like Silicon Valley), they become a magnet to attract capital & labour from across the world. It’s also difficult to emulate/replicate these innovate clusters elsewhere once their foothold is established in particular region. Factoring all the above mentioned reasons, it’s understandable that Europe is somewhat lagging behind America in certain sectors.

A more peculiar phenomenon is that a non-democratic nation like China which was also shattered by second world war and remained backward agrarian even until 1970s but has shown remarkable speed to catch up with developed world.

Corruption

It’s a misconception that liberal and social democracies of developed nations are free from governmental corruption while governments of third world illiberal and non-democratic nations are exclusively corrupted. Corruption exists in liberal/social democracies as well as illiberal/Potemkin democracies, but nature of corruption in government is different.

Corruption in liberal and social democracies is systematically organized and concentrated at top level of politics. Oligarchs and economic industrial lobbies bribe, campaign finance and payroll politicians (revolving doors) to draft favorable policies & regulations. The nature of this ‘quid pro quo’ is well recognized, tolerated and even accepted norm in social & liberal democracies. Lobbying is in fact a white collar profession and there are various think tanks, organizations and experts that are employed full time by corporations and oligarchs to advance their interests. Similarly there are SuperPACs & other opaque quasi political entities that channel dark money into politics and all this is legalized.

Corruption also exists in illiberal and Potemkin democracies but it’s not limited at the top. Recall that social & liberal democracy have Weberian institutions (proficient, technocratic, independent) and these to significant extent are insulated from political corruption. In Potemkin democracy, the entire State & institutional structure from top to bottom is corrupt, malignant and incompetent. While at top level, the marauding of country by politicians and oligarchs happens unrestrained, the same goes on at every level of government institutions by various bureaucrats, pen pushers and Babus. These nations are notorious for petty corruption - function & duty of government is only possible through bribes; getting a GST registration for your business, getting a business loan from State bank, getting an approval for building a factory, getting an electricity connection for your home. Everything requires bribes. Government jobs are scarce and positions especially in law enforcement, licensing & regulatory agencies and similar rent seeking departments are filled by bribes. As a result, only the most incompetent & corrupt people are accumulated in government offices.

Such petty corruption is almost non-existent in developed nations of liberal & social democracies. It’s not surprising that Potemkin & illiberal democracies of third world nations are not known for entrepreneur activities. Entrepreneurs and high skill professionals choose to migrate to developed nations to realize their potential. While corruption exists in all countries and all types of political system, it’s largely true that corruption is greatest in Potemkin democracy.

Here I like to expound on importance of national institutions. An important differentiating factor between developed and developing countries is the nature of their institutions. If you look at politicians of developed society like America (or UK) today and compare them to politicians of backward society like India, there is not a great difference between them - both are bastards of democracy, parliamentary cretins, deranged scoundrels and intellectually feeble. It’s actually the long standing inertia of good institutions of developed nations that differentiate these nations from third world.

Who runs the nation? - Power centers of various types of Democracy

In mainstream political theory, a democratic government is of the people, by the people, for the people. Heterodox theory of democracy goes beyond this idealistic and quite nonsensical narrative. The government is ruled by rivaling power factions who, in a democracy, contest for power in a civilized way through elections and political campaigns.

There are different type of power factions in various countries but can be divided into two broader categories - 1) economic/industrial lobbies and oligarchs 2) Social groups like labour unions, identity groups (feminists, LGBT, religious forces) etc. In liberal and social democracy, the first category - economic industrial lobbies and oligarchs - have a strong sway over politics, and social groups exercise minimal power. The social groups in the past meant labour unions and they were strong in golden years but greatly diminished by 1980s and 90s. Thereafter, the new social groups emerged which although had size in numbers but had little or no substance in political consciousness.

Unlike the sentimental & irrational electorate, the economic industrial lobbies are conscious of their self interest and nurture political campaigns to relentlessly pursue their goals. Their campaigns also entice emotions and sentimental appeal of electorate on which charismatic & cunning politicians - the political entrepreneurs - are tasked to take them across electoral finish line. The military industrial lobby back politicians to advance defense spending and hawkish foreign policy, the Tech industry back politicians to advance deregulation of Cryptocurrency, social media, cyberspace etc, the Big oil industrial lobby back politicians to rollback environmental regulations which hinder their profits, the banking & finance industrial lobbies back politicians to advance privatization of social security & public services so that private corporations can expand their rent seeking fiefs.

A crude way of summarizing politics is a simple statement - Wall Street runs America. But in past social groups also had a strong sway over politics at least up till the late 1970s when labour unions were strong & militant (especially in UK where government had ownership of several enterprises) and demonstrated their power through strikes and tangible political demands. That changed after 1980s - the era which entailed globalization (offshoring of manufacturing), rise of Neoliberalism and also change in technological trends (the technology became more labor replacing rather than labor enabling).

Thereafter, new Social groups emerged which can be best described as identity groups. A characteristic feature of these groups was that while they also protest & organize mass rallies, they had no meaningful political demands and a perspective of class consciousness. These movements were feminists, BLM (black lives matter), LGBT, students, Woke etc. The political & oligarchical elites are comfortable with these identity political groups because they are disoriented and directionless - they are less headache for politicians.

(The current ‘Woke’ and BLM movement shouldn’t be confused with Martin Luther King’s civil rights movement. MLK’s agitation had a class perspective and strong political demands)

Politicians are like relationship managers who balance the demands of social groups with the interests of economic industrial lobbies & oligarchs (in short - the capitalists). When labour unions were the prominent social groups, it put politicians squarely against their financial masters - the capitalists - and thus gave headaches to politicians. Unions demanding wage increase, reducing working hours, more labor protections, healthcare rights, pensions etc made politicians uncomfortable because it was in conflict with capitalists. But that changed with new social movements.

Politicians and oligarchs aren’t worried about people marching on streets with slogan of - ‘defund the police’ or LGBT groups parading to demonstrate gay rights. A recent example is million feminists marching against Donald Trump in 2017 & thereafter which cause no impact on American political dynamics. The politicians easily capture identity groups to cultivate their political fiefs. While a politician’s true loyalty is to his oligarchical industrial lobby (financial paymasters), the politician demonstrate his populist appeal by mobilizing the large crowds of these identity political groups.

Let me expound on concept of political entrepreneurship. Politics is just like any other profession where politicians are motivated by wealth and power (esteem, influence, authority). Politics overwhelmingly isn’t about serving any national interest these days. In a globalized world of transnational corporations, the interests of corporations are not necessarily overlapping with national interest. Their production and supply chains are globalized, their Capital is mobile and offshore. The economic and industrial lobbies of these corporations are main source of political financing. Without political financing, politician’s outreach to people, presence on media & cyberspace, the capacity to finance giant rallies, targeting political rivals (through ads & opposition research), access to various platforms to connect with population is impossible. In simple terms, there’s no political career without the backing of oligarchs and financial donors.

Critical art of political entrepreneurship is connecting to financial donors, and allegiance of political entrepreneurs is thus strongest to their donor class. But money alone isn’t sufficient to win elections, politicians also need some kind of populist appeal and likability by electorate. This is where social groups come into play. In a democracy, if campaign financing - which is overwhelmingly by economic industrial lobbies - are heart & lungs of political entrepreneurs, the social groups are their hands and feet. Social groups connect politicians to people & communities, help establish the groundwork for political campaigns, organize political rallies, make them popular and household name.

(In fast emerging digital age, the social media & cyberspace is becoming highly critical for political success. There are anecdotes that some politicians have won elections even without ground based political campaigns and mass political appeal. The emergence of large scale social engineering through nefarious algorithms and weaponization of internet (see Cambridge Analytica scandal) is the new reality which will further degrade politics in age of AI)

How does political entrepreneurs connect to social groups? Back in the day when labour unions were influential groups, politicians had to give concessions to them to build popular support. As I explained, this was a headache. Betraying labour unions was difficult as they had tangible demands. But new identity Social groups are easier to handle - they can be duped and manipulated more easily because they have no class consciousness. This is another critical art of political entrepreneurship - cultivating social groups as their fiefs. This involves lying, deceiving, thuggery - the Machiavellian traits in general. It’s not surprising that sociopathic personalities & people with impaired empathy are much successful in politics. LeBon described popular democratic leaders as half deranged and intellectually feeble. Their true skill is exploiting people rather than creating new ideas to genuinely solve societal problems.

You cannot make masses understand things but you make them follow you. We live in culture of mass ignorance where electorate aren’t aware of national issues and have no understanding of policy making. How this culture of dumbing down of society came about is a separate discussion but it’s suffice to say that political entrepreneurs operate in this environment and exploit it to their benefit. Thus lying is natural to politicians, for even if they want to speak the objective truth, that won’t get them anywhere in politics.

(The left liberals in American democracy captured the identity political groups of BLM, feminism, LGBT, Woke etc. The right wing & conservatives captured the identity groups of religion like Christian evangelicals & White nationalists.)

In liberal democracy, the major power factions are thus oligarchical - America is a polycentric oligarchy with factions like Banking & finance, Tech industrial complex, military industrial complex, Big Pharma & insurance, Big oil etc. The politicians are representatives of this donor class and try to balance the interests of their donor class with demands of electorate. In American democracy, the interests of donor class (the oligarchy) is supreme and donors have strong influence over both political parties. The social groups of today are good at creating psychodrama but lack actual political power.

In social democracy, there are oligarchical factions but the political entrepreneurs are tilted to a few degrees more towards interests of electorate & social groups although the interests of the markets (the oligarchs, economic industrial lobbies) broadly remain protected. Even in social democracy of many European nations, the so called bond holders and creditors are prioritized in making national policy (term bond holder is just euphemism for private banking and financial interests). Recall that during Eurozone debt crisis, there were countless mass protests by labour unions, students and other groups especially in nations like Greece, Italy, Spain, Portugal etc but these nations were still forced to swallow bitter austerity of Troika (European commission, ECB & IMF).

You may get the impression that oligarchical control of political system is bad for democracy. But now let’s examine third world nations and certain illiberal and Potemkin democracies where in addition to oligarchs & industrial lobbies, there are social groups which also exercise significant political power. This exercise of political power by social groups doesn’t necessarily translate into a healthy democracy.

Take example of India (a Potemkin democracy) where apart from economic industrial lobbies of oligarchs, there are three other important social groups - 1) Religious fundamentalists 2) Ethnic sub-nationalists 3) Farmer unions. In economically backward and rural agrarian economy like India with nearly half of labour force employed in agriculture, the farmer unions are a strong lobby. Modern economy is based on industry and technology based farm production with minimal labour but India’s Farmer unions have stalled land and agriculture reforms. They demand endless loan waivers and other subsidies to sustain their otherwise inefficient farm practices.

Another important social group in India is heterogeneous mixture of sub-nationalist, tribal & ethnic factions. I have explained their agenda in detail in previous articles (1, 2). Basically these factions militantly agitate over reservation & social benefits for their respective fiefs (ethnic, sub-nationalist, tribal etc). This leads to all kinds of destructive economic policies as well as political instability. To understand this dynamics. Imagine in America if Black Lives Matter start demanding 25% of all federal & State jobs for African Americans, Feminists start demanding 33% of all judicial & court appointments and university positions reserved for women, LGBT starts demanding 10% of all private sector jobs reserved for gays and lesbians, Red Indians demanding 15% reservation in all employment & universities. These senseless agitations will upend the whole country. But such conflictual, destructive and idiotic policies are common in India and quite complex (and equally foolish) legislation are created in this direction.

Then there are religious fundamentalists, the Hindu militant organizations who exercise their power in politics. Since Hindus are majority in population, democracy on religious lines translates into abuse of minorities (Muslims, Christians etc). A Muslim can be lynched by Hindu extremists just on suspicion that he is consuming beef (cow is regarded as holy mother in Hinduism). Similarly, religious massacres of minorities and communal riots are common in India lead by political entrepreneurs who cultivate these religious militant organisations to establish their political dominance.

This phenomenon of majoritarian politics also exists in Iran where democracy forces women to wear a Hijab & establish a patriarchal society and in Pakistan where Muslim majority oppresses minorities like Hindus. But don’t be surprised by religious fundamentalists enforcing their reactionary ideas on society through democratic means in third world and poor nations. Isn’t similar thing happening in America recently where politics influenced by Christian nationalists & evangelicals are rolling back women rights & abortion laws in America?

The point being, while oligarchical overreach over political system is bad, it doesn’t mean that overreach of social groups in political democracy will be any better. In fact, one of the reason why liberal economics (the philosophy of markets, positivism and economic rationality) was introduced in third world nations was due to the optimism that market economy will displace these destructive & divisive social groups & their regressive ideologies. But that never happened while few benefits of market economy that did materialize also fizzled out in paralysis and dysfunctional politics of third world. In most of third world nations especially with muti-ethnic demography, democracy translates into battle royale of political forces out of which no political solutions & competent policies can ever emerge.

In conclusion, while control of economic/industrial lobbies and oligarchical overreach on Democratic political system was bad in first world nations, the control of social groups and populist factions over democratic political systems in third world nations turned out to be worse. It’s not just balance of power among Capitalists and Social groups that’s important for healthy democracy but also the maturity and sensibility of these power factions that matters. In third world nations, the power factions - Oligarchs and Social groups - do have certain balance of power but that doesn’t produce a healthy democracy.

In developed liberal & social democracies, the power factions are mainly economic industrial lobbies but in third world nations, the power factions in democracy include religious fundamentalists, bellicose sub-nationalists, farmers and criminal Mafias. Why is it so? The answer may be in technological determinism. The political and economic structure is shaped by technological condition of society. Since developed nations are technologically advanced, their power factions are obviously capitalist and industrial in nature. Since third world nations are technologically backward, their power factions are reactionary, primitive and rural.

If industry & entrepreneurship is a constructive way of making wealth, another way to make wealth is the old fashioned way; stealing, exploit & extortion. Thus in backward society without industry & entrepreneurship, organized crime & anti-social elements exercise strong influence in politics. The phenomenon of gangster capitalism is well known to describe post Soviet Russia and similar is case in other Potemkin democracies where gangsters have become oligarchs by looting national assets to build business empires.

Democracy in flux

The four categories of democracy I discussed are by no means an exhaustive approach to analyze democracies of the world because of vast disparity in culture, politics, sociology, economy and other factors among various nations of the world. I haven’t concluded where I should put Democracies of Asia Pacific (Japan, South Korea, Singapore etc). Even Europe which appears politically united has different variations of democracy which cannot be pigeonholed and categorized simply. But one thing that’s common to all democratic nations in the world is their basis in market economy.

Another thing about democracy is that it’s always in flux, changing in structure & governance with time. For example, Democracy of a particular nation that you see today wasn’t necessarily the one it was few decades ago. Post war UK from 1950s to 1970s was social democracy and this didn’t last with arrival of Thatcher. The transformation of Greece in last two decades is a more extreme example. Even democracy of my country India is different from what it was two decades ago. A major transformation may be happening in America post 2016. Democracies can also break down as it happened in age of catastrophe (two world wars & great depression) in Europe.

Sometimes changes can be sudden and drastic, and sometimes they are gradual & slow. Drastic changes are more common in third world nations where military dictatorships overthrow Democracy overnight (Pakistan & Egypt recently) or slow like Hindutva-fication of India that took several decades or America’s transformation after 2-3 decades of golden years. But one unchanged characteristic about Democracy of modern developed nations is that despite significant transformations in their political democracy they have fundamentally NOT abandoned the concept of democracy or even thought about it.

The question today is not just what kind of democracy will there be in near future in so & so countries. Another relevant question today is whether democracy can produce solutions for 21st century. All the shortcomings and contradictions of democracies, not just in third world nations, but also in some developed nations have gotten so grave that these systems no longer produce solutions for society today.

Suggested reading

Parallels of mainstream political theory and mainstream economic theory

Concept of political legitimacy and theory of Democracy

Politics, Democracy, Invisible hand and Equilibrium

When Political models fail

Classical theory of Democracy and its fatal consequences

India - Economic liberalism, Socialistic Populism and Democracy

India, Democracy and Political future

Caste census and bankruptcy of Indian left

India is Broken

(The precise date of demise of original Keynesian influence in academic discourse and governmental policy is debated. Some put it at 1970s Oil crisis while some put it at around 1980s when Thatcher & Reagan consolidated power. Although there is no doubt that with arrival of Reagonomics (supply side voodoo economics) and Thatcherism (TINA doctrine), the original Keynnesian philosophy was all but buried.)

What was Keynesianism or Keynesian thinking? Keynesian thinking embodied several ideas that included principle of aggregate demand, macroeconomic philosophy (spending drives income, investment drives savings on aggregate level etc), endemic uncertainty, State’s monopoly over money, irrationality & instability of Laissez faire and tied to these ideas was fundamental belief that government has a decisive role regulating economy, participating to guide as much as two-thirds of all national investment and there’s a higher purpose to life other than pecuniary goals. Keynes was also against rigid mathematical models and rather believed in economic philosophy in terms of poetic ideas. Keynesian thinking was thus antithesis of self regulating markets philosophy (markets knows the best) that had been a dominant theme up until great depression.

(Table from Macroeconomics by Mitchell and Wray 2019 ed)

What was Bastard Keynesianism? Bastard Keynesianism was born in American academic circles which entailed dilution, constriction and subversion of Keynes’ ideas with unrealistic mathematical models and dubious constraints. The mathematical models of Bastard Keynesians entailed things like General equilibrium, Philips curve, rationality of markets, marginal productivity etc which was basically rebunking of classical & neoclassical economic theory but by accommodating Keynes’ original idea of effective demand. Basically Bastard Keynesianism was subversion of Keynes’ idea by tying Keynes’ effective demand with other neoclassical tenets and legitimizing them with sophisticated mathematical models which were based on unrealistic assumptions - all of this was called Neoclassical synthesis.

(excerpts from Macroeconomics by Mitchell and Wray 2019 ed)

Keynes’ general belief was that markets can be irrational and thus government has indispensable participatory role in economic management. General belief of Bastard Keynesians was that markets knows the best although they may be slow in arriving at equilibrium, which can be more easily achieved if government provides some nudges along the way - this was principle of fine tuning the economy where government uses fiscal policy to support market economy especially during cyclical downturns.

To expand a bit, we can generalize to Bastard Keynesians in politics (politicians of post war era) who abused Keynesian economics for financing Cold War, building up gargantuan military industrial complex (which now perpetually gobbles Trillion dollars every year) and launching wars of aggression. This was also antithesis of Keynes’ thinking who believed in global harmony, peace and higher purpose of life (Keynes also believed in civilizing mission of 3rd world). In field of economics, the bastards Keynesians were economists like Tobin, Samuelson and Solow. In politics, the Bastard Keynesians were politicians like Nixon, Reagan and Neocons. (Even progressive politicians like JFK & LBJ abused Keynes’ ideas for providing tax cuts and funding wars)

Here I like to assert that the term Bastard can be generalized to any phenomenon that subverts original messaging for nefarious objectives. For example, Canadian scholar Quinn Slobodian characterizes the post 1990 Neoliberals as Hayek’s Bastards who used Hayek’s Libertarian philosophy to destroy social progress of golden age. It must be said that Hayek himself was a charlatan intellectual if not a complete fraud. Although my opinion about Hayek’s bastards is that Milton Friedman was the first bastard child of Hayek and neoliberals actually came later to the scene.

Hayek’s bastard by Quinn Slobodian

Now that we have understood the concept of Keynes’ Bastards, we can generalize this concept to bastards of Indian democracy

Shock therapy of Democracy in India

India was not ready for democracy when it got independence in 1947. Democracy is a political system which requires requisites like mature, civilized and healthy sociopolitical temperaments, social & economic stability (to a reasonable degree), a sizable middle class and national institutions to run democracy - all these are building materials of democracy - but which were nonexistent in India at time of independence and ever before. Nevertheless, the founding father of India (the agitators who protested for independence against colonial imperialists) decided to implement democracy in India.

I’ve already explained the disastrous consequences of experiment of democracy in India in past articles. Democracy ripped apart and ruptured Indian society into various factions; sub-nationalist & ethnic groups, caste & religious groups, and all kind of parochial forces who only thrived for violent confrontations and conflicts. And since Indian society was overwhelmingly illiterate and backward, the leaders of these political factions were also demagogues and deranged scoundrels who could easily manipulate and control their backward political fiefs. The result was a government which was thoroughly incompetent, corrupted and paralyzed which could not fulfill even very basic duties of governance. But all this I’ve covered in past articles. In this article, I will discuss about agents of failed Indian democracy. The kind of politicians, activists and intellectuals that originated out of this failed democracy - these I define as bastards of democracy.

The mother of Indian democracy is undoubtedly British political model as Indian founding fathers emulated a large part of British system. This is unsurprising because Indian founding fathers acquired their knowledge and lifetime experience as Colonial subjects who were educated and interned in Great Britain. Several of founding fathers actually went to British universities and they genuinely believed in modernity. And secondly, India’s legal & institutional system in past 200 years was built by British imperialists themselves. So founding fathers had natural inclination to build & improve upon the structures left by departing imperialists.

So undoubtedly, mother of Indian democracy is former British imperial masters. But who’s the father? This we don’t know. The British themselves fully understood that a backward nation like India is not conducive to democracy. In my past articles, I’ve explained how modern Democracy is a capitalist concept which emerged in Britain starting around 18th century and co-evolving endogenously with institutions of Capitalism. Polanyi’s The Great Transformation is a good book to understand this narrative.

It took centuries for modern Democracy to evolve in Western societies but Indian founding father decided to implement Democracy in one go, by stroke of a Pen & a constitution - this I define as Shock therapy of Democracy. This lead to all the disasters. Indian politicians - the bastards of democracy - sold the Democratic political model as universal theology. But there’s a difference between founding fathers and later day Indian politicians which needs to be clarified. Indian founding fathers were genuine disciples of Classical doctrine of democracy and were confident (out of sheer ignorance & foolishness) that classical theory will work in India while later day Indian politicians had no faith in classical theory at all and well understood that Democracy is a failure. But due to their pathological drive for power, later day politicians exploited the failed democracy for their own gains. In past article I’ve already explained the concept of legitimacy and how Democratic mandate in itself is not a legitimate system unless it delivers on Substantial terms. But the bastards of democracy proclaimed to have the mandate of heaven - an undisputed legitimacy to rule society.

Bastards of Indian democracy

Bastards of Indian democracy are degenerate offsprings of failed democracy and they are not a homogeneous group. They come in various ideologies and motivational aspects.

Hindutva Politicians

The right wing Indian leaders & fascistic demagogues are prime examples of bastards of democracy. A striking characteristic of these bastards is that they fully consciously understand that democracy is a failed project in a nation like India and they fully understand how to exploit and operate this failed system to their best advantage. They used majoritarian politics, religious fundamentalism, demagogy and mass violence to overthrow old conservative & quasi/pseudo liberal regimes. They best exploited the sentiments of uncivilized electorate to achieve political power. These right wing elements are textbook Pathocrats.

(Nations - even the developed ones - are governed by myths, these myths are kind of big lies. American exceptionalism is a myth for America, The productive powers of Socialism was myth for USSR, France was never defeated by Nazis was a myth for post war France, the divine supremacy of Islam is myth for middle east nations)

Hindutva politicians created a nationalist myth by fusion of Hindu religion and State government to define Hindu Rashra and Hindutva where the Fascistic politicians proclaimed themselves to be agents of god with mission of bringing divine governance to population. This religious identity of State is similar to Islamic political projects of certain middle east nations.

Hindutva Plebeians

Hindutva plebeians are extremists, members of religious militant organizations and hooligans who are marching armies of Hindutva politicians. India is a poor backward society with majority of population below 25 years of age. There are very few jobs, ladders of upward social mobility are broken and in general there are little means to build a secure life. The corruption and violence - overt & structural - is rampant which has brutalized vast amount of population. This brutalization of people, especially the young demography has destroyed their intellect and filled them with nihilism, rage & despair.

Rally of religious militias - their job entails beating up minorities (Muslims, Christians etc) and organizing communal riots

Such desperate and enraged population cannot be rational and intelligent, and thus prone to be exploited by demagogues for political purposes. These plebeians - themselves victims of structural violence & poverty - are used by right wing Hindutva politicians to inflict violence against minorities (Muslims, Christians etc) and rival political parties. These plebeians have been used for this purpose in countless religious massacres and riots in last few decades.

Founding fathers

The agitators of Independence movement especially the liberal types - people like MK Gandhi, Nehru, Ambedkar - were the first bastard children of this entire project of Indian democracy. These were mediocre leaders who lived in their Utopian dream of Democratic idealism and were disciples of classical theory of democracy. They never understood really existing democracy (heterodox theory of democracy) and how democracy is thoroughly incompatible with Indian society. Yet they drafted a Constitution which prescribed a political system - failed by its very design - to govern India. But one thing that is remarkable about founding fathers like MK Gandhi was that they never had material/pecuniary motivations or pathological ambitions for power.

Indian founding fathers lived in microcosmic worldview where agitation against colonial imperialists was the only goal of life. But how will they run an independent India once colonial masters depart? They had little idea. Their ignorance was quite evident. Gandhi was a kind of reactionary who although believed in Democracy but had no inclination towards modern industry. He believed in India as a self sufficient rural village society. How will such rural agrarian society fulfill the material needs of 350 million people? Gandhi had no plan about it. Similarly, Nehru was ignorant & naive about geopolitics and foreign policy among other things.

Indian Liberal politicians

Liberal politicians in India are not really liberal in a conventional sense and they are not socialist either although they sometimes like to masquerade as such. A typical liberal politician is a free market proponent who applies liberal (or Neoliberal) ideology in his governing principles. But liberal politics is suited for market economies where society and political class have matured, which is not the case in India. In India, liberal politicians or more accurately pseudo Liberals are reactionaries whose politics is a strange brew of populism, cronyism and demagogy to serve their short term political objectives and winning elections. Actually, this problem is common across political spectrum. All political parties operate purely on short term goals and long term consequences of their policies seldom enter their planning.

Like right wing fascistic politicians, Indian (pseudo) Liberal politicians also fully understand that democracy is a failure in India. But they see no hope in correcting Indian political system which undoubtedly has accumulated great inertia. A failed democracy carried on for nearly 80 years has developed a great inertia and at this point the people have fully bought into the theology of Democracy. A question of political reform can be viewed as undermining this holy democracy as people who have been long accustomed to this failed project will resist. It’s like a pathological relationship where battered wife loves her abusive husband no matter how much he torments her. No matter how badly democracy performs, the electorate continue to tolerate it.

Indian liberal politicians know that democracy is a failure and they know that there’s no point in any rational political program. For, how can a rational program be attractive to electorate who are uneducated and uncivilized? To counter nationalist politics of right wing Hindutva, Indian liberals have invented their own demagogic doctrine which is just as polarizing and destructive like religious populism of Hindutva. It’s called Caste, quota & reservation politics. Divide & rule. Liberal politicians on scam of social justice divide the electorate on frivolous basis of ethnicity, domicile and tribes, and present these factions with carrots of employment and other kinds of social benefits.

Indian Liberals and Indian right wingers are flip side of the same coin. Let me expound on this assertion. India after independence remained a poor backward society. Although the number of acute poor - the people who simply die from starvation - reduced in absolute numbers after independence, these poor only advanced just one rung from the lowest level of acute poverty, and always remaining at peril of sliding back in case of any emergency or bad fortune. The economy also remained backward and rural agrarian with very little opportunities of social mobility. In sum, the economic pie didn’t grow to meet the demographic demands - the national income, material benefits and productive capacity of India remained at very low level. The poverty & inequality has a strong causality in bad macroeconomic policies and competent policies are needed to address socioeconomic backwardness.

But bastard politicians that came out of Democracy had no competence and vision for substantive policy making, hence they sowed division to distract & control the population by creating and aggravating social conflicts based on ethnicity, religion and tribes. While right wing politicians made youth addicted to opium of religion, the liberals diverted youth to agitate over reservation in jobs. It was like a 100 dogs chasing 50 bones. Unless you increase the bones, 50 dogs will go hungry. But rather than increasing bones (the economic pie, employment opportunities & public goods), the liberal politicians enticed hundreds of different ethnic, tribal, caste factions with symbolic reservation in employment & universities.

The politics of polarization and division of society on arbitrary lines is antithesis of liberalism. Recall that liberalism is about positivism and economic rationality of market economy which guides policy making purely on cost-benefit analysis rather than making religious/Caste/ethnic considerations. Thus Indian liberals are not liberal in conventional sense. They are actually reactionaries of an alternative breed. Only thing that differentiates Indian liberal politicians from a right wing fascistic politicians is bellicosity. Right wing politicians are much more bellicose and readily exercise violence (literal and symbolic) against political opposition and minority groups while the liberal politicians have more restraint and discretion in their political style. This propensity for violence and radical politics makes right wing forces more effective in failed democracies like India where right wing forces seek to crush political opposition by all means.

Also noteworthy is that there is not a major difference in economic policies of Indian right wing and Indian left liberal politicians. The policies of both factions are largely exercise in incompetence, populist imbecility and borne out of short term political objectives. Other feature of policy making is of course to enrich their favorite oligarchs.

Liberal activists

Indian liberal activists are cretins cut out from same cloth of founding fathers. They are romanticists who share the grand Utopian delusions of founding fathers about Democracy. A typical Indian liberal venerates founding fathers and says - ‘I love the constitution’. These liberals are strongly religious in a sense that they believe Democracy and constitution like a universal spiritual gospel (refer to Schumpeter’s thesis on how Democracy is like a religion).

A defining characteristic of liberals is that they will blame India’s political failures, not on its inherently failed democratic structure, but solely on operational problems of the structure. Liberals will claim that Democracy is not properly working in India because it’s not implemented in true spirits (the idealistic way). If only the political agents of society start acting as idealistic Classical model prescribes - the democracy will play out well.

(Indian liberals don’t understand the requisites for a functional classical democracy. When a society doesn’t have these requisites, the classical theory will fail. The political agents are not bound by any natural laws to act as per classical theory.)

There are two more defining features of liberals. First, they will contend that failing Democracy is fixable by process reforms, by adopting ballot paper elections or some tweaks like parliamentary deliberation, transparency and other formal procedures to accommodate opinions of civil society in policy making. Second, they will contend that Democracy is the best system there is and is bound to reach its perfectible state sooner or later. But a failed system will remain a failure even if its operated with transparency and proper formality.

For how can parliamentary cretins with an intellect of a baboon demonstrate competence and intelligence in policy making just by adopting different procedures? When all the political party candidates are scoundrels and more importantly when the electorate itself is illiterate and uninformed, what difference will it make if elections in such a backward society are organized by ballot paper or electronic voting? Tweaking design or improving components of of ICE (internal combustion engine) or a steam engine cannot make them more efficient and better than modern electric vehicle technology. A dysfunctional & obsolete system cannot be much improved just by tinkering with its various parts.

Just as Hindutva Plebeians expend their youth energy on religious militancy, the liberal activists expend their youth energy on ethnic & sub-nationalist populism. Liberal activists is heterogeneous mixture of groups which agitate over reservation in employment & education for their factions or gender or tribes. Apart from democracy, reservation is supreme moral virtue for Indian liberals and every institution should be built on it. National Parliament, State assemblies, universities, public offices & enterprises and if possible even private enterprises should be created on basis of quotas. For example, 33% of Parliamentarians should be women, 50% of college students should be from designated tribes & castes, 80% of workers (including in private sector) should be State local domicile etc.

Note the great paradox of Indian liberals. A conventional liberal politician is about markets and its mechanism for allocation of resources and Labour for best efficiency. Socialist principle recognize that allocation of opportunity shall be based on competence of candidate - From each according to his ability, to each according to his needs. In a way, both market system and Socialism share a fundamental commonality. Both don’t differentiate workers on basis of religion, nationality or ethnicity.

(the difference between market system and Socialism is that latter believes in making State the owner of Capital. Capital under ownership of State will then allocate resources and opportunities purely on ability (competence) of people NOT on basis of any ethnicity, tribe or religion, and economic surplus will be distributed in egalitarian way)

Indian liberals are not free market proponents in conventional sense and they are nor socialist either (read my old article). They are creatures of failed democratic process where the policies are invented for purely short term basis to entice imbecilic uneducated population. A liberal politician can get votes by promising employment reservation to cultivate his political fief. And since all politicians do it at the same time, it leads to ethnic and social division of society which down the road create violence (reservation riots are common in India).

Reservation agitators set train on fire

Regional power players

In America, there are only two main political parties (Democrats and Republicans). In other western nations and liberal democracies, there are no more than 4-5 political parties. Apart from conservatives and Labour Party, there is usually a Green party or some liberal or Christian democratic party (as case in Europe). The political spectrum in western democracies is small and stable.

In India which has such a vast diversity of culture, ethnicity and languages, there are hundreds of political parties and regional power players - politics is war of all against all. In national parliament, there are representatives of 40 different parties. On State & regional level, there are all kinds of different parties who rule various States, and down to city and village levels. India is highly fragmented politically.

(Although, the right wing party - BJP - is the largest political party, it still doesn’t have majority at national level and in many States, and relies on various coalitions for forming government at various levels.)

These regional and smaller political parties, just like major mainstream parties, have no actual substance in governance and policies. They’re busy with parochial issues and cultivating their own political fiefs based on sub-nationalist & tribal politics (Maratha, Sikh, Cow belt vote banks etc), reservation demagogy (all these parties agitate for reservation system for their fiefs of ethnic, Caste & domicile), freebie politics (handing out small useless goodies to electorate like free smartphones or tablets), rural populism (farm loan waivers & subsidies) etc.

A feature of these small regional political forces is that they are in eternal conflict with each other. The right wing parties from cow belt region are obviously more bellicose. The Marathi politicians fight against Biharis. The Punjabi politicians fight against Harayanavis. Even the so called civilized South Indian political parties like in Tamil Nadu and Karnataka fight against each other. The Cow belt politicians from Uttar Pradesh attack leaders of Kerala. The Kashmiri politicians demand secession from India and so do certain radical Khalistani politicians.

Like liberal parties, the smaller regional parties also have a strong basis in reservation politics and which commonly leads to frictions with rival regional parties. For example, Politicians of Maharashtra doesn’t want workers from State of Bihar & UP to get employment in Maharashtra.

Democracy in its idealistic model is based on rational electorate theory that entails the idea that people are informed about their self interests and exercise their electoral power for their individualistic self interests. But democracy in a backward, highly muti-ethnic and fragmented society can be destabilizing and chaotic where factional identity Trumps individual interests. A democratic system in such an environment becomes a dog-eat-dog platform for channeling conflict and violence among all the power groups and multi-ethnic factions. So democracy, rather than producing political solutions, instead becomes a recipe for aggravating social conflicts where individual rational interest dissolves in background and battle royale among all factions becomes goal in itself. That’s how Democracy is playing out in highly fragmented and backward society like India & similar 3rd world countries.

Here, I like to draw an interesting parallel to polarizing politics of India to that of modern America. As I explained above, the Indian politicians divert people’s anger against other ethnic & religious groups. Divide and rule. In America especially since the 1970s, right wing politicians are also diverting people’s anger towards other social & racial groups. Currently there’s a White Nationalist movement which is based on scapegoating immigrants, women, blacks, gays and other communities for decline of White Americans. This politics of polarization of society was first utilized as Southern Strategy by Republicans and Nixon. It’s also interesting to note that while American politics had been largely secular in nature, recently right wing politicians are incorporating Christian nationalism in their political strategy. This is creating tremendous rollback in social progress like issues of Women rights (rollback of abortion laws is an example). Historian Brad DeLong has explained this phenomenon of White identity politics in his book and how politicians exploited it.

Why politics of modern society like America is thriving with such destructive & divisive politics which is typical to 3rd world failed democracies? I will discuss this in final section.

Indian Intelligentsia

While the politicians are worst kind of Bastards of Democracy, there’s another class of bastards who have done much harm to social progress - the Indian intellectuals & intelligentsia. The politicians regardless of political system are deceiving actors with instrumental view of everything. Especially in backward democratic nations, little wisdom and competence can be expected from the politicians. The politicians of these nations pathologically dispense falsehoods, lies & myths for purely short term objectives. It’s the duty of intellectuals to document and dispense factual knowledge to society. But they also failed in India.

The problem with Indian intellectuals is same as founding fathers, for they have been disciples of classical theory of democracy. Moreover, Indian intellectuals also helped propagate the nationalist myths of Indian independence movement against colonizers as supreme virtue and achievement. This distracted them from objectively analyzing India’s fundamental problems and exploring their remedies. The most fundamental task of Intelligentsia was honestly telling Indian society that it’s not ready for western style democracy and thus charting an alternate political model for governance. Democracy may become possible when society builds the requisite environment for it but not today. Indian intellectuals abdicated for two reasons. One was obviously their faith in classical democracy. Second, they didn’t expect the society to digest the non-feasibility of democracy. So they chose to propagate comfortable lie of democracy.

Despite the flaws of founding fathers I mentioned above, people like Gandhi were practical men and not merely empty vessels. If they had lived longer to see India’s failures, they would’ve almost certainly rejected their own political conceptions for India. Founding fathers were not fettered by pathological need for power. They may be wrong in their idealistic conceptions but their conviction for India was genuine. Gandhi only lived few months after Independence. Gandhi was genuinely shocked & horrified by mass violence in independent India where nearly a million died in communal violence. If Gandhi, by some miracle, comes back to life, he would undoubtedly see present political system as even worse than of colonial oppressors.

So ideally, Indian intellectuals should’ve been the doctors to measure the pulse of society. Within few decades after Independence, it was clear that Political system had turned out to be a disaster and there’s an urgent need to write a new social contract - a new political system for India. But by 21st century, Indian intellectuals became just as bankrupt as politicians. They either peddled the political ideologies of politicians or in some exceptions, the few intellectuals who knew where India is headed, muted themselves out of fear of political repercussions.

The crisis in democracy was dismissed by intellectuals claiming that path to democracy can be a rocky road and system should be allowed to mature & blossom. Democracy is the best system there is and it will correct itself in time. But that never happened. You can do elections for 100 more years in India but no concrete progress will result.

Bastards of Democracy in the Developed world

It’s true that problems of political democracy are overwhelmingly in poor & backward 3rd world nations but even developed and so called modern societies are not immune from problems of democracy. These problems in political democracy of modern nations became obvious and aggravated after post war golden age and with rise of Neoliberalism. The Bastards of Democracy also exist in modern developed nations and they harm their societies in similar ways like their peers in 3rd world States.

Donald Trump, MAGA politicians, Neoconservative politicians, ultra-right political groups are bastards of democracy in West today. It was bastards of Democracy which gave Brexit referendum to Britain. It was bastards of democracy which under the auspices of MAGA movement took control of America. It was bastards of democracy which weaponized democracy against its own population and against the world.

Neocon politicians weaponized democracy to launch war of aggression. So & so backward nation has to be invaded to export democracy there. Obviously, the real objectives were geopolitical & imperial, and argument for bringing democracy to these nations was just a mirage. The shock therapy of democracy in several nations in middle east & North Africa produced no actual benefits and they remained backward and corrupted societies, however millions were killed in process to implement democracy there.

There also are bastards of democracy in modern world intelligentsia. These were the people who provided the academic & intellectual backing to concept of Democracy by elevating it to level of universal theology - a nation must be democratic (& market economy) to be in the league of modern civilized nations. Anybody who resists democracy can be sanctioned & cut off from global system, and even eliminated by dispatching gunboats or Jet bombers if they are weak defenseless States (although bringing democracy to powerful non-democratic nations like China remained an obstacle).

It’s not that the non-democratic nations failed in their democratizing missions because their societies rejected the concept of Democracy. At first, the independent third world nations were much enthusiastic about political democracy after the imperial masters departed. But enthusiasm cannot substitute for realism and this was where these nations failed in their democratic projects. The problem was never democracy in itself but its compatibility (or not) with particular societies. Inclination and enthusiasm for democracy doesn’t amount to anything if your society is not conducive to it.

Let’s look at post Soviet Russia, a major case of recent experiment of Democracy. The problem was actually the shock therapy of Democracy coupled with shock therapy of markets that ruined Russian society even though Russians were genuinely inclined towards both democracy and market economy. A gradualism approach to implement democracy and market reforms could’ve been the right path for these societies but the bastards of democracy of West (the politicians, intellectuals, economists etc) proposed the Shock therapy. It turned out to be a disaster. Just because democracy worked for some doesn’t mean it will work for everyone. This, intellectuals and idealistic politicians, failed to understand in both developed and developing nations.

The bastard politicians of democracy in developed nations started acting like their peers of 3rd world - the demagogy, big lies, polarization of society and capitalizing on sentimental appeal became the norm in politics. The problem was not the lies and demagogy as such because these exists in all societies - more or less. The problem was that politicians started defaulting on substantial duties and started denying substantial benefits to the electorate. The policies which stagnated wages while skyrocketing profits & inequality, the policies which denied universal healthcare & social safety net while enormously multiplying the wealth of oligarchs, the policies which channeled public money into defense industrial complex while the public services and infrastructure dilapidated - all these policies were pet projects of bastards of democracy. Democracy was reduced to an instrument to legitimize political rule which otherwise failed to provide substantial benefits. And this is where 21st century politicians in West and the 3rd world began to converge.

It’s interesting that rise of Bastards of Democracy in West is coincidental with rise of Bastard Keynesians followed by Neoliberals. This is more than a coincidence. The Keynesian thinking saved Capitalism in 1930s & early 40s, first against the crisis of Capitalism and then against the threat of Fascism. A shortcoming of Schumpeter was that he believed Capitalism can fix itself when it was hit by great depression. But depression threatened to wipe out the entire structure of modern political State as happened in Fascist nations in 1920s & 30s. Without a modern political structure of State there won’t be any markets, and there were two possible outcomes from heaps of such society - either there’s a Socialist revolution or an emergence of Fascism. It was FDR’s New Deal & Keynesian ideas that saved the political systems of western world from both possibilities. Now West is again faced with a crisis as old systems that guided the post war world have dissolved - liberal democracy and Keynesian thinking.

Suggested reading

Parallels of mainstream political theory and mainstream economic theory

Concept of political legitimacy and theory of Democracy

Politics, Democracy, Invisible hand and Equilibrium

When Political models fail

Classical theory of Democracy and its fatal consequences

India - Economic liberalism, Socialistic Populism and Democracy

India, Democracy and Political future

Caste census and bankruptcy of Indian left

India is Broken

This article is expressing some personal opinions about religion and culture, and myths surrounding them. This article is motivated by my observation of Dr Bandy Lee’s thesis on religion, non-violence and spirituality. I’ve read Dr Bandy Lee’s scholarly work and I personally found her book on Violence most appealing. But I have certain differences of opinion on her thesis in areas of non-violence, MK Gandhi, religion and spirituality.

On subject of Gandhi and non-violence, Dr Lee is grossly misinformed about Indian history and Indian Independence movement. I have written a detailed critique on this a while back (1, 2, 3) and won’t repeat here. Now I will talk about religion and spirituality as Dr Lee shows certain roots of her beliefs in Indian culture. I am rooted in India, born and raised here, and living in India all my life. I have seen Indian society up close and don’t rely on second hand knowledge to build an outlook on Indian culture and Indian society.

Religion, mysticism and spirituality is deeply rooted in Indian culture. John Kenneth Galbraith was a great economist, politician and an intellectual of 20th century. His career speaks volume - A New Dealer in FDR regime (was involved in economic management during WW2), an academic (at Harvard & other universities), a writer (wrote many great books), an activist (of Keynesian tradition), a journalist (a progressive) and he was also Ambassador to post independent India. Galbraith had seen the world - New Deal era, madness of World War 2 & Cold War, clash of economic & political ideologies, reality of first world and third world nations in 20th century.

Galbraith’s view on religion in poor nation like India was thus very well informed. India is a failed State, a regressive and a backward society - economically, industrially and politically. Why there’s such a dense culture of spirituality and religion in India? Let me rephrase the question - why there’s such a big market of religious and spiritual doctrines in India? Now the question makes more sense. Now let’s understand the answer. India is failed nation which cannot provide material benefits and decent standards of living to its people. Majority of its people are in poverty or borderline poverty, starvation, homelessness and social insecurity. When there is no food to satiate the hunger of belly, there needs to be myths of religion & superstition to feed the soul. The things people can’t get in current life, they find solace in knowing that they will get them in afterlife. The injustices poor & helpless people tolerate in this life, they find solace in knowing that they will be corrected in afterlife. This is where religion and spirituality found a great market.

Majority of Indians can’t achieve the basic necessities and securities of life. Life in India is like surviving in a jungle. There are no jobs, no industry, no income security, no infrastructure, no rule of law - that is the material reality for majority of population. In short, you can’t have basic things in life. You can’t have a home, you can’t have a proper family life, you can’t have an amount of leisure for yourself and to many people they don’t even have a guarantee that they will get two meals by end of the day. The life of humans is like animals in my country. And this dismal reality of India existed in most severe form up until the late 20th century.

The period before British imperial rule was a dark times for India. With arrival of British colonial oppression also came some benefits of modernity and capitalism. And with globalization of trade and technology, some benefits of economic & industrial progress also reached India by end of 20th century. But despite all that, India remained a poor and backward nation. While the total amount of population in acute poverty has reduced, the abject poor have just only reached a slightly higher rung of ladder where they still live on borderline poverty. And middle class? - That’s a tiny fraction of total population.

Religion, superstition, magic and rituals thrive in a failed and backward society. That’s why India has such richness of this cultural filth. It amazes me how some foreign intellectuals find this filth attractive & scholarly. But I will get to the reasons of it in a bit. I explained the demand side of religion, superstition and spirituality. A poor backward society has a high demand for opium of religion to escape harsh socioeconomic realities. But what is the supply side?

Here I strongly suggest you to read book by Thorstein Veblen - The Theory of the Leisure Class. You may know the theory of social classes of Marx where Marx lists classes like Capitalists (bourgeoisie - the ruling class), Proletariat, Petty bourgeoisie etc. Veblen concept is similar but he expands the ruling class further by adding classes like Religious elites and he incorporated them into a broader class - leisure class - which is characteristically a predatory force over the productive & industrial class of society. This Leisure Class doesn’t provide any meaningful economic purpose to society and it only predates on product of industrial class and workers.

The lifestyle of this ruling class is vicarious leisure. Veblen explains lifestyle of super rich and aristocracy in detail. But pertinent to this article is lifestyle of religious elites. These religious elites don’t have any productive benefit to society (apart from opium they deliver to masses). But to enforce themselves as a superior class, to establish domination over the society, this elite religious class invented the force of religious doctrines. The more backward a society is, the more rich it’s in amount of religious literature, rituals & superstition.

Western experts like Dr Bandy Lee cherry pick some spiritualistic elements of Hinduism while ignoring the abusive and racial elements of Hinduism like the class hierarchy prescribed in Manusmriti. Hinduism as a whole always has a strong racial and oppressive component where Brahmin Class (a religious elite leisure class) established dominance over other classes and especially entailed brutal oppression of lower classes (shudras or Dalits). And spiritualistic elements are creation of this Brahmin class which is a thoroughly reactionary and oppressive class of elites of Indian society (Ambedkar describe this as Brahmin theology).

Class Structure in Hindu society

Take note that class structure of Hindu society is purely a construct for purpose of predation and domination over poor classes. The Shudras in India are poor classes - peasants, menial laborers, servants, cobblers, tannery workers etc. The rituals & lifestyle of Brahmin class are forbidden for Shudras and Dalits (the lowest rung of humans declared as untouchables) who are given punishment and torture if they were discovered to pursue Brahmin knowledge or even if they dare to enter a Hindu temple. Through this oppression and subjugation, Brahmin class (along with Kshatriyas - the warrior class) enslaved poor people.

(This is similar to structural violence in western world where plutocratic and political elites establish their dominance over society, and minorities like Negroes suffer the most oppression.)

Western society has drifted far from morality of enlightenment era but even still it remains superior to the reactionary society of Hinduism. Western intellectuals like Dr Bandy Lee don’t know that many Indian Liberals actually strive for values of western modernity rather than their own Hindu spiritual roots because Indian liberals realize that Hinduism is riddled with grave racial injustices, superstition and abuses. The problem is that western modernity itself is now lost in an age of dog eat dog Capitalism & hyper-individualism. I will explain more on this in a bit.

I explained the demand as well as supply side of religion in India - Why people drift towards religion and who creates the supply of religious doctrines. But there is also some curiosity and attraction of Indian religious culture to foreigners like Dr Bandy Lee and many others. Why do these foreign people try to look into Hinduism and Indian religious cultural filth for answers of life? This is a critical question. I don’t have a complete answer to this but I will try. There

1. Western society like America in age of Neoliberalism, hyper-individualism, Post modernism has greatly degraded in terms of social, political and cultural norms. There is a severe crisis of communal and personal identity in America and it has created a void in hearts and minds of people. To fill this void, people try various remedies. Some people, especially if they’re white & poor, join MAGA movement of Donald Trump (where they only get further abused). Some people, if they’re wealthy, try to fill their void with spending (shop till you drop), buy sports car in their midlife crisis, do drugs etc.

Capitalism reduced people to atoms and many jobs in post modern, post industrial society have little intellectual satisfaction and many people don’t even have a job. Many people don’t see a purpose in their work apart from pecuniary end. Hence, people look to find purpose and meaning in life. That’s where con-artists like Donald Trump dupe them and recruit them into a movement - Make America great again - which superficially gives them a purpose greater than their own boring lives.

Similarly, western intellectuals horrified and dejected by their social crisis look for answers somewhere …. anywhere. Many western citizens thus find attraction to Hindu shrines, rituals and literature. On surface, Hinduism’s message of oneness and harmony may give solace to these western people. But that’s just one small component of Hinduism and its culture, and the race theory and class oppression is the major component of it which westerners don’t understand.

This is similar to MAGA movement. Even MAGA movement has justifiable themes on the surface. Like the critique of globalization, de-industrialization of America and decline of American working class - this has been the original message of Trump since 2016. And MAGA movement was originally about correcting these injustices. On surface, MAGA had noble cause. But beneath the surface, MAGA is Fascist movement which weaponized grievances and sentiments of people to nefarious ends.

Similarly, Hinduism has these things on surface like messages of Oneness and Vedic phrases (I’ve seen many people are suckers for this phraseology). But beneath the surface and as a whole, Hinduism is a regressive and oppressive doctrine. Always understand the whole, not just the parts of a system.

Here I like to explain the difference between conceptual idealism and ground reality by taking Socialism as example. Idealist Socialism was about common purpose, shared wealth, equality and democracy. But that nowhere exists in the world. What we saw in Soviet Union was really existing socialism , not the idealist form. And really existing socialism was about oppression and corruption. Similarly we have really existing capitalism which is far from ideal capitalism of prosperity and progress. So really existing Hinduism that we experience in our daily lives is also oppressive and corrupted.

2. In first point, I explained how post modernism, Neoliberalism and hyper-individualism has created an identity crisis in western society. But that crisis alone is not enough for people to turn away from modernity and start moving towards religion to find solace. Another crisis of western civilization is failure of its political system - its liberal democracy. If you have a social and economic problems, you participate in politics to change things. That was the idealized conception of democracy where political participation was a satisfying experience to electorate (at least in theory). But in reality, the democratic system of America has no place for competent and visionary people while the most incompetent, unfit and pathocratic politicians are rising to the top.

People can protest, go on strike and organized mass rallies but all that changes very little. The inequality, structural violence, institutional corruption, political decay, social problems etc - all continue to incline. Western intellectuals can only be a mute witness to the decay and crisis of their society. They can’t participate in political process and reach a public office or even influence public policy. They don’t even have a voice and an outreach to society. I’ve seen Dr Bandy Lee complaining that media isn’t providing her a platform or Congress doesn’t invite experts like her for an opinion. People who really have an expert independent opinion are just blacked out from media in these critical times. But this is just another feature of our current systems - they have atomized people where they have no voice and power in this system.

3. Western society is in crisis and people are helpless to influence a positive change in their countries, so people seek various platforms for internal satisfaction. Some people join a social or political group, some people turn to religion & spirituality, and some people just divorce themselves from sociopolitical arena and live to maximize their wealth & pleasure. But religion and especially foreign religion like Hinduism is rather odd place to seek solace. Why some foreigners do it? You can find few odd westerners in ISKCON temples in India who appear to be in full dedication in pursuit of Hindu culture.

Westerners singing ‘Hare Rama - Hare Krishna’ at Hindu temple in India

These foreigners with fondness of Hindu culture are ignorant. Here I like to expound on a broader point. Our world is complex space and people have limited knowledge of various arenas of life. You can have a Doctorate in Medicine but that doesn’t mean you understand history of Hindu culture or sociology of Indian society. You can be a great sociologist but that doesn’t mean you will have an informed view of political economy. (There are philosophers in a society who have a vast encompassing knowledge of multiple fields and areas. These people are very few in any society.)

People in our objective reality only have microcosmic worldview from their limited range of sight. Only few people have capacity to transcend microcosm and view the macrocosm of our objective reality. Most people only understand the various individual parts of a system but do not understand the system as a whole. To understand the macrocosm, one must understand the whole, not just the individual parts. Hinduism as a whole is a regressive & oppressive concept (more on this in a bit). While Dr Lee focuses on rituals of vicarious leisure of Hindu culture (meditation, vedas & Yoga etc), she ignores the racial & oppressive component (Manusmriti) of Hindu culture.

One of the founding fathers of Independent India, BR Ambedkar - the author of India’s constitution, who was also a close friend & colleague of MK Gandhi, was so repulsed by Hinduism that he renounced Hindu religion (he converted to Buddhism). As a Dalit (lower class in Hindu hierarchy), he was personally a victim of racism and understood the nature of Hinduism as a whole. Beneath the veneer of spirituality (oneness & Yog), Hinduism is a Brahmin theology which is instrument of class domination.

Really existing Hinduism - Road to Hindutva and Santana Dharma

Starting in early 1990s, the Political regimes of India started transforming India’s secular identity into a religious identity - they defined it as Hindutva. Hinduism was fused with political identity of State - Hindutva and Sanatana Dharma is really-existing-Hinduism in practice. The Yog, spirituality, oneness, Hindu literature & rituals are vanilla elements of Hinduva, and integral with these elements are core components of race theory & political control structured into State doctrine.

The vanilla components of Hindutva are harmless - they at least in their appearance are humanistic, spiritual and harmonious - which attracts people including some foreigners. But humanism stops just at the surface at the rituals and other activities of vicarious leisure (Yoga, fasting, meditation etc). Beneath the surface lies politics, oppression and violence. Indian Prime Minister Narendra Modi can be seen visiting sacred Hindu temples, the most sacred caves of Himalayas and doing meditation (see picture below).

Indian Prime minister meditating in Himalayan caves

All this holy persona is a facade to cover his crimes against humanity. Modi is a mass murderer, a tyrant, a Pathocratic politician who has organized communal massacres and pogroms throughout his political career. Similar to Modi are other Hindutva politicians and his political party who are his partners in crime. Now you may get the impression that these devious politicians are hijacking the noble religion for their political purposes. But the malignancy is much deeper. The seers - referred as Sadhus in India), the holy men, the temple priests etc - are also fully complicit partners in crime. These religious elements have created various militant organizations that participate in mass violence & pogroms across India. So you have the worst Pathocratic leaders at the top who are assisted and legitimized by seers and priests. Indian political ceremonies are actually performed by these Holy Hindu seers, for example inauguration of India’s New Parliament (see picture below). (This is similar to merger of Church’s Patriarchy and Kremlin in Russia.)

Holy ceremony in Indian Parliament - A mass murderer Prime minister receiving blessings of spiritual seers.

Politicians and top seers are complicit in crimes against society but what about religious places and spiritual temples which attracts millions of people? These places & temples are a den of corruption and malignancy run by Godmen (also known as Babas). On surface, these places appear as humanistic artful centers where people come to suppress their inadequacies and hopelessness. Beneath the surface, these places serve multiple objectives; legitimizing Hindutva political doctrine; nurturing youth militant wings to serve in private militais of politicians; providing a front for money laundering & other illicit activities. And many of these places are also personal harems of these Godmen where they abuse their disciples. Some of the greatest spiritual leaders have been found to be sexual deviants (like Jeffrey Epstein). (This is similar to child sexual abuse which has deep roots in organization of Catholic Church).

Babas (spiritual Gurus) are notorious for crime syndicates in India - they preach Oneness and spirituality during the day and commit heinous crimes in the night (clockwise from top right - Ram Rahim, Aasaram, Rampal and Chandraswamy)

Coming to a broader point. Dr Bandy Lee regards religion as fountain of peace & harmony but this is her personal idealistic reading rather than objective reality of our world. The really existing religion has been anti-enlightenment, anti-progress and a force of reaction in general. I discussed the malignancy of Hindu culture, now let’s look at religion more broadly. Catholic Church in 19th and early 20th century was against modernity and enlightenment - resisting the emancipation (of women & oppressed social classes), social revolutions, democracy, separation of church and the State. Recall that Catholic Church did not mobilize against Fascism & Hitler - the darkest hour of mankind - when humanity was at its brink. Vatican’s relationship with Hitler was accommodating one rather than of contempt and outright rejection. The Catholic Church also stayed silent while Genocide of Jews and Slavs happened.

Hitler with Reich Bishop

Catholic Church’s reactionary tendencies can still be noticed today. 2024 elections in America were a crucial moment where Church should’ve taken an unambiguous stance against Trump. But Church took a both-sideism approach in condemnation of Kamala Harris and Donald Trump even when the difference between both candidates was day and light. (because Church resists the progressive stance on abortion). Church itself has been long marred by scandals of child abuse since more than a century and unable to shake its ill image.

Similarly Islam is also a force of reaction and oppression and it is clearly visible in middle east where Islamic regimes are some of the most backward sociopolitical forces; there’s no democracy in middle east, there are no meaningful civil rights, the social status and oppression of women is horrific, the corruption of political dynasties is appalling. This is really existing Islam though you can always find proponents of Islam who believe that Islam is a force of progress & harmony.

Summary

Poor backward nations could not modernize even long after enlightenment age and industrial revolution. Denied of intellectual awakening, material wellness and all the fruits of modernity, these backward societies compensated for their inadequacies by consuming opium of religion like Hinduism (Sanatana Dharma). Hinduism is a duality - an opium of masses and a Brahmin theology which is sociopolitical doctrine for exercising control of society. Some westerners are fooled by rituals, vicarious leisure and literature of Hindu culture. These westerners have little historical insight of oppression in Hindu culture.

Western world - America in particular - had been in a long secular decline in terms of politics, culture and social values since 1970s. The decline accelerated after great recession and especially since 2016 with arrival of Donald Trump into politics. American intellectual class was repulsed by Trumpian politics. At the same time, the opinion and voice of intellectuals found little value in influencing political discourse. Grass appears greener on the other side. That’s why some intellectuals turn towards spirituality and religion as if these things offer some kind of wisdom.

The crisis of hyper-individualistic dog eat dog Capitalism ripped open the social and moral fabric of Western society, especially America. Take note, this crisis of western society is not due to modernity but due to its substitution by malignant sociopolitical discourse & doctrines - Neoliberalism, Post-modernism, Parliamentary cretinism, legal positivism etc - which eroded the structural foundation of western society. But ironically even in these bleak times, the liberal class of poor backward nation - although a small fraction of society - didn’t turn towards their own traditional roots of religion & spirituality. Rather, they turned towards or at least wished for western style modernity for advancement of their societies.

If religion and spirituality actually provided peace, harmony and prosperity to a society, wouldn’t India be a shining example of such State as it has such dense sociopolitical and cultural roots in Hinduism & spirituality? But India is a violent society - overt and structural - a hobbesian jungle with thorough failure in every aspect.

To the western observers who seek intellectual wisdom and spiritual answers in Hindu culture - stop wasting your efforts. The wisdom lies in modernity, class struggle and correcting power relations in your political & economic systems that broke down with arrival of Neoliberal era of 1970s. The answers to current crisis of western society lies in collectivizing wisdom of philosophers like Keynes, Lincoln, FDR, Galbraith, Joan Robinson, Einstein, DeGaulle etc.

Suggested books and documentaries

The Age of Extremes by Eric Hobsbawm

Riddles in Hinduism by BR Ambedkar

The Theory of the Leisure Class by Thorstein Veblen

In the name of God (Ram ke Naam) - a documentary on rise of Hindutva & political violence

Final Solution (2004) - a documentary on Gujarat religious massacres in India

Most intellectuals take post world war 2 order, independent nation States and Democracy as the most sacrosanct concept and basis of all worldview. But this world order was just an incidental outcome of world war 2. A different order could’ve also been formulated. I discuss some possibilities in this article. Keynes wasn’t against British empire in itself but its political status. Keynes, like some other progressives, believed in civilizing mission of the colonial States. Colonial States were economically, socially and politically backward & regressive, and thoroughly incapable to govern themselves in a civilized way.

After first world war, Keynes saw that great powers aren’t interested in any harmony among themselves or civilizing goals of their colonies. The goals of great powers was imperial plunder and conflicts. This was a moment of disillusionment for Keynes who had held an idealist imperialist view of colonies. Keynes as an idealist had believed in continental unity and mutual peace, and a higher purpose of life. He held art, culture and knowledge as real objectives, and wars and conflicts as wastage of civilizational energy. But this wasn’t the world he found himself in.

Keynes developed his own thesis on life and political economy from which culminated his works like Economic Possibilities for our Grandchildren and The General Theory of Employment, Interest and Money after witnessing the turmoils of Europe and then finally the great depression that upended everything. FDR was the first regime across the Atlantic that tried Keynes’s ideas for economic recovery. Keynes was impressed by FDR’s activist policies in stabilizing economy and wrote letters of advice and appreciation to Roosevelt. Roosevelt didn’t waited for market to balance itself, he took initiative to restore economic stability.

(in contrast, Andrew Mellon’s response strategy for great depression was - “Liquidate labor, liquidate stocks, liquidate farmers, liquidate real estate. It will purge the rottenness out of the system. High costs of living and high living will come down. People will work harder, live a more moral life. Values will be adjusted, and enterprising people will pick up the wrecks from less competent people.”)

Few years later came the second world war. American economy had significantly improved due to New Deal policies and many progressives (called New Dealers who were disciples of Keynes) were in FDR regime. Britain on the other hand was crippled by classical economic thinking, and same was material position of other European nations like France. These nations had put too much faith in laissez-faire, austerity, balance budget and gold standard. Keynes saw FDR as the moral leader of western world against Fascist forces and rightfully so.

Keynes was employed by British government to formulate economic policy for Britain during second world war - he became defacto exchequer (from which came out his manifesto ‘How to pay for the war’). And British had to depend majorly on its economic-military alliance with America (the leading industrial power) to fight the war. Keynes became a sort of diplomat who navigated the economic relationship between the two powers (like the matters of military & economic aid, lend-lease program, borrowings for war etc). Now I come to the subject matter of this article.

To fight against Axis, US which was the leader of alliance, needed an ideological anchor. FDR provided it with declaration of four freedoms - Freedom from fear, freedom of speech & expression, freedom to worship and freedom from wants. This ideological narrative impressed Keynes greatly and he had cordial discussion with FDR when he visited America. Let’s pause a minute. Now think of Keynes life journey hitherto at that point - he had seen the disasters of world war one and the Carthaginian peace which destabilized Europe, he had witnessed the disasters of classical economics and especially during the great depression, and he had witnessed the incompetence of his own British government as well as foolishness/deviousness of American regimes (Woodrow Wilson & US bankers).

FDR’s personality, his New Deal policies and grand narrative of four freedoms to change the world was the zenith of great political leadership that Keynes had waited for all his life. Now it was there - in shape of FDR’s New Deal regime.

Here Carter explains the UK-British political dynamics with clarity. While FDR and Keynes converged on things, there were certain crucial differences in their vision. Let’s understand Keynes. Keynes did not question the morality of British imperial empire. Keynes also knew the economic reality of colonies (more on this in a bit). While Keynes recognized the oppression of empire, he hoped for reforming the empire with idealistic vision. The grand vision of four freedoms had arrived which can be instilled everywhere to rehabilitate the world including British empire and its backward colonies. And America and Britain will Police the world on this noble mission.

FDR had different ideas. Although he was seriously committed to four freedoms, he was not interested in joining effort of policing the world with Britain. Rather, FDR and Americans planned to defeat axis and leave the world to realize the fruits of four freedoms on their own by an independent democracy. The British empire was to be liquidated. Liquidating British empire - a great achievement or a mistake?

Let’s understand some things about FDR. FDR was a great believer of Democracy and possibly from his faith in Democracy he arrived at conclusion that world can materialize fruits of four freedoms when nation States have their independent Democratic political systems after defeat of axis. But ground reality of backward Colonial nations was that they were not ready for democracy. Here I strenuously assert that a functional & healthy democracy is a system conducive to a society with mature sociopolitical temperaments. This never existed in many poor nations. For example, societies like India were not ready for Democracy.

Some time back, I read biography of Charles De Gaulle who is regarded as among the greatest leaders of modern France. De Gaulle escaped to Britain when France fell to Axis powers and from Britain De Gaulle started Free French forces to continue fighting axis powers. France was a modern State unlike imperial colonies but still De Gaulle wasn’t sure if Democracy was best fit model for liberated France. FDR regarded De Gaulle as an autocrat similar to Fascists (gross misreading on part of FDR). De Gaulle wasn’t an economic visionary (like Keynes or FDR) but had great acumen for Statecraft and foreign policy. But FDR was skeptical of De Gaulle. De Gaulle understood that Democracy is not the ‘be all and end all’ objective for independent France. Rather, France needs a political system that makes it stable, powerful and self sufficient.

(FDR and De Gaulle had different views on Democracy. FDR won four consecutive elections in America and he delivered on many great ideas. Although American democratic system was not perfect, FDR saw it as vehicle of functional & constructive politics. De Gaulle had an opposite experience. French revolution and unstable French republics left deep impression on De Gaulle. The unstable democracy, parliamentary cretinism, political paralysis in multiparty politics, appeasement of Hitler - all this De Gaulle experienced first hand. That made De Gaulle skeptical of democracy.

After contemplation, De Gaulle eventually did settled on Democracy as the model for liberated France and made certain amendments to its political system. Current France political system is known as fifth republic which was established in 1958 by De Gaulle.)

In his historical account of 20th century, Historian Brad DeLong also remarks that imperial colonies were given independence at a time when civilizing mission wasn’t complete and precisely at a time when grand narrative of four freedoms had emerged. So possibly, it was in best interest for colonies to get rehabilitated by the super powers through this new vision. Admittedly, this is a Utopian thinking and Keynes was a Utopian who often contemplated grand vision of global unity and harmony. A world where wisdom of enlightenment can be instilled even to the backward poor colonies.

I hold no illusion on atrocities and plundering of colonies by imperial powers and neither did Keynes. But for a slight moment at the outbreak of world war 2 when America announced the grand ideological narrative for the world, there was a hope that empire could be rehabilitated instead of being liquidated and being left on mercy of democracy of colonialized natives. At least Keynes thought so. What happened to colonies after the liquidation of empires?

Take example of India - my home country. It’s a Potemkin democracy and a failed State. The plundering and oppression of colonial masters was replaced by plundering & oppression of native politicians. India is Mafia State. It’s similar to model of State which Paul Klebnikov described as ‘Gangster Capitalism’ defining post soviet Russia. Just like Russia, Indian State is controlled by Mafias, Gangsters, fanatics and Pathocratic politicians in alliance with oligarchs.

(Historian Eric Hobsbawm has explained how the regimes of nations invent their own history based on lies & half-truths to control populations. This is more notorious in failed States where there is no academic Independence and intellectual capacity. Indian society also lives in an artificial bubble reality where they venerate myths of their Independence movements. Now a new bubble reality of Hindu Rashtra is created by ruling political regime. For insight into India, I recommend book India is Broken by Ashoka Mody.)

But just like India, many other post colonial nations especially in Africa and Asia also turned out to be failed countries. Some of these failed nations could never achieve the sociopolitical maturity and temperaments of developed Democratic nations. However, few of them managed to develop Nuclear weapons (India & Pakistan). While their people starved, these nations managed to develop Nuclear deterrence.

There are two ways of looking at FDR’s worldview. One is that FDR had a more realistic view where he understood the limitations of America and its internal political dynamics which was not conducive to achieve Utopian global objectives as believed by Keynes. (Carter also describes in detail about anti-New Deal & anti-Keynes revolution after FDR’s death that gave birth to Neoliberalism). So FDR probably thought that defeating axis and liberating colonies is an achievable objective rather than trying to build an Utopia. Second way of looking at FDR’s worldview is that he was naive about democracy and did not understood the ground reality of the backward nations. These nations were not ready for democracy. FDR just didn’t understood that.

Either way, in post war order we could not achieve the grand vision of four freedoms. After death of FDR & Keynes, the world was living in constant tension of cold war, not of peace & harmony that Keynes & FDR had envisioned. After collapse of Soviet union, the world did come to be policed by American superpower but it was not policing to promote peace & prosperity. It was policing to export Neoliberalism abroad and military aggression for petty gains (like capturing foreign oil & gas reserves). Some fragments of Keynesian thinking did survive but they were put to malevolent uses; like the emergence of military industrial complex, a multi-trillion defense industry which was sustained by public money & government finance.

Today, the post war order is in great turbulence with arrival of Trump. Many thinkers and intellectuals are anxious about this turbulence and they wish to return to pre-Trump era. They’re nostalgic about pre-Trump era which they considered a great era of prosperity (think of Fukayama’s dreams when he declared the end of history). It was a great era for prosperity for armchair intellectuals, academics & pundits who enjoyed fat endowments and income to praise an otherwise dysfunctional global system. Trumpian era is not a new phase, but a further degeneration/mutation of old dysfunctional system which has long reached the end of its life cycle.

A great leap in Science that began with enlightenment era was supposed to advance social thinking from the backwardness of religion and superstition. But this didn’t happen even after nearly four centuries. The problem is of course intertwined with our political systems which reinforces social backwardness. The problems with our political systems are many which ranges from domestic policy of nations to international policy of nation States. On domestic level, the political system of nations got stagnated. Schumpeter asserted that Democracy could not keep pace with Capitalism.

While Capitalism became sophisticated with technocratic governance and meritocracy of managerialism, democracy remained trapped in populism, incompetence, inefficiency and idiocy. Over time, the Capitalism started cannibalizing on political system and further degraded it for its own needs. That was the emergence of crony Capitalism. Capitalists financed incompetent political cretins who made regulations and policies in favor of Capital and against interests of rest of society. Thereafter, the politics went downhill and never recovered. Fast forward this decay of Political system by 5 decades - you get Donald Trump and modern Republican party …. and impotent Democrats.

(political party system in America is like game of ‘good cop-bad cop’ , the Republican party is bad cop which torments and abuses American people in worst ways. When American society get fed up with Republicans, the good cop (Democratic party) comes in to charm and cuddle the abused electorate. Note that there is never any accountability of bad cop who keeps coming back to inflict ever more abuses. The cycle continues.)

While America has the material resources - the technology and means - that are more than sufficient to provide decent living standards to the whole society but ironically the economic inequalities, social insecurity and tensions in society are surging. A strange paradox. The social fabric of America is torn apart from poverty, incarcerations, collapsing family structure, opioid crisis, extremism and mental health crisis. Why a modern nation with all the material means to fulfill social needs is limping in so many ways? Because its political system is dysfunctional, paralyzed and broken. It can’t do anything constructive on long term objectives. But this problem is not just of America. The same thing is in other modern nations with only difference being the degree of decay.

American psychiatrist Dr Bandy Lee, defines the current era as a Psychological age. Human specie is in a crisis where they are marching towards their own extinction. The path to extinction can be slow like global warming and destruction of environment by economic and industrial means. Or the path of extinction can be sudden by an intentional or accidental nuclear war. While humans developed the technology that can destroy itself and they degraded the very environment that sustains life, humans were unable to transcend their psychological barriers that leads them to a death drive.

On international level, the nation States and superpower rivalry has brought the world to a state where it has become habituated to live on edge of total annihilation. The world lives on hair trigger of Nuclear catastrophe with weapon stockpile that is sufficient to incinerate the world many times over. We gained technological capacity to invent these weapons of mass destruction before we developed political temperaments to live in harmony and cooperation. We thought of using Nuclear energy for economic development much later, rather we first built Nuclear weapons to destroy other nations. And then we kept on building the weapon stockpile.

The post world war 2 international order is now unraveling, creating more uncertainties and dangers for international peace. But if we recap the international scene from 20th century, there never was a solid foundation for global harmony. Colonialism and unipolar world order where British empire was the hegemon, followed by failed league of nations, followed by 20 years of crisis in Europe, followed by United Nations with elite club of superpowers who carved their sphere of influence, followed by collapse of soviet union and rise of US hegemony - the world was in long turmoil. Now with US hegemony dwindling, and world thrown into chaos of mindless trade war (declared unilaterally by US on the world), world desperately needs a new anchor for stability.

Historian Eric Hobsbawm described 20th century as the age of extremes. Humans discovered and invented so many great things that created such great material progress in a short span in human history. But humans also destroyed so much in such a short time. From two world wars, a cold war, countless conflicts, genocides and enormous structural violence - the violence, inequalities and death created was also unmatched in scale. While humans advanced so much in social, economic, institutional and technological direction, they also left a trail of mass death & human carnage along with it.

Also remember that tragic events of 20th century were not inevitable but brought about by our own blunders. The "Carthaginian peace" that created league of nations (and set the stage for world war 2), the policies that lead to cold war (immense waste of resources that created Nuclear age), the policies that lead to Russia becoming a gangster State (after collapse of USSR, Russia could’ve been incorporated into European security architecture & common markets) - all these things were clearly avoidable. Not out of compulsions but out of our foolish decisions & policies, the tragic events came about.

And just as our international tragedies were avoidable, our economic tragedies were also avoidable. Monetarism, supply side theory, Thatcherism and Reaganomics were crackpot doctrines that did immense damage in various parts of the world. The austerity imposed on Greece & other Euro countries was unnecessary. The shock therapy implemented in post Soviet Russia was unnecessary …. and foolish as it created a Gangster state. American austerity for deficit & debt reduction in wake of 2008 great recession was nonsensical which crippled the labor market for 7 years (and possibly set the stage for arrival of Trump).

To be sure, not all was bad in 20th century. Fortunately there were right leaders at right time in history who nudged the world in positive direction. Allies won second world war. New Deal and Keynesian thinking that drove US economy in 1940s to 60s was strongly progressive. The peace race of economic competition between US and Soviets had positive outcomes. The cold war ended without the most feared scenario - Nuclear war (we came close on several occasions and survived). But much of the good things that happened from 1940s to 1970s started to fizzle out in late 20th century. Thereafter, the hyper individualistic Neoliberal doctrine became the dominant theme.

On basic level, while humans were able to advance their understanding of natural science, they made little progress in formulating political and economic organization of society. Orthodox economic theory is a pseudoscience which masquerades as actual science. Although based on frivolous nonsensical tenets like Rational choice theory, general equilibrium, NAIRU, invisible hand, utilitarianism and artificial monetary constraints, the orthodox economics is however the economic foundation of most of the world. Academicians, students & professionals learn these theories and policy makers & bureaucrats use these theories to govern nations and international institutions.

On political level, the Classical theory of Democracy which is based on universal suffrage is also a frivolous and nonsensical concept (I strongly recommend Schumpeter’s book). The idea of universal suffrage is ingrained so deeply into people that they religiously believe that it’s the supreme universal concept of political science. Just like religion, the indoctrination of people with democracy starts at young age and they grow up to be disciples of this system. With life full of indoctrination, people lose ability to think outside ‘democratic system’. Most western intellectuals on political science are also either fools or intellectually dishonest who peddle Classical Democracy to people.

A new disruptive technological leap is on the horizon - Artificial intelligence. How much AI can mimic human intelligence isn’t the question. The contentious matter is how much application and limitation of AI would be and the trend indicates that it will be mostly Labor replacing technological transformation. The problem with emergence of AI is not AI in itself but actually our current social and political contracts. We live in a time where Labor power has largely dissipated, norms of liberal democracy greatly eroded and Oligarchical power is at the pinnacle. In such conditions, the AI will only put downward pressure on wages and living standards of labor.

The second industrial revolution and post war golden period improved living standards of society more broadly for two reasons. First was that mechanization of these times was mainly of Labor enabling technology. Secondly, the democratic governments played an activist and participatory role in supporting economy. Stabilizing aggregate demand, general welfare (social security), low unemployment and improving standards of living were explicit goals of government in this period. The result of both factors was that economies grew and living standards of common people also improved greatly.

Now look at the kind of political regimes currently in nations like US & UK. They use accountability sinks of free markets (invisible hand), bond markets (TINA doctrine) and monetary constraints (fiscal tightening & austerity) to justify regressive policies and cover up their general incompetence. Cultural populism (MAGA movement & Brexit), gaslighting (disinformation) and Kayfabe is the basis of political regimes which are now thoroughly corrupted and incompetent (Kakistocracy). Also look at Oligarchs and business community; the tech oligarchs like Elon Musk, Peter Thiel etc are delusional and malevolent elites who have accumulated unprecedented power over economy, politics, sociopolitical discourse (through their social media) and industry.

Combination of failed political regimes (Trump is prime example) with backing of malevolent and delusional oligarchs, and the environment where norms of liberal democracy gone, principle of rule of law in ruins and labor power largely dissipated, the new labor replacing technologies won’t be as beneficial to society as the technologies of second industrial revolution. There may now be a new trend in economic growth. Recall that in second industrial revolution, capitalists’ profit had a basis in providing material outreach to common people. The capitalists employed workers → workers produced goods & services → Capitalists sold this production in markets → workers purchased and consumed these goods. And capitalist made their profits in this process.

So if capitalists pay low wages to workers, there will be a deficient demand in economy and growth will suffer. So it was in Capitalists’s interest to maintain decent wages for workers. But now think of production, employment and consumption pattern in markets with sophisticated automation & AI robots. The Capitalists own vast majority of all wealth. They will produce goods & services with minimal workers as automation will do majority of tasks. There will be lesser employment. The goods & services will be increasingly consumed by wealthy people. Overall consumption may not decline but consumption share of wealthy will rise while that of common people (lower percentiles) will decline or stagnate.

The nature of goods and services will also change. There will be more demand for mansions, private Islands, yachts and super yachts, private jets, sports cars, life enhancing medical services & drugs (too costly for common people), exotic escort services (think of Epstein clients) etc and luxury goods in general. And common people will struggle to buy homes, afford education and healthcare (affordability crisis). The services, especially in tech sector, will continue to degrade. While you may have cheaper computers and smartphones, the services of eCommerce, streaming OTT, video games, social media, Uber etc will continuously degrade in experience. This is what’s termed as Enshittification phenomenon.

With vast amount of data and information flow in domain of digital technologies, one would’ve assumed that people will learn more, acquire greater knowledge and become more informed. But along with the possibilities also came all the destructive tendencies. Malignant use of digital Technology has reached epic proportions. We now have digital crypto currencies that are widely used for drug trade, extortion, money laundering, organized crime and all kinds of illegal activities. Digital currencies are also ways and means for bribery in politics. Social media companies have become platforms of hate, disinformation, conspiracy theories, addiction and promotion of socially destructive behavior in general. Disinformation on social media has even become a threat to process of democratic elections and tech companies are building algorithms that subvert political process.

Isn’t this a common theme? We develop technologies but fail to curb its destructive uses. And with advancing power of technologies, the potential threats of their abuse keep getting greater.

Here, I also assert that people should not fall for narrative of ‘Technology Trap’. This narrative is another spin-off of TINA doctrine which claims that current decline in employment and falling standards of living are inevitable endogenous developments of technological transformation. This is a half-truth. This narrative on technology trap is based on laissez-faire doctrine which presumes that markets are best mobilizing economic resources and those who’re not employed (or underemployed) are just out of luck in this whole process of technological transformation. But are markets efficiently mobilizing all resources in economy?

Look at state of America today. Infrastructure deficit alone is reaching nearly $4 trillion and growing every year. Roads, highways, water distribution, dams, electric grid, schools, hospitals etc - in dilapidated conditions. If you include the cost of green transition, trillions more are needed to make America into a sustainable economy in near future. The healthcare system of America is broken and condition of rural healthcare is reaching a crisis level. There’s a crisis of housing scarcity which is more prominent in blue States. And in service sector, US has shortages of teachers, nurses, doctors, engineers & other professionals which has to be filled. The profit motive of free market is insufficient to address these investment needs so government must fill the gap. When government starts fully investing in above mentioned areas, only then we can truly find out how much structural/technological unemployment is there.

It’s true that many technologies are labor replacing but we can’t miss the other critical factor, that is major lack of government investment and deficient demand in current economy. So blaming technology alone for unemployment is half truth which doesn’t reflect the full economic picture. After government fills the investment gap and stabilize economic demand, whatever unemployment still remains, there are ways to deal with it like Jobs guarantee program.

The withdrawal of government participatory role in economy is defining feature of Neoliberal era. This has resulted in accumulation of investment deficits in infrastructure, public services and other areas where profit motive doesn’t have much incentives. On a deeper level, the direction of technological advancement is also not a spontaneous phenomenon, but an outcome of complex process which includes government policies and private interests.

For example, a lot of 20th century technology is based on non-renewable energy. The private interests that owned the fossil Capital worked hard to convince the public and government that renewable energy is not cost viable and efficient for wider use. The fossil Capital also grabbed many government subsidies and favorable regulations for decades (even wars were fought for control of oil). But today we are realizing that renewable energy can be just as cheaper (or more) and can substitute many fossil based technologies (like ICE, coal & gas power etc). Bottom line is that the current renewable boom that has began in post pandemic era could’ve come earlier had we not prioritized our investments in dead end fossil Capital.

So the big picture is this. What we have is an underperforming economy and areas where private sector doesn’t mobilize resources. Modern economies also require more qualified labor force but higher education (scientific, technical, professional, skill oriented etc) is out of reach of average population which is creating scarcity of labor in many sectors. All these are areas where government can make investments in economy (for example, providing free college education). There is no technology trap that is dooming the nation. Technology trap exists only in an economy where government withdraws from its crucial role in economy and markets only work in areas to maximize profits (achieving micro-efficiency of corporations). There is a lot of slack, macro-inefficiencies and wasted opportunities in such economy.

Root of Problem

A fundamental problem of human civilization is its failure to resolve social conflicts. We could not reconcile the conflict of Labor and Capital, political ideologies (liberal democracy or Confucian socialism or communism), class conflicts (rich vs poor inequalities), differences of first world and third world societies, conflicts of religion (Hindu-Muslim, Jews-Muslims etc), conflicts of race (crisis of nationalism, Xenophobia).

The political and economic systems, and global institutions we created were supposed to resolve our social conflicts (domestically & internationally) but now it appears that our political and economic systems actually created/aggravated these conflicts. The political and economic systems we built were based on simplistic make-believe Utopian narrative - how things ought to be. These systems were not founded on our sociopolitical and socioeconomic realities but were founded on some idealistic position that we wished to achieve. In fact, there is no universal system that transcends space and time which can serve the needs of society. Yet, we religiously adopted liberal democracy and Neoliberal economics as universal principles.

When models don’t work, we have to amend them or change them altogether to fit the needs of society. But that did not happen. Our political, intellectual and plutocratic elites somehow convinced the rest of the society that models we are living in are the best of all possible alternatives. From this emerged the TINA doctrine of 1980s - there is no alternative - and our political & economic models became our shackles to which we tied ourselves.

Donald Trump is like a divine intervention, a wake up call that’s meant to tell us that our systems have failed. But don’t misplace your anger on him because he’s just a symptom of the problem - the failure of democracy itself. And it’s also the failure of economic system which created American oligarchs who financed, supported, sane-washed and normalized this madman to make him presentable to American society.

America was long held as beacon of liberal democracy but look at its state today. In her book Profile of a Nation, Dr Bandy Lee makes a pessimistic sweeping statement about America today :-

….. [a] third of the country has locked itself in a hall of mirrors that it believes to be reality; a third has driven itself mad with the effort of trying to hold onto the idea of knowable truth; and a third has given up even trying to do anything at all.

Is this an exaggeration? Look at 2024 elections in America which were arguably the most important in recent history. Trump, twice impeached, indicted on nearly 100 criminal charges including most outrageous crimes of insurrection, espionage and defrauding America was able to win elections by winning nearly 77 million votes. More importantly, 90 million Americans (more than third of eligible voters) didn’t even cast ballot in this high stake elections.

Adaptability is a human trait for survival which has positive and negative consequences. Lately, adaptability of society to tolerate failed political and economic systems has turned it into a situation of boiling frogs. We have become so accustomed to our failed systems that we have lost all ability to think outside of it.

We are at crossroads. One direction is where society wakes up to the failures of our systems and create new systems to lead into the 21st century. Other direction is what Tongdong Bai warns in last pages of his work. When people of goodwill and intellect fail to take the lead in reforming the system, the charlatans like Donald Trump will rise and seize our sociopolitical discourse proclaiming themselves to be the saviors. This road will be age of reaction and it will lead to extinction of civilized society and bring down the curtains on age of enlightenment that began nearly four centuries ago.

PS - There’s a situation in Venezuela. Picture says a thousand words.

In mainstream economic theory, general equilibrium or market equilibrium is a critical concept. It’s a point where markets clear out, the forces of demand matches with forces of supply in markets of goods & services and Labor. Orthodox theory prescribes that Laissez-faire invisible hand clears the market if the governments don’t create obstacles and hindering regulations. The sweet spot of equilibrium is the holy grail of orthodox theory and orthodox economists spend their time building mathematical models and identifying this point of equilibrium and related parameters.

(there’s no invisible hand that provides an anchor to markets. Economic agents take decisions in endemic uncertainty and there’s no invisible hand that can guarantee that economic decisions of all agents can achieve some net balancing position. Keynesian thinking recognized this shortcoming of markets and thus proposed government as a stabilizer of aggregate demand. But Keynesian thinking has vanished in Neoliberal age.)

What do I think about concept of General equilibrium? General equilibrium is an idealistic concept and special case where markets may reach, if ever, a point of balance and that too may only be momentarily. The driving forces of creative destruction means that there cannot be any stable equilibrium in an economy as new products & services keep arriving with ever changing technology of production. Another perspective is that equilibrium can be reached at any point - there can be multiple points of equilibrium. You can have an economy which is in equilibrium but the economy has low production, high inefficiencies, high unemployment and low supply. Such underperforming economy can be called low equilibrium (or bad equilibrium) and this is a situation in many poor developing nations. With right set of economic policies, the economy can be taken to a high equilibrium where Production increases as well as the Demand and economy utilizes the resources more efficiently with higher level of employment.

(In orthodox theory, prices and wages are determined by invisible hand but heterodox economists have different kind of models. While prices in unorganized sectors of economy like Agriculture are determined by demand & supply mechanism (more or less), prices in organized sectors of economy are determined by markups which are based on market power of firm (market power of firm is based on its capitalization in oligopoly/monopoly). Wages in organized economy is determined by bargaining power of labor (stronger unions can negotiate for higher wages). Wages and prices are thus determined by complex factors including power relations between Capitalists and Labor.)

Orthodox economists spend their time on models as if achieving the equilibrium in itself is the goal of economic policy. But the goal of economic policy is not just about achieving equilibrium (if such a state exists) but a much broader set of objectives. The goals such as high employment, high production, good standards of living, clean environment & sustainable growth, low inequalities, decent wages etc. But orthodox economists believes that all the good things will automatically follow from equilibrium if we allow invisible hand to work its way. People like Milton Friedman were the most radical proponent of invisible hand who scorn any intervention by government in the markets and profess that independent central bank should only focus on money supply (QTM). Now let’s move onto Political theory and Democracy.

There is a parallel in Political theory to that of invisible hand and general equilibrium in orthodox economic theory. Orthodox economists say that government should not meddle with forces of markets and let the markets find their point of balance. Similarly, mainstream political scientists believe that Democracy is a self correcting system and it should be allowed to play out for healthy political discourse. What invisible hand is to orthodox economists, the universal suffrage is to political scientists & similar intellectuals. I’ve already explained the fallacies of classical theory of democracy and especially its key tenet - the rational electorate theory. Rational electorate theory professes that people are rational, intelligent and informed who have capacity to exercise sound political judgement.

Political thinkers say that even if electorate is sometimes fooled by demagogues, deceptive scoundrels and incompetent politicians, the electorate will learn and corrects its mistakes, and vote out these sort of politicians in next elections. The order of democracy is that mistakes are fixed and delicate balance is restored in terms of healthy and competent government. Many political thinkers also say that mistakes are part of democratic process and a learning curve for electorate. But universal suffrage do not actually provide any sort of invisible anchor that keeps it in balance.

Anybody who has studied the democracies of poor third world nations knows that many of these countries could never correct themselves. Their democratic systems keep getting worse, more & more dysfunctional and sometimes even to a point to a complete State failure. Such States are commonly called Potemkin Democracy or electoral autocracy or Zombie States. These failed States appear to have a process of elections, multiparty politics and universal suffrage but the Democratic process is just a facade to legitimize rule of autocrats and oligarchs. Nations like Russia, India, Turkey are example of Potemkin Democracy. America is now moving in same direction. The incompetent and corrupted leaders can keep getting elected by the people despite continuous failures and long term decline.

Democracies can tolerate a degree of marginal dysfunction but when they spiral out of this range, entire political system can go into chaos and breakdown. It’s like a flexible spring which is stretchable to a length. But if you try to stretch it beyond tolerable limit, it will get permanently deformed and won’t go back to its old shape. America is a recent such case. The democracy in America had been dysfunctional since quite some time. There were contradictions, fissures, corruption, institutional decay and bad actors in American political system but American democracy still worked. But Trump was the turning point. With arrival of Trump and MAGA phenomenon, American democracy spiraled out of control so violently that it may never go back to its original state.

Many political scientists, activists and intellectuals are religious disciples of classical democracy. They think that all good things automatically flow from universal suffrage. Recall the American attitude on foreign policy or at least its official stated position about exporting democracy to other countries. If Democracy is implemented in a country, all other fruits of social good will flow out from fountain of democracy. But nothing came out of Democracy in Iraq or Afghanistan as they remained failed societies.

So just like economists who believe that invisible hand & equilibrium is fountain of economic progress, mainstream political thinkers believe that universal suffrage is the fountain of national prosperity & development. But a nation can have universal suffrage while still languishing in abject poverty, corruption, social and economic backwardness and failure of the State. Repetitive elections and universal suffrage don’t correct anything in such nations and they continue to go into abyss of failure. I haven’t got a hand on this book but here is an interesting passage from Economic Theory and Underdeveloped Regions - Gunnar Myrdal (1957 ed).

Universal suffrage as a stabilizing force in Politics is a myth just like invisible hand in modern Capitalism.

P.S - Here’s a good article by Yanis Varoufakis which debunks invisible hand in modern capitalism.

A street in Delhi, India

My first run in with Substack came when I found that Substack can de-platform users without any warning, proper notice or valid reason. Then I researched and found out that there are other people who faced similar fate. Now recently, I read this note by user Claire Hartnell which I am reproducing in full.

I’ve just read 2 posts lamenting Substack’s descent into clickbait Notes driven short form content. I want to explain what’s happening here & why.

Initially, Substack, like all social media platforms, was like a market where independent & equal(ish) writers shared content. Some writers were more successful than others, but in a small marketplace, this didn’t undermine other writers. Users were still exposed to their writing. Gradually, more users began to flock to Substack. Now you have an algorithm problem. How does the algorithm address increasing information flows? There are 3 choices:

1. Distribute the flows randomly (every user gets served random content from big or small accounts)

2. Distribute the flows on a time basis (effectively queue them & serve them as they arrive)

3. Distribute the flows according to a hierarchical arrangement (show accounts on the basis of account size, Likes etc)

1) is the fairest but Substack can’t make much money this way. Users will keep seeing niche posts on gothic Victorian literature or whatever & they’ll stop engaging. 2) is how original bulletin boards worked. Stories take off for a while, then trail off into oblivion. For Substack, this could work but it doesn’t drive 💰💰. To monetise this site & pay back the investors, you need “success to the successful” loops. You need 3), where people keep seeing their echo chamber content & they ‘like’ it because others liked it (social contagion) leading to spiralling (success to the successful feedback loops). This way, you get writers with 250k subscribers who patently do not write 250k x better content than the bedroom blogger with 1 subscriber.

But as these 250k subscriber accounts start to generate income, outsiders with strong media platforms think: that sounds like a nice way to monetise my boring, orthodox political content. And maybe I can supplement the pennies I make submitting articles to The Guardian or The Times. So on they all come = massive new information flows.

Now Substack has an algorithm problem again. How to manage the variety? Just look at complex civilisations - the answer is simple: hierarchy. So now thresholds are introduced & you get a little character next to your name if you hit a certain number of subscribers. But like any caste or hierarchy, it becomes very difficult to jump between layers? Why, because each threshold is algorithmically destined to get more ‘serves’ than the layer below. A grand “success to the successful” spiral. How do people respond? Manically, with short form content. And the content must be: emotionally salient, easy to absorb, visually attractive & conformist.

The result? You get a Gresham’s Law of content. Bad content pushes out the good stuff & we’re all drowning in homogenous clickbait & wondering why we never stumble upon those interesting, curious accounts we used to find 3 years ago.

It’s because Substack is not providing a public service. It wants your eyeballs to monetise a few huge accounts so it can scrape its fee. And if you see thousands of small, free accounts every day? Fewer subscriptions = less income. So Substack will go the way of all the rest. Subscriber capital will concentrate in a few accounts at the centre & the periphery will try & game tge algorithm with pointless short form content bollox that you can read, understand & Like without any cognitive effort.

Which is why this post will get a few Likes, if I’m lucky. But if I posted a picture of my dog jumping off my garden wall like a lunatic (he does this) I’d probably get 50 Likes.

It’s depressing but it’s how the shitty attention economy works.

Claire talks about the Algorithm bias of Substack which evidently most users already know by now through observation. You can see that many Notes on your Substack timeline are attention seeking, click bait or rage bait. Most Notes I get on my feed do not have any connection to my area of interest. But that’s not the only problem with Substack. Claire has already explained how few big writers captures the oligopoly space on Substack. Now some of them do produce good articles while many of them produce mediocre content (and earn up to a million dollar in revenue). I won’t name these top writers who are good and who are mediocre. If you’re familiar with Substack by now, you know who these people are.

Substack has another bias which most people don’t talk about - the third world bias. In most developing countries, Substack doesn’t have payment revenue system to support independent writers. Substack’s payment system is Stripe which processes the revenue and provides transfers to content creators. This system is not available in most countries of the world, especially the developing nations. Take example of my home country India - a country of over 1.4 Billion people - so called largest democracy in the world. Many independent writers from India are on Substack but because of Stripe limitation, they don’t receive any money.

Some years ago, Substack started an invite-only experimental system in India where it allowed some businesses to enroll in its Stripe revenue model. But a normal writer cannot enroll in the screening process of this invite-only system which has arbitrary limitations. There are many great content creators on Substack who have a platform to write …. but they won’t get paid. If you’re in America, you can get started on Substack revenue system straightaway. Not in India and many other developing countries. I read somewhere that Substack was planning to expand Stripe revenue system to all independent writers in India by end of 2025. But I don’t see this happening.

Substack payment network - Only few developing countries on the list, that too with arbitrary limitations

So who are we - the independent writers from third world and poor nations? What best defines our status on Substack? We are data proles of the lowest order. We don’t own anything on Substack and neither do we get any income for our content. Our data belongs to Substack and many viewers appreciate it. I am just a small writer but there are many others with significant following, yet they earn nothing. To understand the concept of Data proletariat, I suggest you read the book Technofeudalism by Yanis Varoufakis.

I started writing nearly 6 years ago on blogspot (Blogger) and came to Substack 2 years ago. Writing for monetary gains wasn’t my real goal as I haven’t made a penny from both my blogs where I’ve collectively published more than 150 articles and two free ebooks. Writing was a way to refine my ideas, articulating and documenting my thought process. It has been a good journey as I experienced my evolving thought process over the years.

After 6 years of writing, I am starting to think that I want to write more, even full time if possible. But then I don’t see the incentive. Writing full time requires a more dedicated effort and a stable income. That Substack doesn’t give me or many independent writers like me from developing nations. There’s a lot of potential among these writers but not any real incentive. And that’s the sad reality of Substack. Meanwhile, there are users sitting in America or Canada who earn hundreds of thousands of dollar easily by doing part time writing.

What can you - the reader - do anything about it? You can ask Substack to start payment system for independent writers in India. Maybe they will listen.

India was ruled by British Imperialists for 200 years and finally got Independence in 1947. The founding fathers of post independence India - people like Gandhi, Nehru & Ambedkar - had a lofty idealistic vision of Democracy. They believed that Democracy will make India into a healthy, compassionate and prosperous society. The reality turned out to be otherwise. Indian political system was ripped apart by polarizing, nationalist & sub-nationalist, proto-fascist forces. Gangsters, organized crime groups, religious fanatics and worst type of Pathocratic leaders took over Indian politics. The lofty dreams of Indian founding fathers were laid to dust and India turned into a failed State.

For better or for worse, Gorbachev can be called founding father of Democratic Russia. Ironically, Gorbachev wanted a Democratic Soviet Union but his policies ended up destroying the union & creating Democratic Russia & other independent post-soviet States. Vladislav Zubok in his book A failed empire has made an interesting and very correct comparison of Gorbachev with MK Gandhi, a key founding father of independent India. I also read Zubok’s book Collapse: The Fall of the Soviet Union and insight I get about Gorbachev does indeed show a parallel between his thinking and to that of Gandhi & other Indian political leaders like Nehru. Gorbachev and Indian founding fathers like Gandhi, Nehru were disciples of Classical theory of Democracy.

Gorbachev and Gandhi were dreamers - they believed in Utopias and idealistic universal vision of the world. They believed that a society of justice, equality, nonviolence, openness can be created by Democracy. Western developed societies greatly advanced under Democracy so why can’t Soviet Union and India? Such was their thinking (Gandhi’s thinking was actually even inferior to Gorbachev as Gandhi only preached morality without any concrete developmental ideas). Recall that Deng Xiaoping regarded Gorbachev as a fool. I regard Gandhi & Nehru as fools who sowed seeds of India’s degradation by building a failed and unworkable political model of independent India.

I’ve written extensively about Democracy and explained how India is incompatible with Democracy (read 1, 2, 3, 4). Similarly, Russia was not conducive to democracy, at least not in a way Gorbachev intended it to be. Gorbachev wanted to convert Soviet Union into a Democracy & a market economy through a political & economic shock therapy which ended up as a catastrophe for post-Soviet Russia.

Indian founding fathers were fools who believed that political model of Democracy can be imported from abroad and implemented locally. Gorbachev was similarly a fool who thought of Democratizing soviet union and making it work like western nations. Surely, Soviet Union needed political and economic reforms but not of the type and in ways in which Gorbachev carried them out. In contrast, China carried out reforms very differently in 70s and 80s. China reformed it’s economy tremendously in qualitative & quantitative manners although after witnessing the chaotic breakdown in Democratic reform of Soviet Union, China never thought of experimenting with Democracy & universal suffrage, perhaps correctly so.

Schumpeter’s thesis is an excellent analysis of Democracy. There are two ways of understanding Democracy. One is the idealistic way - the classical way - of understanding democracy. It’s an idealistic Utopian way of Democracy, a philosophy of how Democracy ought to be. Many political thinkers, intellectuals and activists understand Democracy only through classical viewpoint. So did Nehru, Gandhi & Gorbachev. But then there’s really existing democracy - a way in which democracy actually works in reality. This is a heterodox and a realistic view of democracy. Schumpeter’s describe both views of democracy in detail.

Schumpeter also described that democracy may work even under classical tenets provided that there is a conducive environment for it. Schumpeter described four requisite for a functional classical Democracy. I’ve explained in my past articles on why a socially & economically backward nation like India doesn’t have these requisites for functioning of democracy. In short - Democracy cannot work in a country like India. Ignoring the ground reality, if you try to implement democracy in India, you will get a failed political system. That’s what India turned out to be.

Soviet Union suffered the same fate. The experiments of perestroika and Glasnost opened Pandora’s box for nationalism, political fragmentation and dissolution which destroyed the Soviet union. Thereafter, the experiment of democracy in post-soviet Russia created a Kakistocracy & a Kleptocracy where the most incompetent and most corrupted crooks took over the political system. Intelligent, visionary and moral people had no mobility in this failed system. Klebnikov describes this in detail in his book. The end result was that Russia became a Gangster State.

So is the case for India. Most Indian intellectuals and activists are fools just like founding fathers. They don’t understand heterodox theory of Democracy and how Indian constitution is a failed project. They keep yelping about saving democracy, free & fair elections, cleaning up politics etc without knowing that Democracy is an unworkable system in India. Of course, there is no easy answer to what alternative social contract & political model is befitting to India. But why should India seek to apply a particular model as a universal ‘one size fits all’ approach? China built itself with a lot of experimentation and pragmatism in last 5 decades. Perhaps India needs a similar approach of reforming its political & economic system.

Book by Isabella Weber illustrates how Chinese economy evolved through experimental reforms and extensive deliberations among technocrats

Apart from failure of domestic political reform. The Utopian vision of international policy & co-operation also turned out to be failure for Gorbachev and Nehru. Gorbachev thought that once cold war was over and Soviet Union democratized, the military rivalry of superpowers will come to an end. But after democratization of Russia and end of cold war, NATO continued to expand eastwards and inducted former soviet states in the alliance. This is contrary to oral promise where US said that NATO alliance won’t expand eastwards.

The Neoliberal reforms as proposed by US economic experts were also a recipe for disaster for Russia. Even still, Russia expected US financial aid from America to jump-start its market economy initiative. But no financial aid ever came. Even Neoliberals like Jeffery Sachs who were advisers to Russia in transitioning to market economy were disappointed that US never provided a financial aid package to assist the transition. Zubok makes an interesting point that in the 90s, there was a good chance to incorporate Russia into common European security architecture and European common market. But US & Europe were not interested.

In India, Nehru also believed in Utopia of international policy, global justice and co-operation. One of the signature policy of Nehru was brotherhood of nations who have been victims of imperialism. China which was a victim of colonial imperialism was thus seen favorably by Nehru. But attack by China and capturing of Indian territory came as a brutal shock to Nehru from which he never recovered psychologically (China occupies the captured territory of India ever since). Similarly, there were other foreign policy failures of Nehru. The consequences of all that was that India after Independence lost territory to its two immediate neighbors, China & Pakistan, and got tied up in conflicts forever.

The Utopian Internationalist vision of Democracy and idealistic political equality turned out to be disasters for Gorbachev and Indian founding fathers. Today, most Indian activists keep digging deeper holes. They are fed up with really existing democracy and so they demand Utopian idealistic democracy. This won’t get them anywhere. The starting point of debate on reforming India should be recognition that its entire political model has failed. Politicians like Modi, Shah, Rahul Gandhi, Nitish Kumar etc & political parties like BJP are endogenous variables of this failed political model.

Image - California

Is inequality just a bug or an endemic feature of Capitalism? Inequality is undoubtedly an essential characteristic of Capitalism. With adequate policies we can restrict inequality to some tolerable levels at which Capitalist engine will perform while society will also be able to accept the level of inequality which the engine generates.

But before we go into that, let’s understand why inequality is a feature of Capitalism. Capitalism has highly uneven risk-reward characteristics which means that success is disproportionately rewarded (winner takes all) and losers are swept aside - this is driving force of Capitalism. Capital tends towards concentration (monopolies & oligopolies) which automatically means few & few people/entities reap the larger share of profits and national income. Giant firms, consolidation of Capital, rise of monopolies are not necessarily a bad outcome in Capitalism, rather a natural process of Capitalism.

A giant firm can operate in a climate of much more certainty (in contrast to free market dog eat dog competition) and thus has capacity to plan, invest and produce with more efficiency. Giant firm can be more conducive to process of creative destruction. Another feature of Capitalism is continuous technological progress where production is mechanized and automatized. With continued technological progress and automation, there is downward pressure on wages of labor especially in modern times when bargaining power of labor - by policy choice - has weakened and production is globalized. Weakening of labor’s bargaining power is due to government policies in favor of Capital in Neoliberal era which began in late 70s.

This tendency of Capitalism means concentration of profits and wealth which translates into inequality in society. Now this feature of Capitalism meets with another critical feature of our political economy. Our government’s desire for economic stability and status-quo of growth trends. There are two things which can destabilize and upend the Capitalist ecosystem.

First - A sudden giant leap in technology that can create new Capitalist players on basis of new modes of production. Now chances of this sudden giant leap in technology is getting smaller in late stage of capitalism for two reasons. A lot of the things entrepreneurs could invent (relatively) easily are already invented and the space for new thinking has shrunk. The real innovation in technology now happens in industrial labs of giant corporations who also own various patents & IPs in advance to maintain their market power.

(It’s difficult but still possible for new market players to emerge as we can see Chinese capitalists’s entry into Green industry (batteries, renewable energy, EVs) and cloud Capital when a competent government supports them with industrial policy.)

Second - And this is the part which is more relevant to my point. Capitalist order can be severally destabilized by a crisis.

Crisis in Economy

Crisis can be endogenous - like great financial crisis. Crisis can be exogenous - a pandemic or a major foreign war. Now government’s - that means elected political regime and Central banks - objective is to preserve the status-quo. Preserving Status-quo means protecting the ‘too big to fail’ institutions, important and strategic corporations and big market players. Government and Central bankers don’t want to let economic crisis wipe out these players. Recall the set of alphabet soup of Federal reserve programs to save financial institutions (& many non-financial as well) in wake of great financial crisis. What would’ve happened if Fed didn’t intervene after collapse of Lehman Brothers? A lot more institutions would’ve collapsed like Dominoes.

Stabilization of business cycles and intervention in times of crisis wasn’t always the policy of our governments and central banks. Back in the day, they thought that ‘letting market balance itself’ should be natural response to a crisis. But great depression showed us how much worse and how long a crisis can get without a government intervention. A crisis works in both ways. It can wipe out the established players of the markets. And it also plunges production and employment - In great depression output crashed by nearly 33% and unemployment peaked at 25%. That was the original order of Capitalism. Capitalists can grow unfettered but they can also get wiped out in a crisis.

In a modern State, Private players own the Capital (means of production) and government only acts as a regulator and stabilizer of economic system. Government itself doesn’t own the Capital and can only influence aggregate demand indirectly through fiscal & monetary stimulus. Even in times of crisis when government bails out private players, government hesitates to take ownership of Capital and lets private players sort out things (through mergers, takeovers, restructuring etc). Employment in Modern State is overwhelmingly under private sector and allowing private sector to fail uncontrollably can be devastating.

(China is a peculiar case where government owns big chunk of Capital through Strategic State owned enterprises and uses this Capital for dirigistic goals and industrial policy)

Now crisis doesn’t wipe out the big market players, for they are strategically protected by governments and central banks in process of stabilizing the business cycles. So we have a Capitalist system which inherently creates inequality and it’s supplemented by our political economy that preserves the existing Capitalist order in times of crisis. The result is Great moderation which entails a (relatively) stable economic growth, attenuated business cycle shocks and more certainty in economy. And after each government intervention in face of crisis, there is a surge in inequality.

When crisis occurs (endogenous or exogenous), Central banks flood the markets with liquidity, starts buying bonds and securities of private corporations and open various credit windows & swap lines for the markets (nationally and internationally). Political governments have given ample legality and liberty to Central banks to extensively exercise their powers as they deem fit. Jerome Powell (current Fed chief) says - “we are lending, not spending”. Central banks say that the credit and capital injections in private sector is only temporary to fend off the crisis. But in the long run, established market players & corporations can always be profitable if the incidental risks and acute shocks have vanished due to explicit guarantee of Fed intervention.

Shifts in Macro paradigm and Political attitude

In post great depression era, governments recognized their roles in stabilizing the economy but thereafter the nature of government interventions changed with time (by government I include Central bank which is an institution of government). From 1940s - 1960s, the fiscal policy was recognized as main tool for stabilization of business cycle. The political attitudes at that time was maintaining low unemployment and healthy growth with fiscal interventions. Government in early post war era (Keynesian period) recognized the shortcomings of market system - the endemic instability of markets, the process of creative destruction, fundamental uncertainty in market economy and its impact on aggregate demand. That was the reason government maintained an activist role in economy (microtuning of economy). But that started to change in 1970s as government slowly withdrew its role.

After Oil crisis, 70s inflation and rise of monetarism & supply side theory, the main tool of policy intervention became monetary policy of Central bank while fiscal policy vanished in background. Starting from late 70s, the government intervened in markets in favor of Capital and against Labor. From here on, the wages of Labor could never catch up with benefits of productivity. Globalization and technological transformations lead to outsourcing of many types of jobs but government let the economy to be lead by the market forces.

Guiding economy and dealing with economic downturn since then has been left mostly to be tackled by Independent Central banks. In response to crisis, too big to fail institutions are nurtured backed to health. This is in contrast to government’s attitude towards general population where government’s fiscal policy is constrained by fear of fiscal deficits and inflation. It’s not surprising that with every crisis, inequality always goes up. Central bankers started to be worshiped like Demigods and monetary policy became only game in town.

Taxes, regulations and Rentierism

While profits and income disproportionately accumulate in the hands of Capitalists, the government can tax them to redistribute the income. Taxes have three main purposes - Regulating aggregate demand, redistributing national income, incentivize/disincentivize types of economic activities. US had the highest income tax rates for top earners for couple of decades after World War 2. But thereafter the tax rates were brought down due to political and ideological reasons. For example, Vodoo economics (supply side theory) professed that cutting taxes drives growth and tax cuts pay for themselves. The decline in top tax rates & deregulation (trickle down economics) resulted in surge of inequality and stagnation of income in lower percentiles but there wasn’t any remarkable improvement in growth.

While a giant corporation with an oligopoly/monopoly power operates in an environment of stability and certainty, it doesn’t necessarily mean that it’s aim is to dispense innovation and technological progress. A Corporation can instead capitalize on its market power to enshittify things, stifle innovation and harness rents in most abusive ways. Tech industry of today is the prime examples of enshittification model of corporations which exploits its market power to degrade things. Tech companies like eCommerce, Social media, Search engines, Video games industry, OTT platforms etc in recent years have become notorious for degrading things.

(I am excluding the discussion on more malignant behavior of Tech companies like their algorithms that promote hate & violence, create addiction, are used for political disinformation and propaganda. Many of the Tech Bros are themselves exponents of malevolent ideology who have subverted social democracy in many countries.)

But what’s the connection between enshittification and inequality? Capitalism has two components - Productive and Rentier. Productive component is tangible production, innovation, technological progress and these material benefits reaching average population. Rent seeking component is about extracting rents (profits are different from rents) without any tangible/material increase in output. Rent seeking is like a parasite on productive & tangible component of Capitalism. Earlier, the financial industry was viewed as Rentier industry but now Tech industry has also joined the ranks.

Capitalism inherently creates inequality but degree of inequality is also determined by ratio of Productive and Rentier components. The more productive the forces of Capitalism are, the more tangible & material output of the economy is. The more Rentier forces are there in Capitalist system, the more parasitical and unproductive the economy is. In late stage Capitalism, the Rentier forces are tending towards dominance. This further aggravates inequality because Capitalists who get larger share of income and profits are also joined by Rentiers who extract their share without any tangible production.

Traditionally, the abuse of patent & IP regime was parasitical component of industrial capitalism. A degree of IP protections are necessary but the pendulum swung too far to the extreme where patents & IPs became mainly an instrument of Rent seeking and exploitation. Example is overpricing of drugs which costs pennies to produce but are sold for thousand times their production costs (1, 2). The lobbies and special interest groups nudged governments throughout the decades to create rules & regulation to protect their dominant market position & legalize abusive practices.

Earlier, the financial industry was infamous for deregulation. Now we have Tech industry joining the ranks demanding self-regulation and autonomy. Financial industry created speculative instruments like Derivatives, Tech industry has created toxic & parasitical instruments like digital currencies (Crypto, meme coin etc). A competent government should seek to minimize parasitical, exploitative and abusive practices in economy. But the lobbies of Corporations and especially Tech industry has gotten too much sway over the government which is now drafting regulations to the wishes of the lobbies of worst type (like new Crypto bill).

Putting everything together - The problem of inequality

Inequality in our current system has following causes -

1. Inequality is an inherent feature of Capitalist system due to ‘profit-wages’ dynamics where profits gets accumulated and concentrated to Capitalists, and trend of technological progress which suppresses wages of labor and keep them in position of uncertainty. Globalization and weakening of labor power has put further downward pressure on wages of labor.

2. While income is unevenly distributed (capitalists grab the larger piece of pie), the taxes and regulations are supposed to redistribute national income. But through the past decades, the government has been cutting taxes on top earners for political and ideological reasons (like trickle down, supply side theory etc). This has aggravated inequality.

3. The productive component of Capitalist system - the tangible industrial production - has shrunk in late stage capitalism while the Rentier component - the parasitical and speculative part - has expanded in US & other developed nations. So capitalists and rentiers are grabbing the piece of economic pie that is not sufficiently growing in size.

4. Interventions by governments and central banks in name of stabilization of business cycle protects too big to fail institutions and big corporations. Hence these established market players grow bigger & bigger, and are immune from adverse events like recessions. Great moderation entails economic stabilization policies that protects the powerful players on top of the mountain from where they cannot be dislodged.

5. The government under the influence of various lobbies is creating policies and regulations in service of oligarchs. Corporations and oligarchs with backing of State power are not really playing in a “free market” environment. Rather they are playing in environment which they themselves create/control and in which they always win. The fundamental ‘risk - reward’ equation of Capitalism is now heavily tilted in favor of existing players on top of the mountain.

6. It would be fitting to add another reason for growing inequality. It’s the legitimization of political and ideological decisions on taxes, regulations, fiscal & monetary policy etc by pseudo-scientific economic theory. Doctrines like Monetarism, Supply Side theory, Neoclassical theory (which includes things like General equilibrium & rational expectations), shock therapy, arbitrary limits (like Maastricht treaty) etc reinforced government policies that aggravated inequality. Orthodox economic theory provided the intellectual backing to political & ideological decisions like Austerity, union busting, privatization, shock therapy etc which increased inequality.

Dealing with Inequality - A new Social Contract

The measures for addressing inequality that I will discuss below are not universal. Meaning, they are suitable for developed nations with industrial power (affluent nations) having the productive capacity to serve needs of society. The real problem for affluent society is not production, but improper distribution/allocation. For developing nations, their problem is lack of productive capacity (economic and social backwardness) as well as improper distribution. So measures for addressing inequality in developing nations requires some different solutions among which is Developmental State doctrine - i.e government strategically guiding economic development and certain sectors of economy. Now let’s focus on developed nations.

Inequality is a feature of Capitalist system and it cannot be wiped out. A realistic approach is restricting inequality to socially acceptable levels and this is doable with right policies. As mentioned, there will always be inequality in Capitalist system. Trying some sort of cultural revolution to force hyper-equality on society will be harmful. But too much inequality also means accumulation of power in hands of few people and in a democratic society, we don’t want accumulation of such great power in hands of Oligarchs. Also don’t fall for misconception that Plutocrats are geniuses who will exercise their power with great acumen & responsibility in best interest of society. People like Elon Musk and Peter Thiel are examples of how dangerous is power in reckless hands of oligarchs.

Before going into ideas for Taxes, regulations and other policies, my approach is rather broad which begins with a new social contract. Political rights without economic rights are insufficient. Since the days of New Deal, people envisioned a society with both political and economic rights. I believe many developed nations have reached the stage where they can provide at least some economic rights to their citizens like right to education and healthcare. Right to employment still looks difficult to implement in a market society although some experts are more optimistic about it.

Government shouldn’t rely on markets simply as a buyer of service to provide healthcare and education as this is a highly inefficient way of doing it. US spends most among developed nations on healthcare but still lags behind in ranking because much of the spending is absorbed by Rentier sector of healthcare system (like insurance companies). Direct funding in these areas and taking out the rentier middle-men (insurance companies etc) will make these programs much more affordable and efficient. Universal healthcare will be significantly cheaper than current hodge-podge of a system based on excessive spending and high subsidies.

So government needs to invest more directly into certain areas instead of relying on middlemen. That means building more hospitals, universities & training centers, research institutions, rural health clinics etc. Similar building of an ecosystem is needed in education sector. Build more Schools, colleges and technical training centers and making education free of cost. Economic growth in 21st century will be led by a R&D in industrial scientific areas and high quality labor force.

Universal healthcare and education system will provide significant savings to households, improve their social mobility and bring down inequality. In addition to that it will also create a backbone for 21st century labor force and scientific advancement. I don’t subscribe to hype of AI but if at least some of the hype is materialized, that means we will have more productive powers for our economy and more automation in industry. That shouldn’t translate into cutting of jobs and suppressing the income of labor. Sam Altman suggested a change in social contract in time when AI will alter the dynamics of economic production. If wonders of AI are so great (although i doubt it) that it enormously raises our production and eliminates waste, we may even have to consider a Basic income guarantee for people.

On subject of regulations, the government policies should seek to minimize Rentier, speculative and parasitical activity by either outlawing it or taxing it heavily. Things like Crypto and digital currency is area which has no purpose in our economy other than for illicit drug peddling, extortion and money laundering. Crypto may be outright banned or it can be heavily taxed. Similarly, a financial transaction tax as proposed by Dean Baker can be levied on Stocks, Bonds, Derivatives or Crypto. Baker also proposes Taxing Stock returns which is more effective than Corporate Tax.

Dealing with the enshittified Monopolies

In conventional wisdom, a giant firm can produce, plan and innovate more economically and hence beneficial to market stability and consumer interest. That’s one side of the coin. On other side is that a giant firm can also stall innovation, abuse consumers and even undermine social fabric & Democracy in worst possible ways. Cloud Capital is the epitome of this side of coin. Monopoly power can go both ways and when it starts going to regressive side, it has to be corrected.

Tech companies is the most concentrated sector in global economy & overwhelmingly located in Silicon valley and operating worldwide. The abuses of these corporations are well known and they are among the worst rentiers in current economy. Some of these companies have to be dismantled and put under proper regulation (much of internet companies are self-regulated so far). The abuses of companies like X/Twitter & Google are so bad that consumers want these services to be converted to public utilities for common good (may be a bridge too far).

There is always an interplay between Capital and Politics on which Marx developed (and overemphasized) the narrative of Class conflict. Schumpeter pointed out that there doesn’t have to be an antagonistic relationship between Labour and Capital. Mainstream economic theory has nothing to say in this regard. But look at reality today and all the empirical evidence. The oligarchical financing of Trump (especially from Tech Bros like Musk & Thiel) and entry of Tech Oligarchs into State apparatus - isn’t this an empirical evidence of Class Conflict?

The policies of DOGE - austerity, dismantling of State, cutting welfare, privatization of government etc - is naked exercise of oligarchical power in hostile takeover of the State. The inequality is a political phenomenon as much as it is an economic one. None of the policies like updating Tax system, rewriting social contract and changing regulation will ever materialize in a system which is politically controlled by oligarchs. Maintaining a healthy democracy is in fact conducive to healthy Capitalism. A capitalist economy cannot function without a healthy State and a Liberal Democracy. Thus it’s critical to remove oligarchical encroachment from Political system and dismantling certain monopolies which are brazenly destroying the liberal democratic Political system.

Advancing Technology while minimizing Rentierism

Conventional thinking on technology is that it’s developed solely by private enterprises in their industrial labs but fact is that a lot of scientific and technological progress is financed and developed in private-public partnership (read work of Mariana Mazzucato in this area). For example, military industrial complex which is a fusion of government and private resources (money, institutions, assets) has contributed significantly to technological advancement.

Government is not in a business of making money like a private enterprise so it lets private players to reap profits in market economy even when government finances development of certain technologies. Dean Baker has written much about it like the development of mRNA vaccines which saved millions of lives were funded by the government. However, private enterprises patented and marketed them for hefty profits which created vaccine billionaires. Baker has proposed constructive ideas for financing innovation in Pharmaceutical and Biomedical sector for public good.

Government can finance research based Startups at universities or entrepreneurial level on long term contract basis. The only condition will be that all research that materializes (drugs, vaccines, equipment etc) will be open source. The products that come out of this research will be patent free and thus a lot cheaper as we can bypass the Rentier activity of middle-men (Big Pharma). The concept of patent free research is that private firms can get a hand on technology and compete on basis of economic potential of mass production rather than playing in highly restrictive & paralyzing IP walls.

Another conventional wisdom in western economic philosophy is that private enterprises are best for delivering production and driving innovation. Can a government enterprise innovate and produce more efficiently? Can a government enterprise emulate technostructure of a private enterprise? Actually it can under certain conditions like proper autonomy and competent leadership.

If we look at modern corporation today (say an Aircraft manufacturing enterprise), the innovative core of it is run by technicians - engineers, scientists, various expert professionals. Then there is a managerial class which decides the nature, quantity and quality of production that is to be sold in the market and also other decisions like finances and marketing strategy of the firm. And finally there’re are the owners of company which are giant shareholders, the large equity owners or private equity firms etc - the true capitalists.

A misconception in mainstream thinking is that innovation is driven by pecuniary motive. Reality is that technicians in technostructure of modern corporation are not just driven by pecuniary motive but something more - intellectual satisfaction they find in their line of work, artistic perfection, curiosity - and this drives their innovative work. In contrast, a Capitalist (a private equity corporation like BlackRock) is purely driven by pecuniary profits, there’s no motive of intellectual satisfaction for them.

A government can create strategic enterprises, emulate private technostructure and harness their power for public purpose. Like Dean Baker’s proposals for research and innovation in Biomedical research, Drug discovery and development. Such innovative enterprises (fully or partially funded by State) can dispense technological advances without Rentier side effects. A lot can also be learned from China and its industrial policy where government gives major subsidies to certain companies and government also has strategic ownership of corporations (SOEs). Recall that until Trump created all the chaos, even economists in market economy like America were realizing the significance of industrial policy. Biden administration got praised for its new approach of industrial policy although he did it in very limited way.

One shortcoming of American industrial policy (as also noted by James Galbraith) was that US government only had restrictive tools for exercising industrial policy because it can only act indirectly through subsidies and government spending. A nation like China has a lot more versatile industrial policy because it has strategic ownership of certain enterprises, a large spectrum of technocratic planners along with government subsidies & broader range of other incentives. Simply put - China has a lot more depth in its Industrial policy. And China makes industrial policy on long term picture whereas policy making in America is beholden to party politics and narrow corporate interests.

But coming to the subject matter of this section. Why am I digressing about rethinking Corporate structure and industrial policy? Because to tackle inequality and to achieve a more equitable growth, we need to rethink organizational flaws of our production process and not just limit our thinking to tax reforms and welfare policies, although they are also important. Our aim is to minimize rentier nature of Capitalism and maximize its innovative & productive role that includes some type of government participation in production.

Government interventions and bailouts

In times of crisis like GFC, government (that includes central bank) saves too big to fail institutions to stabilize the economy. Even in times of small crisis like failure of SVB, government is quick to come to the rescue. The ethical role of government in rescuing the reckless behavior of financial institutions is questioned. Government has a standard excuse - the financial system in our economy is so complex that we can’t allow some institutions to fail and expect the rest of the system to survive as normal.

Government can do several things. It can ban the most parasitical & speculative form of financial activity like Crypto and certain kinds of derivatives. It can also stop providing financial backstop to entities and individuals involved in these kind of activities. Why should FDIC reimburse deposits of Crypto company accounts? Even if certain big institutions have to be saved, the wealth of their key shareholders and executives should be liquidated (forcing some personal responsibility on them) and entire management should be overhauled (to bring some accountability). In wake of GFC bailouts, the government never pushed for any changes in management of institutions while top executives enjoyed fat bonuses from bailouts.

The problem in times of crisis is that debts & liabilities have unknown counterparties and it’s too difficult to know the extent of damages. Proper regulation and supervision of financial institutions is thus important to ascertain that they maintain adequate Capital and are not indulging in reckless behavior. Proper regulation and oversight is in fact most critical to financial stability and ironically this is the thing which financial players despise. A contentious remedy is also that government should let some of the reckless institutions to fail in times of crisis to set an example.

Inequality in developing nations and Globalization

A developed nation can think about new social contract because it has productive power but many of the developing nations don’t have this capacity. For example, for a functional healthcare system, State must have the infrastructure and human resources like hospitals, doctors, nurses and medical equipment. This is not the case in many poor nations. A social contract makes sense when its achievable.

There are two main problem with developing nations. First obviously is their dysfunctional or failed political system. A system which is incapable to produce meaningful policy. These nations suffer from policy paralysis, political instability, unbridled populism and, in general, lack of competent people in their governing institutions. These nations are always marred by poverty, inequality and economic backwardness.

Secondly, developing nations often seek to apply western economic doctrine wholesale as if it is recipe for universal success. The Washington consensus & shock therapy - Privatization, Fiscal responsibility, liberalization etc - is implemented without understanding the ground realities of developing economy. This sometimes results in terrible disasters like Post Soviet Russia. A lesson for developing nations is that they should not rely solely on invisible hand of markets or importing economic doctrines in pursuit of progress. Economic progress has to be achieved by developmental policies of State keeping ground realities in mind and some experimentation. Here China & Asian tigers can offer some guidance.

Many developing economies are still industrially backward and Agriculture based like India where half of labor force is employed in rural agriculture sector with extremely low wages. The primary goal of developing economies should be urbanization and industrialization. With limited resources, the investments have to be made on priority basis in developing States. It makes little sense for developing nations to focus on AI and semiconductor industry when they don’t even have proper roads, reliable electricity, clean drinking water and other basic infrastructure.

Developing nations also face a dilemma - should they focus on tackling inequality or should they focus on increasing their Capital? The question of distribution of income becomes relevant only when there is sufficient income to distribute. That means first growing the size of economic pie and then thinking about its allocation (think of Deng’s view on modernizing China). A starting point for developing nations may be a two-pronged strategy - modernizing the economy and tackling poverty. In later stage of development, priorities can be modified to focus on inequality. In short - grow first, redistribute later.

Technology does offer advantages for laggard nations to catch up with affluent nations. For example, the problem of energy scarcity which has plagued developing nations since long is not a major constraint in current times as renewable (Solar & Wind power, modern batteries etc) energy has gotten much cheaper. Energy is important driver of production, urbanization and electrification and with cheap clean energy, developing nations have more space for developmental policy planning. Unfortunately, the incompetent political regimes of developing nations do not realize the developmental opportunities offered by clean energy & other technological advances. Case in point is my country India (1, 2).

Inequality is a global problem and requires global solutions. Developed nations have advanced much ahead of developing nations and thus developed nations have some responsibility to help the laggards. Back in the times after World War 2, America (the leading industrial power at the time) helped rebuild Europe and Japan which were ruined due to war destruction. Looking at the world today, we need a similar role by developed nations (US, EU, China etc) to help advance developing countries. Unfortunately, starting in 1970s, the assistance to developing nations was packaged into Neoliberal programs (like IMF loans) which failed to lift many developing States.

Globalization produced global imbalances which caused income inequality in Developed nations and certain benefits for developing ones. Labor intensive jobs migrated to developing nations in last few decades which made certain manufacturing jobs obsolete in developed nations (think of rust belt in America). These lost jobs in manufacturing & similar skills were not adequately replaced. The job outsourcing did benefit developing nations as it created new opportunities in these economies and hence lifted many people out of poverty. But the benefits were limited for developing nations. What happened?

Globalization created imbalances and task of re-balancing was left to the laissez-faire markets while governments shunned guiding role in economies. But markets never provided a balance. The lost jobs in developed nations were not replaced & compensated. The developing nations initially benefited from job opportunities and took this trend for granted but the benefits plateaued. And now with newer trends of AI & more sophisticated automation in pipeline, there is little hope for new opportunities to come the way for developing economies as they once did in 90s and 2000s.

China fared much better in globalization era as it harnessed the opportunities from globalization to the full compared to other developing nations like India which remained backward & poor. China can be called a developed State today. Reason for Chinese success was government planning, policy guidance and co-ordination with market forces. China understood the nature of globalization trends and channeled market forces into things it wanted to do (and insulated certain other things). Other developing nations failed in two main regards 1) They played little or no guiding role in economies and left economic direction to laissez-faire or 2) They failed to recognize economic trends and simply failed to capitalize on opportunities (nations like Pakistan).

On field of Economics

Something also needs to be said about the economics field which has failed in certain respects. Inequality is an afterthought in mainstream economic theory. Mainstream economic theory in current times is a perverted field, based on unrealistic assumptions and mathematical models. Mainstream economic field focuses on production centric approach while the distributional aspect of production or its environmental impact is outside the purview of mainstream economics. While employment is an important subject of economic theory but in last few decades, the issue of price stability and arbitrary limits (2% inflation targets, 3% deficit targets etc) have undercut its significance. Inequality doesn’t figure at all in economic theory apart from some trivial commentary on it.

Economics right now is reducing to a dismal Science and a hopeless field if it’s studied from Neoclassical viewpoint. Under orthodox economic science, nothing can be done to make things better. Government’s activist role in economy is scorned, spending on infrastructure and social welfare is despised as inflationary, government deficits is scorned as crowding out private investment & upsetting confidence fairy, arbitrary rules on fiscal limits & inflation targets are considered sanctimonious and any proper regulatory intervention is criticized as hindrance in working of invisible hand.

There needs to be different approach to doing economics rather than building complicated models on unrealistic assumptions. A way of economics which focuses on environment & ecosystem, on economic growth with more equitable distribution, a way of doing economics which doesn’t lock us into rigid tenets and applying theories as universal truths. Last several decades of economics has been based on western Neoliberal philosophy which has brought tremendous damage across the world. The rise of madmen like Donald Trump, erosion of liberal Democracy, surging inequality and populist anger, environmental destruction and geopolitical divisions - all these problems can be traced to failures in economics.

Jan 6 riots

This is continuation of my thesis on Democracy. My previous articles are here (1, 2, 3).

When discussing fallacies of mainstream political theory, I’ve made a parallel comparison of these fallacies with mainstream economic theory. For example, mainstream economic theory proposes that consumer (or economic agents in general) are rational and sovereign. That means consumers or firms take rational decisions and exercise their decisions out of free will. Such generalization is wrong. The rationality itself is a dubious concept which is open to interpretation (what’s rational to you can be irrational to me). Similarly, mainstream political theory is founded on assumption that electorate is rational and sovereign. This is also wrong. In fact, the rationality is an idealist position that is attributed to the masses, and such basic assumption is necessary to build mainstream political model of Democracy.

Mainstream political model of Democracy would fail if we start with assumption that people - the electorate - are irrational. The universal suffrage would then become pointless. Similarly, mainstream economic theory also makes certain assumptions about economic agents and their behavior. If we reject these assumptions, mainstream economic models will fail. In fact, certain assumptions and suppositions are requisite to build any model in political theory or economic theory. Homo economicus is an ideal concept of a man who is rational, informed and intelligent to take best decisions in his economic interests - Homo economicus is an optimizing agent and economic theory is underpinned on this ideal man.

Economics is a contested field and heterodox economists claim that idealist assumptions of orthodox (mainstream) economic theory are wrong and thus fail to adequately explain/analyze our economy. Heterodox thinkers claim that economic models should be based on realisticness and they have formulated ‘realistic’ assumptions to build their own economic models. This I’ve explained in my previous article.

In mainstream political theory, the model of democracy is built on idealist and unrealistic assumptions. This mainstream model is what we call classical doctrine of democracy or simply classical theory. The idealist and unrealistic assumptions of classical theory of democracy are detached from our objective reality and several intellectuals have made excellent thesis on this. Most notable is landmark work of Schumpeter in his book - Capitalism, Socialism and Democracy. Similar but less organized thesis are also made by LeBon and Graham Wallas. Schumpeter also offers a realistic approach - a heterodox view of democracy - which also explains certain fallacies, shortcomings and limitations of Democracy.

When Economic models fail

What happens when economic models fail. Back when macroeconomics was not sufficiently developed, (neo)classical economic theory dominated the field which was pretty much a generalization of microeconomic theories and laissez-faire doctrine (markets knows the best). The great depression upended economies across the Atlantic. What did economic experts propose? Balance budget, wage cuts and allowing markets to correct themselves. This only made depression worse.

Economists learned some lessons and macroeconomics field evolved with major influence of Keynes. But by end of 20th century, Keynesian economics faded out and ‘Vodoo economics’ (supply side theory) emerged. It’s tenets were - Deficit reduction generates growth, lower taxes drive production, tax cuts pay for themselves etc. The debt and deficits exploded but there wasn’t any remarkable improvement in growth. The tax cuts didn’t pay for themselves but instead created a surge in inequality. However, the economists hailed the arrival of era called great moderation where central bankers can stabilize growth with monetary policies.

Mainstream economists started worshiping independent Central bankers as demigods (recall Greenspan) who delivered us the realm of great moderation. But then came the Minsky moment which caught the technocratic & independent central bankers napping off-guard. The sophisticated DGSE models failed to project the great financial crisis. All risk models of financial industry were also laid to dust. To rescue the markets, socialistic policies were implemented where treasuries and central banks gave trillions of bailouts to private institutions in form of capital injection and credit. The markets were rescued.

And what about real economy (main street) and labor markets? Here, the same old rhetoric on deficit reduction continued. So it took 7 long years for labor market to recover to its pre-recession levels - A long painful recovery. Why the recovery was so slow and painful? Because of bipartisan consensus on austerity and demise of Keynesian thinking. Democrats since days of Clinton had become a party of Balance budget and paying down the debt (they believed in negative fiscal multipliers) and Republicans were always against more government spending (except on defense).

With Neoliberalism, the TINA (there is no alternative) doctrine was born which basically meant the new economic paradigm is best of the possible alternatives. The market economy coupled with liberal democracy is the fait accompli which has to be accepted. TINA doctrine + ‘end of history’ meant that debate about political and economic systems has been settled once and for all, and nations have to adopt these systems. The Developmental State ended, Keynesianism was over, dirigisme was finished. The national economies and global economy would be guided by the markets and politics of States governed by democracy.

What has been the legacy of mainstream macro in western economies, in US and Europe? It’s stagnation, austerity and inequality. The case of Eurozone is worse where fiscal policy is permanently paralyzed because of arbitrary fiscal rules (like Maastricht treaty & German debt brake) and completely independent central bank - ECB. Guided by these kind of economic models, Eurozone did a lot of self harm which resulted in a ‘lost decade’.

Why Eurozone is marred by flawed structural designs? Because it was born in 90s - the zenith of Neoliberal era after collapse of Soviet union. Economies of Soviet union and Comecon States were also based on flawed economic designs. These States lacked efficiency and stability because of central planning and pricing rigidities which stagnated growth and strangulated innovation. While Neoliberal economies put too much faith in markets - ‘markets knows the best’ mantra, the communist nations put too much faith in central planning and State control of Capital.

The failure of economic models was felt worldwide. The western economic model was packaged into ‘Washington consensus’ and exported to developing nations as a universal recipe for economic advancement. The success turned out to be uneven. Some nations adopted this model with success while many others faced great difficulties or failures with it.

When Political models fail

Western intellectuals have since long misinformed people about Democracy by their idealistic political models. These models start with an ideal electorate - an informed and rational population - which exercises their popular will in best interest of society. The political arena comprises of leaders with diverse ideas for governance of nation and electorate chooses those among them which they see the best of the lot.

There are a lot of problems with mainstream models of democracy because it’s built on unrealistic assumptions (elaborated in my previous article). To begin with, there’s no rational and sovereign electorate. There’s no such thing as popular will of electorate as Schumpeter explained. It’s actually popular whim which is exercised in elections. Today a madman, who’s not even fit to be a janitor is put into highest public office by American voters. This is epitome of failure of rational electorate theory. Things only go downhill from here. Mainstream political theory is based on idealistic assumption that political is a playground for competing ideas for best governance of nation. In reality - as Schumpeter stated - politics is a battleground of (oligarchical) power factions who contend for power. And policy making is only an incidental outcome of democratic politics, not its main feature.

A democratic politician in populist democracy

There’s a gross misunderstanding among people who believe that ruling politicians really have some constructive plan for policy making and governance. Look at Donald Trump. Do you really think that he has a plan for governing the country? This unstable man operates on his erratic whims (dictated by his id) which change by the hour and he shoots his policy decisions at midnight through social media posts.

What about the Democrats? Today, Donald Trump is in power because Democrats in their previous tenure did not enforce the rule of law against madman Donald Trump and his coterie. Trump, indicted on nearly 100 criminal counts that includes charges of insurrection, espionage and fraud managed to escape all accountability. That is such grand failure of rule of law from which a country may not recover. Some Democrats say that they couldn’t do anything because of the Fascist Supreme Court which gave total immunity to Trump. Well, if your Courts have become Fascist and a madman takes over your highest office - Isn’t that an indictment that your political system has failed?

The problem with political system in America is not limited to crisis of populist democracy but extends also to their archaic concept of Judicial branch. Lifetime appointments of Justices has translated into dictatorships of courts. Here again we can see how an idealist model of separation of power has gone awry. The creators of this system envisioned Judges to be wise philosophers who will conserve the spirit of constitution. And to protect these wise judges from political interference, they were given lifetime appointments.

It’s common sense that ‘lifetime appointment’ itself is an invitation to corrupt and unaccountable people. With free flow of money into American politics, the oligarchs financed politicians to install their favorite judges in top courts. So substandard and corrupted politicians started packing courts with substandard and corrupted judges. While there is a crucial check on politicians - their tenure in public office is limited - the judges have no such limitations. Once an incompetent or corrupted judge enters the Judicial system, he rots the whole system for a lifetime. That’s what judges like Clarance Thomas are doing. The idealist model which was intended to make Supreme court free from political interference ended up making Supreme court as most politicized and corrupt institution in America.

Elsewhere, look at politics in UK where Labour Party recently won by a landslide. But is it really the Labour party that won? There’s really no difference between Labour party of today and conservative (Tory) party of 10-15 years ago. The Thatecherite policies of austerity and downgrading standards of living of British society continues under Labour party. What happened in UK? The political system shifted to the right. The Labour became like Tories and Tories became like UKIP (and a new monster ‘Reform party’ is born). Why did it happen? The Labour party under Corbyn wasn’t winning national elections while Tories kept winning on their bankrupt programs of austerity. So Labour thought why not emulate Tories.

This is similar to what happened in US. In 90s, a billionaire Ross Perot entered Presidential campaign and popularized the idea of Balance budget and discovered a great appeal in this slogan. Equating government budget as a household finance was a simple enough narrative which people could comprehend and it struck a chord (although this idea is complete nonsense). Although Perot lost, Bill Clinton who won the elections found the Balance budget slogan as an effective political narrative so he adopted it and worked to implement it. Such is the imbecilic political arena where playing to popular slogans rather than objective thinking drives policy ideas.

It’s not that Donald Trump is highly intelligent and wins elections through some great political acumen. Rather, the political field has reduced to such imbecility that it’s conducive to an idiot like Trump to participate and succeed in it. He keeps repeating idiotic slogans - Make America great again, Build the wall, Drain the swamp etc - and captures the sentiments of voters. The path to political success is capitalizing on sentiments of electorate. No real policy ideas and competence for governing the country is needed.

In mainstream political theory, Parliament is a sacred institution where great policy ideas are converted into good legislation. In reality, parliament is a dysfunctional body where power factions collide, compete on basis of demagogy where goal is to produce a spectacle for populist consumption. Government shutdowns have now become a routine affair in America where politicians could not come to an agreement on budget bills. As I write this article, US government is in shutdown once again since last 8 days.

The problem in America is also their archaic system of governance. For example, the ‘debt ceiling’ imposes arbitrary limit on government spending. Both parties know that this is a nonsensical self imposed idiocy but both parties never come together to repeal this obsolete law. When Democrats are in power, GOP takes the government hostage by blocking the extension of debt ceiling. When GOP is in power, Democrats get busy with politicking to paralyze the government. This game has been going on for many years.

The reality of Parliament (Congress in US) is quite simple. The politicians are not representatives of people but of donor class or oligarchs. It’s no surprise that while political parties are in bitter feud over things, they also come to bipartisan agreement over legislation where donor class interests are common. For example, the new Crypto bill which serves the parasitical Crypto lobby or the defense spending which serves defense industrial complex pass with bipartisan support .

When talking about failure of democracy, I gave an outline of affairs in the western world. Western world, which historically was conducive to democracy (and where modern democracy was born) is now facing crisis. Elsewhere, Democracy especially in many backward developing nations has already failed. For example, in my country India, the democracy has been a total disaster.

Conclusion

After collapse of Soviet Union, US became the hegemon in unipolar world order. A feature of unipolar world order included superiority of western philosophy of which there were two crucial pieces - the liberal democracy and Neoliberal economics. As a result, Political philosophers like Fukuyama and economists like Larry Summers got great reverence. People like Fukuyama were either intellectually dishonest or intellectually shallow which was evident from his thesis of ‘end of history’ and final victory of liberal democracy.

Philosophers like Schumpeter and Graham Wallas gave an unbiased and objective view of democracy in their thesis in early 20th century. Their thesis qualifies as real philosophy which stands the test of time and space although we can certainly make improvements on it and update it to new technological age.

If you look at western intellectuals today, (Timothy Snyder, Ruth Ben Ghiat, Jennifer Mercieca etc) their analysis and thesis on American politics is solely focused on Donald Trump rather than political model of America that’s on brink of failure. Donald Trump is not a problem, but a symptom of a systemic crisis - an endogenous variable of American political system. And here is the root of the problem. For how can American thinkers question their political system? Because liberal democracy is the best political model in their philosophy. So problem has to be found elsewhere.

Getting to heart of matter. Why do our idealistic models of politics and economy fail? It’s in our nature to quantify things and hence we build models. As in Scientific field, building models in economics or politics also requires certain assumptions. But modelling these complex systems involves human agents which cannot be represented by fixed idealistic assumptions. Metaphysics of human nature is very different from fixed scientific laws (like gravity, laws of motion, principles of physics). Rationality can be an arbitrary concept when applying to humans.

Another perspective is that the models - especially political models - are make believe systems. That is, these models are prescriptive - an idealist proposition on how our government, institutions and society should work. People may aspire to these idealist propositions but that doesn’t mean that things will run this way. The 18th and 19th century philosophers built ideas of democracy in their own idealistic image - how things ought to be. Not how they actually are. This is where Schumpeter’s heterodox theory of Democracy fills the void by explaining how Democracy works in reality rather than how it should work based on idealist assumptions.

Suggested readings

Capitalism, Socialism and Democracy by Schumpeter

Human Nature in Politics by Graham Wallas

Post-Keynesian Economics by Marc Lavoie