The collapse of the Islamic Republic of Afghanistan on Aug. 15 sent a shock wave throughout the world. After two decades of the trappings of democracy, it is gone, together with the hopes of millions of men, women, and children; even as we hope that the “new” Taliban has learned the lesson of its own recent history and steer clear of wanton reprisals. For the few of us old enough to have witnessed the fall of Saigon in 1975, this feels like déjà vu. At that time, it was the Socialist challenge that was riding high. But Uncle Ho proved much wiser than the Khmer Rouge and would eventually steer Vietnam to an economic miracle if along capitalist lines. But for the moment, J. Schumpeter’s categorical “No” to his own rhetorical question, “Can Capitalism survive?” seemed prescient.

The toppling of the Berlin Wall and the collapse of the Socialist challenge in 1989 put paid to all the lost ground to Socialism. “Euphoric” hardly described the swelling mood among those under the sway of the Western worldview and schooled in the fear of a socialist takeover. We knew that something fundamental had ended. The Socialist challenge had not only stalled, it died!

For Francis Fukuyama (1992), what ended was “history,” understood as the clash of competing arrangements for society and economy. When the smoke finally clears, he surmised, the last one standing will be liberal democracy! For every challenge to liberal democracy, there will always be a Berlin Wall moment of reckoning! Many of that persuasion believed that 1989 was as final as the mathematician’s QED. Liberal democracy had become history’s anointed. Fukuyama professed his belief that history is an evolutionary process but rendered evolution strangely eschatological revealing its direction and terminal state. Still and all, euphoric license is generous. The fact that evolution is a process of emergence with irreducible un-predictability in its DNA was lost in the exuberance. Among the acolytes, liberal democracy has the character of an absorbing state in non-linear dynamics — once there you are stuck. Did not Karl Marx of Das Kapital make a similar mistake when he made the classless society the eschatos of his evolving system? The “end of history” thesis was roundly criticized as hopelessly naïve. Huntington (1993) suggested that the “clash of civilizations” with emphasis on the Islamic challenge will quickly replace the “clash of ideologies.” The August 2015 Afghanistan debacle reiterates Huntington’s point; as did the much ballyhooed Arab Spring that sputtered into chaos and dictatorships.

Illiberal democracy is even more of a challenge to the end of history narrative. Venezuela, Turkey, Poland, Hungary, Thailand, Myanmar, and the Philippines have lurched into illiberal democracy. What was once the heartland of liberal values, the USA, seems now irretrievably fractured along the post-truth fault line. Autocratic China and Russia, both intent on driving a wedge between Capitalism and liberal democracy, are in vocal ascendance both politically and economically. Hong Kong, caught in the awkward middle, has been wrenched away from the liberal democratic fold. Meanwhile, the EU, now having to receive even more migrants following Kabul’s collapse, will see an intensification of seemingly irreconcilable clash of cultures which may still result in what D. Murray (2017) calls the “strange death of Europe.” As the Berlin Wall moment recedes farther and farther, liberal democracy is proving to be less and less its own excuse for being!

What seems glossed over in this welter of claims and counterclaims is another and deeper divide: the clash between the individual and the group. Faithful to Emmanuel Kant, liberal democracy views the group as ancillary to the individual; for its rivals, the group seems paramount. This may be partly due to relative affluence and how attained: the North already enjoys what the South aspires for. The affluent North indulges the individual mainly by allowing greater and greater latitude to political and social preferences (what economists called “universal domain” which, in social media lingo, is “my truth is as good as your truth”) and tutors the South to do the same. The South knows that the North attained its affluence not by indulging the individual but by carefully husbanding the scarce economic capital of the group mostly through two pathways: the blind and ruthless discipline of laissez faire and the restriction of social and political preferences among its populace. Another of Ha-Joon Chang’s kicked ladders (2002), in a sense.

The Gilded Age from 1878 to1900, when the USA caught up with, and even overtook, Europe had an abundance of jobs and land but not an abundance of worker and minority rights. It was a living breathing illiberal democracy. Freed slaves were fenced in by Jim Crow laws. As late as the 1930s, the Chinese, Filipinos, and Mexicans in California were treated as dogs, and when they resisted, were hunted down as canids (Bulusan’s America is in the Heart, 1946; or Steinbeck’s Grapes of Wrath, 1939). Thus, when China restricts preferences among its minorities, the Uighurs and the Tibetans and among dissident fellow Han Chinese of Hong Kong, it is just being a good student of history. In the Confucianist tradition, the individual has little meaning outside the group which in China is the 90% Han Chinese majority.

The insistence on the individual’s priority over the group is painfully reflected in modern Western economic thinking which adopted the behavioral type homo economicus as a first principle. Homo economicus, truth be told, is the sociopath in other social sciences, a spectrum of autism devoid of any regard for others though gifted in other ways. Western economics, under the spell of Physics envy over the last three-quarters of a century, has increasingly distanced itself from the study of real humans. That every economic agent is a fallible member of some group and regards others as valuable now begs to be restored at the heart of the hopeful post-Physics envy economics. Homo economicus is now a member of the trivial group with exactly one member, himself. All the vaunted theorems of neoclassical economics are still valid but only for this nested special subspace of humans. Economics can only help itself by embracing Kahnemann-Tversky’s humans as starting position and completing the program started by G. Myrdal (An American Dilemma: The Negro Problem and Modern Democracy, 1944) and H. Simon (Models of Man, 1957). The birth and death of groups, the entry into and exit from groups like Brexit, the decision to migrate or a become suicide bomber become tractable economic problems. Perhaps then Economics can better engage the great debates of our time.


Raul V. Fabella is an Honorary Professor of the Asian Institute of Management (AIM), a member of the National Academy of Science and Technology (NAST) and a retired professor of the University of the Philippines. He gets his dopamine fix from hitting tennis balls with wife Teena and bicycling.