The Baraka Khan Foundation (BKF) and East London Mosque Trust (ELMT) were honoured to host Martin Wolf CBE, Associate Editor and Chief Economics Commentator at the Financial Times, for a keynote lecture on Democracy, Markets and Welfare on 19 April 2018.
As part of the BKF’s ongoing series to host prominent opinion-formers to discuss issues pertaining to the community, third sector, and global economy, Martin Wolf’s keynote lecture at the London Muslim Centre was well-received amongst an audience of community leaders, business professionals, financial services practitioners and other distinguished guests.
Habibur Rahman, Chairman of the ELMT, welcomed guests to the prestigious event and highlighted the efforts undertaken by the institution to build on strategic partnerships for the common good.
Speaking to the audience, Mr Rahman said: “We are an open, accessible and welcoming institution. Our activities and services are open to men and women, young and old, Muslim and non-Muslim. We want to improve the society around us and increase our collective understanding by welcoming people to both our institution and the Baraka Khan Visitor Gallery. Iqbal Khan, our dear friend and member of our Mosque Trust, has been instrumental in inviting fascinating and engaging personalities to this institution – to not only learn about our community but also share their extensive wisdom, knowledge and experience. And, tonight’s event is one such occasion. We look forward to hosting further events in partnership with the Baraka Khan Foundation.”
Martin Wolf expressed his gratitude for being hosted at the mosque and the opportunity to speak on the various subject areas interrelated between economics and democracy, which he is deeply passionate about and has spent the best part of his career developing his thoughts on.
The key themes and highlights from his lecture include:
Rebalancing the world’s systems
Speaking on his work around “rebalancing the world’s system”, Martin cited a quote inscribed in the Temple of Apollo in Delphi, which reads ‘never too much’. He added: “The underlying idea is that in human affairs there is never a perfection, and everything is about getting the balance right. And, we have got the balance wrong in important ways, and my view is we have to rebalance without losing the virtues of the old but eliminating some of the vices.”
Martin also quoted Dani Rodrick, Professor of International Political Economy at Harvard University, who said, “Democracy, national sovereignty and global economic integration are mutually incompatible: we can combine any two of the three, but never have all three simultaneously and in full,” Martin explained that this outlook is correct and that it “does not matter”. In the understanding that these vast areas have an interchange but cannot always align together perfectly.
He went onto say, “We have to make trade-offs in the real world between these dimensions of things which are desirable. We shouldn’t want an economy, which is entirely isolated from all other economies in the world on national grounds. That would be impoverishing and also extraordinarily aggressive in relationships towards dealing with other nations. National sovereignty, therefore, cannot be absolute. That means ultimately the people who make the decisions in our nations through democratic decision making, cannot have total control over their economic life and shouldn’t want it. They can have some of it but not all of it, and that is essentially what I am arguing.”
A Crisis of Democratic Capitalism
Talking about the ‘crisis’ in democratic capitalism, particularly in Western nations, Martin mentioned we are witnessing a “democratic recession”. He explained that citizens in our ‘liberal democracies’ have rights vested in them through protected law, which “constrains the rights of temporary majorities,” and that “our economies rest on market exchange within the order created by our democratic states. But the market system is inherently global. It goes wherever opportunities are to be found.”
He continued to explain that while the “symbiosis” of democracy and the “global market economy” appear to be natural in the processes undergone within the last century or so, which has led to the rise in prosperity, education and organised labour including the mass mobilisation of adults. However, Martin said, “there are also conflicts between democracy and the market,” which are manifesting in “enormous inequality”, thus if democracy or the market economy fail we will witness an “illiberal democracy”. He alluded to the points that democracy puts forth the notion of “one person, one vote” but the capitalistic system, this can be re-stated as “one pound, one vote”. Martin added that we have seen in a rise in “plebiscitary dictatorship”, as a result of decline in the market economy over the last decade.
Learning from the Collapse of Trust
Martin explained the current collapse of trust in democracy and the market economy was emerging as a result of globalisation, mass immigration, inequality, unemployment, austerity amongst other factors. Using these factors as indicators he described what could be seen as the “Corbyn effect” within the UK, and the rising distrust in the UK and US population from established institutions that check the “will of the people” such as the courts, established mainstream media and opinion experts. Martin alluded to the point that a rise in populism is a threat to “liberal democracy”, the “independent media”, “globalisation” and “international co-operation”. He noted that this force is also growing within other western countries, which is growingly seeing “free markets, free trade and capitalism” as a suspect, which are “not part of the people”.
Future of Human Welfare
Lastly, discussing the ramifications of the political and economic discord that we see within the world, Martin concluded that “liberal democracy and the rule of law remain the best way to govern ourselves.” He laid out ideas and the need for reforms, a move away from “shareholder value maximisation” as the goal of companies to “reduction in our dependence on private debt and strong government investment in infrastructure, innovation and education.” With specific regards to the betterment of welfare provided by the state, Martin outlined that “both a stronger safety net and strong support for people to adapt to and profit from economic change” and said it would require higher forms of taxation to deliver it.
In closing Martin said, “The market remains the best way to generate prosperity,” and that “there must be a balance between the two if we are to offer the people of this country a balance between security and prosperity, mutual obligations and individual freedom. The balance has gone wrong, with dangerous consequences.”
The event closed with members of the audience asking a range of questions on points he raised in his speech.
The Baraka Khan Foundation and East London Mosque Trust want to thank all those that attended the evening’s event and our sincere gratitude to Martin Wolf CBE for his keynote speech and presentation.