What is the elephant in all our rooms? It is the global triumph of capitalism. Democracy is fiercely disputed. Freedom is under threat, even in long-established democracies like Britain. Western supremacy is on the skids. But everyone does capitalism. Americans and Europeans do it. Indians do it. Russian oligarchs and Saudi princes do it. Even Chinese communists do it. And now the members of Israel's oldest kibbutz, that last best hope of egalitarian socialism, have voted to introduce variable salaries based on individual performance. Karl Marx would be turning in his grave. Or perhaps not, since some of his writings foreshadowed our era of globalized capitalism. His prescription failed, but his description was prescient.
Here is the great fact about the early 21st century, so big and taken for granted that we rarely stop to think how extraordinary it is.
After all, what are the big ideological alternatives being proposed today? Hugo Chavez's "21st century socialism" still looks like a local or at most a regional phenomenon, best practised in oil-rich states. Islamism does not offer an alternative economic system (aside from the peculiarities of Islamic finance) and anyway does not appeal beyond the Muslim umma. Most anti-globalists and, indeed, green activists, are much better at pointing out the failings of global capitalism than they are at suggesting systemic alternatives. "Capitalism should be replaced by something nicer," read a placard at a May Day demonstration a few years back.
Of course there's a problem of definition here. Is what Russian or Chinese state-owned firms do really capitalism? Isn't private ownership the essence of capitalism? One of America's leading academic experts on capitalism, Edmund Phelps of Columbia University, has an even more restrictive definition. For him, much of what continental Europe has, with its multiple stakeholders, is actually corporatism. Capitalism, he says, is "an economic system in which private capital is relatively free to innovate and invest without permissions from the state and green lights from communities and regions, from workers, and other so-called social partners." In which case, most of the world is not capitalist.
I find this much too restrictive. Surely what Europe has is multiple varieties of capitalism, from more liberal market economies such as Britain and Ireland to more co-ordinated stakeholder economies such as Germany and Austria. In Russia and China, there's a spectrum from state to private ownership. Other considerations than maximizing profit play a larger part in the decision-making of state-controlled companies, but they, too, operate as players in national and international markets, and increasingly they also speak the language of global capitalism. Granted, China's "Leninist capitalism" is a very big borderline case, but the crab-like movement of its companies toward what we would recognize as more rather than less capitalist behaviour is far clearer than any movement of its state toward democracy.
Does this lack of any clear ideological alternative mean capitalism is secure for years to come? Far from it. With the unprecedented triumph of globalized capitalism over the past two decades come new threats to its own future. They are not precisely the famous "contradictions" Marx identified, but they may be even bigger. For a start, the history of capitalism over the past 100 years hardly supports the view that it is an automatically self-correcting system. As George Soros (who should know) points out, global markets are now more than ever constantly out of equilibrium -- and teetering on the edge of a larger disequilibrium. Again and again, it has needed the visible hands of political, fiscal and legal correction to complement the invisible hand of the market. The bigger it gets, the harder it can fall.
Then there is inequality. One feature of globalized capitalism seems to be that it rewards its high performers disproportionately, not just in London but also in Shanghai, Moscow and Mumbai. What will be the political effects of having a small group of super-rich people in countries where the majority are still super-poor? In more developed economies, such as in Britain and North America, a reasonably well-off middle class, with a slowly improving personal standard of living, may be less bothered by a small group of the super-rich -- whose antics also provide them with a regular diet of tabloid-style entertainment. But if a lot of middle-class people begin to feel they are personally losing out to the same process of globalization that is making those few fund managers stinking rich, while at the same time outsourcing middle-class jobs to India, then you may have a backlash.
Above all, though, there is the inescapable dilemma that this planet cannot sustain six and a half billion people living like today's middle-class consumers in the rich north. In a few decades, we would use up fossil fuels that took 400 million years to accrete -- and change the earth's climate as a result. Sustainability may be a boring word, but it is the biggest single challenge to global capitalism today. However ingenious modern capitalists are in finding alternative technologies -- and they will be very ingenious -- somewhere down the line, this will mean richer consumers settling for less rather than ever more.
Marx thought capitalism would have a problem finding consumers for the goods that improving techniques of production enabled it to churn it. Instead, it has become expert in a new branch of manufacturing: the manufacture of desires. The genius of contemporary capitalism is not simply that it gives consumers what they want, but that it makes them want what it has to give. It's that core logic of ever-expanding desires that is unsustainable on a global scale. But are we prepared to abandon it? We may be happy to insulate our homes, recycle our newspapers and bicycle to work, but are we ready to settle for less so others can have more? Am I? Are you?
British political writer Timothy Garton Ash is a professor of European studies at Oxford.