What do Japan, US, EU need the most?

By Shahab Sabahi

Energy and Environment - Policy analysis research group

Francis Fukuyama argued in his book THE END OF HISTORY AND THE LAST MAN (1992), that the fall of communism ended an aged dispute over the proper society structure and institution in favor of liberal democracy. Now liberal democracy has been in force without competitor for dozen decade. Since there exists no perfect system in the real and dynamic world, what would be the successor of liberal democracy? When would liberal democracy reach its decay? (Huntington 1962, theory of political decay)

Perhaps the recent incidents such as financial crisis highly polarized national politics, emergence of nationalists, international competitions and global warming suggest that time is up for liberal democrat. The fact is the liberal democrat has no an efficient answer for these issues. History also tells us in the time of hardship, a strong leadership who can create a sense of trust among society, directed societies even it breached the basic principle of liberty,

The notion of market forces and a simple confidence in the power of markets and the “rational man” economic model are ultimately as self-defeating as the socialist ideal. As cultural theory suggests, culture is the ultimate determinant of social life and consequently economic behaviour. People make their choices based on their world view, ideology and lifestyle. Men and women have needs that transcend the desire for gain. As members of societies, they are in a sophisticated network of understanding and obligation. These cultural ties induce every economic decision. It seems that something is at odds with orthodox economics. THE SOMETHING lives in the real world, thus the orthodox economics disables to figure out issues and should be revised.

Social science teaches us that Trust is the cultural key to prosperity. The level of trust in a society shapes the nature of its economic transactions and institutions. High-trust societies are marked by a high degree of spontaneous sociability. Individuals in these societies are able to build strong relationships outside such structures as the family. High-trust societies are able to generate the large corporations that form the cutting edge of modern industry. People in low-trust societies are disinclined to trust people outside their family or clan. They tend to form smaller family-run firms. Traditionally, nations such as Italy and China have been low-trust societies, and nations such as Japan, Germany, and the United States have been high-trust societies. Fukuyama warns that an erosion of trust in the United States during recent decades may imperil its economic position.

A rebirth of the communal values which promote trust, in America, Japan and EU is essential.