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January 21, 2011 / Lukasz Cerazy

A Transparent Liberal Democracy

Image: Idea go /

The birth of the social network has not only been significant in terms of greater communication and connectivity, but it has also become a powerful voice. A vocalisation of public opinions on all sorts of issues and its power has grown to such an extent that it now has the potential to change the social contract between the state and the public and to revise business practices. Lately a new phenomenon has risen to public prominence, which is a type of organisation, like WikiLeaks, that blows the whistle on sensitive issues. Their effectiveness is still complicated to determine, but the organisations certainly have the power to embarrass businesses and political leaders. There are two significant reasons why these organisations have more potent ammunition to fire with and better capabilities to change popular public opinion than ever before. First, the news or information can be distributed fast and very effectively within huge social networks. Furthermore, once it has spread it is nearly impossible to delete that information because the number of copies is simply immense and no authority has the capability to account for its distribution. Second, and perhaps most importantly, the individuals who seek to blow the whistle come from within the system itself, like national security offices or offshore banks.

Public Opinion

Image: renjith krishnan /

The whistle blowers might have a variety of reasons why they come forward with sensitive material, but it seems to have a more profound motivation than just 5 minutes in the spotlight. Their motives might be self-interest or potential gains in the future; however, they might also be driven by the desire to correct social unjust relations or practices. Without having a clear-cut answer to their motive, because there are always exceptions and cases vary, it is, however, possible to interpret how the public judge their actions. Supporters of individuals that do come forward and pass on sensitive information to organisations that publish these, give them a sort of hero-status because they are seen to want to unveil “the truth” about a controversial issue. A correction of this kind of affair can potentially lead to greater equality or other social externalities, which benefit society. On the other hand, the sceptics are entrenched in their view of data protection and want to reserve the rights for firms and state to protect their trading secrets or policies and put up barriers to their distribution of information. This division resembles the intellectual property rights debate on patents, copyrights and the like. In general this can be seen as a division between the left and right on the political spectrum, despite this being a quite vague classification that is not universally true.

Political Spectrum

Image: renjith krishnan /

In spite of the obvious risk of prosecution, if one is found to be in breach of a confidentially contract, the whistle blowing community is gathering momentum and individuals from more sectors of the economy express their desire to make the public aware of an unfair relation. Government and business can no longer be certain to get away with corrupt or unjust dealings because it may become the next day’s big scandal. In this context the timing of this wave of discontent for the “system” is no coincidence. It follows a big global recession where it is harder to justify inequality or corruption given times of austerity compared to times of prosperous growth and increasing social unrest has been a reality across the globe. It also follows a period where governments have appeared to have sleep during a prolonger period of economic boom and failed to regulate the financial sector appropriately to avoid the credit crunch and following recession. Confidence is therefore low in politics and furthermore, big corporations that pay out huge bonuses to executives or transfer their wealth to tax havens have come under scrutiny and public outrage.

This outcome is hardly surprising given the development of two main factors: globalisation and governance. First, the process of globalisation has been underway since the industrial revolution and resulted in a much greater degree of economic, political and social world integration. Throughout history firms have always wanted to protect themselves from competition and sometime fought very hard not to loose their trade secrets or asked for political immunity. Not many decades ago it would have been possible for firms to go abroad and make a deal in almost complete secrecy and make huge profits from it because of the lack of information available to their customers or competitors. That scenario seems unlikely in today’s inter-connected world with prices shifting almost instantaneously on a computer screen in London when a deal has been struck on aluminium in India for example. Markets have become significantly more transparent and more difficult to manipulate, despite the obvious need for anti-trust laws. This has resulted in a more efficient distribution of resources and therefore a higher degree of equality. Markets have in essence become more efficient and reflect better what buyers and sellers are willing to accept. One of the main factors that contribute to the creation of an efficient market place is the distribution of information and the access to it. The amount of information that is available to us now is staggering and we have to filter and sort it to make sense of it. Globalisation has, therefore, helped the flow of information to create better marketplaces. However, many barriers still exist as firms or politicians still vigorously resist transparency, which is what the whistle blowers are aware of and is at the heart of their actions. In essence we should promote transparency because it is associated with greater equality, positive externalities and social benefits. However, incentives should also exist for firms to engage in for instance research and development by having intellectual property rights. A balance is therefore crucial and it appears to be swinging in the favour of advocates of openness and transparency yet again, because not many can justify that these gigantic multinational corporations should avoid paying taxes or otherwise hold governments at ransom if they threaten legal actions.

Secondly, governance has played a significant dual role in this development. Formally governments around the world have been promoting neo-liberalism and freedom of the individual from both sides of the political spectre. Liberalism and individual freedom were concepts that both George Bush and Tony Blair used extensively during their tenure. The elections in the UK and USA in the late 1970s and early 1980s together with the transformation of China and the fall of communism in Central and Eastern Europe paved the way for liberalism as a mainstream ideology. Margaret Thatcher’s election in 1979 and Ronald Reagan’s election in 1981 signalled the beginning of a wave of liberal rhetoric as they came to power with a mandate to end a period of stagnant economic growth coupled with high inflation. The role of the free market was given particular importance; governments transferred many of its functions to the private sector and argued that individuals, not any institution, would collectively have the most information and therefore make the best decisions. The result was a marketisation of the public sector and the breakdown of many market barriers in order to free the individual. The end of the Cold War, the fall of the Berlin Wall and later the Soviet Union meant that neo-liberalism had no obvious rival and was allowed to engulf much of the Western World more or less unchecked. Emphasis was put on equal opportunities and the pursuit of individual happiness and has evolved into the kind of liberal democracy that describes most of the free and economically advanced nations today. This ideology has been a significant factor in promoting equal rights, choice of religion, sexual orientation and freedom of speech and has in this way helped to develop an open and dynamic economy, where information is available to the greater public.

Neo-liberalism has proven to be a good catalyst for both economic growth and freer consumer choice, however, it has come at the expense of increasing inequality and more wealth has been transferred to the richest than before. The result is a peculiar kind of freedom that has reinstated privilege and class-division and reduced labour mobility thanks to neo-conservative tendencies amongst the individuals that had the most to gain from open markets. It has become very clear, especially during the latest crisis, that markets do not always produce the best outcome and state intervention is necessary in cases where market failures arises. Despite all the rhetoric about freedom, we have not created a very transparent liberal democracy, but that might be about to change with organisations like Wikileaks that see it as their primary concern to expose dodgy dealings by businesses and political misconduct.

Liberalism and equality are words that have been used in many political manifestos across the political spectre but a true utopia of setting everyone free has never been reached. To reach this kind of freedom would involve overthrowing the current social structure, with force if necessary, and letting individuals act without hindrance, but such an arrangement would need corrections as individuals require paternalistic supervision if their behaviour is questionable and that would result in intervention, which goes against the whole idea of this kind or liberty. On the other hand, a liberal system that engages in some kind of governmental control or self-regulation suffers from the disparity between what is best for the greater public and what is best for a self-interested politician.

Blow the Whistle

Image: Idea go /

In my view the state should be actively involved in correcting market failures to benefit society and create positive externalities, but otherwise not engage in planning the economy in any way. That kind of system has not been sufficiently geared to prevent businesses or politicians from engaging in actions that create private gains to them at the expense of social cost. However, the whistle blowers may be the actors in society that put in these controls by monitoring the activity of other. It is a kind of social self-regulation by the non-governing part of society itself. The problem in the past was that these individuals did not have enough weight behind them to make any serious corrections to improper actions, but the social network does and can make a difference. In this relation it is not important that all previously unjust or corrupt deals be mapped out, but it is sufficient to know that their mere presence gives individuals the incentives to check their own behaviour.

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One Comment

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