Democracy imperiledDemagogues on the right and left use digital tools to exploit popular resentment, dissatisfaction

The digital era has spurred many advancements in many areas of human society, but it has also led to growing instability and inequality, notes Tom Wheeler, a Visiting Fellow in Governance Studies at Brookings’ Center for Technology Innovation. At the political level, the digital engine which is driving economic and social instability also provides the tools to exploit the resulting dissatisfaction so as to threaten liberal democratic capitalism, he argues.

Wheeler notes that we should not be surprised that the effects of new technology cause such upheaval. “Technological change previously caused similar—if not greater—destabilization; both economic and political,” he writes.

Digital technology has facilitated to rise of a populist challenge to democratic capitalism. “Populism from the right can tend toward authoritarianism, while populism from the left can tend toward socialism,” Wheeler writes. “In the marketplace, technology has delivered a different type of extremism: a handful of companies with unfettered dominance over key components of economic activity.”

Demagogues on the right and left saw the opportunity. “In the new Gilded Age, the politics of distraction is aided and abetted by the ability of digital networks and algorithms to target the distracting messages.”

Wheeler argues that “The digital companies are not bad actors—they have just been given free rein over their behavior and have taken advantage of that lack of oversight,” and that “The data economy is no different from earlier economies where human nature and economic instinct created market-controlling bottlenecks.”

The solution? “If we reassert public interest rules over private interest rules, we will have taken an important and essential step toward the preservation of liberal democratic capitalism.”

Here is the introduction to his report:

At a summit of international business leaders recently, I was surprised how often the discussions turned to the impact of the internet on liberal democratic values, including capitalism. Populism, nationalism, protectionism, Brexit, Trump, the rise of the alt-right, the call for socialism, and the seeming success of government-managed markets were all attributed—at least in part—to how the internet has eliminated many of the rules that delivered stability for the last century.

A “liberal democracy” does not apply the word “liberal” as we do in American politics. A liberal democracy is a representative democracy of free and fair elections, and the rule of law applied to equally protect all persons. Until recently, it has been on the rise throughout the world. Democratic capitalism is a free market operating within guardrails established by such a liberal democracy.

What I was hearing from the business leaders was that new technology and the internet create an economic and social instability that plays into the hands of those at the extremes—extremes of both political thought and marketplace dominance.

At the political level, the digital engine that is driving economic and social instability also provides the tools to exploit the resulting dissatisfaction so as to threaten liberal democratic capitalism. Populism from the right can tend toward authoritarianism, while populism from the left can tend toward socialism. In the marketplace, technology has delivered a different type of extremism: a handful of companies with unfettered dominance over key components of economic activity. The internet, a decentralized collection of interconnecting networks, has created new centralized powers that siphon, aggregate, and manipulate personal information to create bottlenecks to the operation of free and open competition.

The internet started out with the hope of being the great democratizer by removing barriers to everything from the flow of news to local taxi service. While the networks of history had centralized economic activity, the distributed architecture of the internet would similarly distribute power away from central institutions. Unfortunately, that has not been the result. Companies utilize the distributed network to recentralize activity. Corporate digital autocrats collect personal information and exploit it to control markets. Political digital autocrats use the internet to spy on their citizens and target attacks on the democratic process.

— Read more in Tom Wheeler, Who makes the rules in the new Gilded Age? Lessons from the industrial age inform the information age (Brookings, December 2018)