The Fall of the Berlin Wall: Catastrophic Success

by Matthew Edwards

Read other contributions to our series on the 30th anniversary of the fall of the Berlin Wall and today’s challenges to liberalism:

The photographs of Berliners and other Germans clambering over the graffiti-sprayed Berlin Wall in front of the Brandenburg Gate in November 1989 have come to be the images that define the ending of the Cold War, in a manner ironically similar to how the photograph of the raising of the Soviet flag over the Reichstag, just a stone’s throw away, came to be the photo that signified the end of World War Two in Europe. Two historical periods that ended and two new worlds that were born.

The fall of the Berlin Wall, the collapse of the Soviet Union, the disintegration of the Warsaw Pact, the repudiation of Communism: all were clear signs of the victory of the liberal, democratic, capitalist freedoms that the West offered, the benefits of which were on offer to the former Eastern Bloc countries globally. Liberal democracy and market economics had proved themselves superior to and more resilient than their totalitarian coerced opposites. In the years since 1989, liberal democracy has spread, and Capitalism has been embraced the world over.

And yet…

Thirty years on, the fall of the Berlin Wall may have marked the victory of liberal democracy and capitalism but, in retrospect, 1989 and the following years mark the apogee from where the successes of both have fallen, gradually at first and then with increasing momentum, both shaken again and again by repeated blows. The flushes of success and hope that illuminated many countries from both the West and the former Eastern Bloc have faded.

The optimism for the future, which helped many Eastern European countries through the difficult years of the 1990s, has largely gone. The success-generated belief in the West – and within the West – has dissipated.

The awareness of virtues generated by economic freedoms has faded, with Capitalism’s vices now all that seems to be visible in the headlines, generated by, amongst others: the 1997 Asian and 1998 Russian Financial Crises; the 2001 Argentinian default; the 2008 Global Financial Crisis, the Eurozone Debt Crises from 2009 onwards, with all the associated bailouts, austerity, unemployment and lingering, anaemic recovery. The spread of Capitalism and market economics, once viewed as a marker of success, of belief in the co-associated political and personal freedoms, is now seen as a threat as they are both embraced all-too-effectively by other countries, as evidenced by the economic competition and challenge posed to the West from China and others.

The shine may have gone off Capitalism with all-too-evident reminders that economic cycles involve both ups and downs – despite the prideful boast of one former UK Chancellor of “no return to boom and bust” – but the malaise that has seeped through liberal democracy has deeper roots than just economic factors. There has been a repeated undermining of trust in liberal democracy and the institutions crafted by it, oftentimes with evidence of rot or incompetence at the highest levels: the Clinton scandals, Blair and the Iraq War, Bush and Hurricane Catrina, Berlusconi, to name a few. Each time, each has been a one-off, a once-in-a-generation occurrence, but again and again scandals or failures occur that undermine trust and confidence in the liberal democratic system – and with the globalisation of news and easier access to similar stories from around the world, the compounding effect has been to shake belief in the system that won the Cold War.

This may go back to the very nature of political systems.

It is often said that authoritarianism and like systems need an ‘other’ to identify against, whether internal or external. It is quite possible that we are discovering that so does liberal democracy. The confrontation of the Cold War allowed liberal democracy to point East and say, “See? We may be flawed but we are better than that!” And it was right to have done so. But the collapse of the Berlin Wall and the ending of a clear alternative to the liberal democratic system removed the ability to so do.  For 30 years, without an external other, liberal democracy first rested on its laurels, initially confident in its superiority, before looking inward and navel gazing, identifying an ‘other’ within itself, encouraged to do so by the politics of identity – even where the ‘other’ is actually the majority. Thus within itself, little bit by little bit, with the system pointing again and again at different parts of itself to castigate or promote, is it any wonder that trust, confidence and belief in liberal democracy has ebbed, when there is no ‘other’ on which to reflect and say, “The mistakes here are still better than the abuses there.”?

Without the other, without the external opponent, the moral standpoint has disappeared. The moral standpoint that was held during the Cold War and the willingness to say what is right or what is not – the stance that with confidence and conviction says, “This is what we stand for”, sometimes more overtly stated, sometimes less so, depending on the government or leader and the audience – has been largely silent. It has been replaced by one that has too often refused to confront or be counted, whether for fear of giving offence or of losing votes. The pliancy of many modern politicians’ convictions has been just as disconcerting, compounded by the fact that their audience (aka the public) were not really paying attention while the feel-good debt-fuelled consumerist binges of the late 1990s and 2000s were in play.

From 2008, the end of the economic good-times, for both individuals and countries, has shaken liberal democracies and increasingly raised the question of – absent the apparent ability to deliver economic prosperity or keep the public focus on consumption, absent an external other – what liberal democratic governments actually stand for.

It is a question that many still seem to be floundering to answer.

The fall of the Berlin Wall may have been a victory, but as memories of the Cold War fade, it has been a catastrophic success that has absented much of the West from purpose other than often-empty economic betterment. As Plutarch reported of Pyrrhus, one more such victory would totally undo us.

Matthew Edwards is an independent consultant and analyst based in Vienna. He gained his bachelor’s from the University of York and master’s degree from King’s College, London.


The views expressed on austriancenter.com are not necessarily those of the Austrian Economics Center.

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