The End of History

The genesis of the 1992 book was a 1989 essay, titled simply “The End of History,” that Fukuyama published in The National Interest. The essay and book appeared at a time of great promise: the Berlin Wall fell in 1989, the Soviet Union dissolved in 1991, and China was opening to capitalism and experiencing internal demands for greater liberalization—until Tiananmen Square in 1989.

All this led Fukuyama to observe in The End of History that both “authoritarian states of the Right” and “totalitarian governments of the Left” had failed. With the democratization of many countries in the last part of the 20th century, he saw only capitalism and democracy as the triumphant forms of economic and political organization. It seemed that the whole of human history pointed in the direction of liberal democracy as the only regime consistent with “the nature of man as man.” (In the 1992 book, Fukuyama often used “man” to mean “human being of whatever sex.” In his latest book, he uses more politically correct terminology.)

This raises the question of whether there is, in fact, a direction to human history—that is, an end toward which it progresses. The ancient Greeks like Plato and Aristotle believed in cycles, not progress. The first Western conception of directional history was that of Christianity pointing to the end times and final judgement. Immanuel Kant, an Enlightenment philosopher who believed in human progress, thought that a universal history pointing to freedom could be written. Georg Wilhelm Friedrich Hegel, the German philosopher who straddled the 18th and 19th century, whom Fukuyama presents as the first historicist philosopher, attempted to do such a universal history.

The “last man” in Fukuyama’s book title is the sort of person who will live when history has reached its end—that is, when everybody is satisfied with society and no new social ideal will upset it. There will still be events, but no wars and history as such: nothing fundamental will change.

Historicism is the theory that immutable laws preside over the development of history. Karl Popper, the well-known philosopher of science, persuasively argued in a series of articles in Economica in 1944 and 1945 that such “laws” don’t exist in the scientific sense; only historical trends exist, but their persistence is not guaranteed. Fukuyama did not claim more than that: in a 2006 afterword to a new printing of The End of History, he explained that he did not believe in a rigid form of historical determinism, only in “a broad historical trend toward liberal democracy.”

Two processes / According to Fukuyama, human history develops around two processes. The first one, which he calls “the Mechanism,” lies in the progress of natural science, driven by the desire for material goods, by military competition, and by human reason. Economic growth requires capitalism, a term that Fukuyama uses interchangeably with “the market” and “a liberal economy.” The result of the first process was the development of liberalism in the sense of capitalism.

Central planning cannot support technological innovation, which requires an atmosphere of freedom as well as proper financial rewards, nor obtain the required information incorporated in market-determined prices. Fukuyama could have traced the latter idea to Friedrich Hayek, the classical-liberal economist who won a Nobel in economics in 1974. Comparing the former Soviet system or the Chinese economy before the death of Mao to the partly capitalist economies of the fast-growing Asian countries (notably Japan, South Korea, Taiwan, and Hong Kong) makes the point. A “universal capitalist economic culture” and a “universal consumer culture based on liberal economic principles” have thus been developing over the whole planet.

Fukuyama defines liberalism in terms of the rule of law and “certain individual rights or freedoms.” It entails economic liberalism (or capitalism)—that is, “the recognition of the right of free economic activity and economic exchange based on private property and markets.” This looks like classical liberalism and Fukuyama says it is; as we shall see, the picture is a bit more complicated.

The Mechanism of modern natural science “creates a strong predisposition in favor of capitalism” but does not necessarily produce liberal democracy, despite the strong correlation between the two systems. Authoritarian capitalism can also result, Fukuyama emphasizes.

To this Marxian-like economic interpretation of history, he adds a parallel process driven by what Hegel saw as the third component of the human soul besides reason and desire for material comfort: man’s desire for recognition, what Plato called thymos. Men, or at least some men, are willing to fight and risk their lives to have their dignity recognized. This second strand in Fukuyama’s theory owes a lot to Hegel’s political philosophy and its interpretation by French philosopher Alexandre Kojève (who was also influenced by Marx).

For Fukuyama, in short, man longs for “a political system that would institutionalize universal recognition.” This system is democracy—that is, popular sovereignty or the equal sharing of political power. It satisfies every man’s thymotic longing for dignity and recognition.

Enemies of liberalism / According to Fukuyama, liberal democracy is a combination of liberalism, which satisfies the desire and reason components of the soul, and democracy, which satisfies the thymotic part. Between liberalism and democracy, The End of History gives precedence to the second term: the right to participate in political power is the most important of liberal rights. By adding thymos to the standard classical liberalism defended by John Locke and most modern liberals—and notably of the Anglo-Saxon variety—Fukuyama claims to defend “a higher understanding of modern liberalism.”

Although Hitler and Stalin represent “bypaths of history that led to dead ends,” Fukuyama realized that liberal democracy could meet obstacles on the path to the end of history. One danger would be a drift into extreme equality at the cost of freedom. The more equal society becomes, the more remaining small inequalities seem to stand out. As a result, society could splinter into closed identity groups. Trying to create an equal society could also result in building a new class of privileged rulers, as happened under communism. The equalizers tend to not be the equals of the equalized.

Fukuyama noted that the perils of liberal democracy are accentuated by a current philosophical crisis over the “nature of man.” For many environmentalists, man is just another organism, due no special respect. This view has not changed over the past three decades.

Another peril is the return of thymos from those affected by megalothymia, who want to be more recognized than others—as opposed to isothymia, the equal recognition of all in a democracy. When everybody is bored by gray equality, attacking the boredom society becomes attractive to the most thymotic individuals. War and violence—and thus history—would return.

Fukuyama observed, quite correctly, that a liberal regime allows individuals to escape boredom and live great adventures without imposing their desire for recognition by force. A liberal society “permits considerable scope for those who desire to be recognized as greater than others”: there are entrepreneurs and industrialists, celebrities, exotic hobbies, dangerous sports, and other competitive quests for higher recognition. But the objects of recognition are now purely private, aesthetic, socially useless, or “pure snobbery.” We learn that Kojève, who “gave up teaching in the latter part of his life to work as a bureaucrat for the European Community,” wished that the Roman Empire would be reestablished, but this time as a multinational soccer team. Interesting vision.

Idealistic model / The End of History is an impressive construction, from which much can be learned, but it also shows some major weaknesses.

The first broad weakness lies in its underlying model of the state: an idealistic Hegelian state supposed to be like God on earth. It is not surprising that, as Fukuyama notes,

Hegel would never have endorsed the view of certain liberals in the Anglo-Saxon tradition, now primarily represented on the libertarian Right, who believe that government’s only purpose is to get out of the way of individuals, and that the latter’s freedom to pursue their selfish private interests is absolute.

Many objections immediately present themselves. The dream of an ideal state to counter selfish individuals does not do justice to either economic theory or casual observation. Hegel’s desire for recognition or Plato’s thymos is not necessary to explain how individuals behave either in politics or on the market; the assumption that an individual tries to reach preferred positions given his own preferences is simpler, more general, and more fruitful. Also note that, notwithstanding Fukuyama’s categorization, libertarians do not fit well on either side of the traditional left–right political spectrum.

The economics underlying The End of History is often questionable. The author overestimates the economic capabilities of the state in general and of less liberal states in particular. Following the mood of his times, he feared the “economically dominant Japan,” with its more traditional culture. It is not true that external trade deficits need to be “managed”; each individual or corporate body can efficiently take care of its own trade deficit. It is generally recognized that, to produce economic growth, science is not sufficient but needs some enabling institutions based on individual liberty and economic freedom. (See “From the Republic of Letters to the Great Enrichment,” Summer 2018.)

Fukuyama’s model of the state ignored how the democratic state behaves in practice, as opposed to implicitly assuming that it is manned by angels. Over the last three-quarters of a century, the public choice school of economic analysis has thrown much light on how democracy actually works. For example, an ordinary individual’s participation has virtually no chance of influencing democratic outcomes, which is why most individuals remain rationally ignorant of political issues. Moreover, voters are offered complex baskets of policies that are difficult to understand and whose total effects are unpredictable. Organized interest groups are more efficient at collective action and at rent-seeking (obtaining privileges at the detriment of others). In this context, politicians and bureaucrats can exercise much discretionary power.

Fukuyama seemed to recognize the danger of Leviathan without naming it, but he minimized the possibility that it could arise internally under his liberal-democratic state. Individuals, he writes, “demand democratic governments that treat them like adults rather than children.” He did not seem to realize how different the current reality is from that principle. Current democratic states often do tell their citizens “how they should live, or what will make them happy, virtuous, or great.” For example, modern democracies don’t only “criticize” smoking habits, they tightly regulate where adults may smoke, tax their smoking products, and forbid “private” entertainment venues to accommodate smokers. They have even defined vaping products to be tobacco products though they do not contain tobacco. Many other non-boring adult activities are tightly regulated or forbidden.

The aggregation problem / Another aspect of Fukuyama’s idealistic democracy is what has become known as the aggregation problem. It contradicts the too-simple idea that “democratic procedures” should “reflect the will and the true self-interests of the people.” What are the interests of the people given that “the people” is comprised of many individuals, each with his own preferences, values, and thus interests—except for some abstract and limited common interest? Fukuyama seems to simply assume that preferences and values can be aggregated easily over individuals, that “the political choices that are made by populations” are unambiguous. He does not seem cognizant of the demonstration, made by Nobel economist Kenneth Arrow and others, that, given some reasonable assumptions, the results of democratic voting are incoherent. (See “Populist Choices Are Meaningless,” Spring 2021.)

Shaky ethical foundations / The second broad problem with Fukuyama’s 1992 book lies in its fragile normative foundations, which differ from those of the main schools of classical liberalism, notably the Scottish enlightenment represented by such thinkers as Adam Smith and David Hume. Fukuyama’s thesis on democracy relies heavily on Hegel, an idealist philosopher who was not a democrat and whose liberal credentials are questionable at best. Popper considered him to be one of the main enemies of the open society, who “links Platonism with modern totalitarianism.” Hegel worshipped the state as “the Divine Idea as it exists on earth” and “the Spirit of the People itself.” He is, wrote Popper, a “charlatan” as much as an “indigestible writer.”

In some ways, Fukuyama’s concern with the moral underpinnings of liberal democracy resembles that of James Buchanan, the 1986 Nobel economics laureate. Buchanan, who was one of the founders of the public choice school of economics, was also a major political philosopher. (See “An Enlightenment Thinker,” Spring 2022.) The normative ideal that underlies The End of History would strain credulity less if, instead of relying on Hegel, it had borrowed from Buchanan’s ethics of reciprocity between equals, which is also an ethics of enlightened self-interest. Buchanan’s theory provides a contractarian foundation for constitutional (that is, limited) democracy where individual (all individuals’) consent is the ultimate political criterion. The End of History did not even mention Buchanan.

In a 2019 afterword to The End of History, Fukuyama added a new threat to liberal democracy: populism, defined as “a rejection of the liberal part of liberal democracy.” He also forewarned of “the return of geopolitical competition from a newly assertive Russia and China.” Interestingly, he argues that as the world evolves toward liberal democracy, governments that represent it should proclaim its ethics and not yield to cynical “realism” in foreign policy.

Liberalism and Its Discontents

To find out how Fukuyama’s thought has evolved since 1992, a detailed analysis of his intervening work would be necessary. I will take a shortcut and only review Liberalism and Its Discontents, which focuses on the dissatisfactions that have become more obvious in liberal democracies. This book corrects some of the weaknesses of The End of History, but not all of them.

To his credit, Fukuyama has become more economically literate. Hayek has found his way into Fukuyama’s thinking, although the Nobel economist is misleadingly characterized as having a “normative preference for a minimal state.” Hayek would undoubtedly oppose Fukuyama’s expansive democracy, but his model state cannot meaningfully be characterized as “minimal.” Buchanan’s 1962 book with Gordon Tullock, The Calculus of Consent, provides some matter for a section in one of Fukuyama’s intervening books, but Buchanan is absent from Liberalism and Its Discontents.

We can probably look at Fukuyama as one of the enlightened members of the political establishment that has been reigning in the West over the past several decades. He knows the difference between classical liberalism and what is labeled “liberalism” in America. He is not afraid of criticizing the political left as much as the right. But he still ignores much of the economic and political tradition of classical liberalism, at least in its Anglo-Saxon version.

Fukuyama seems obsessed with material equality, which does not contribute to his originality. Redistribution is needed to correct “the inequality produced by market economics.” “Social policies should seek to equalize outcomes across the whole society”—a very strong statement, although attenuated by the admission that many factors that generate inequality “are well beyond the ability of policy to correct.” He often seems to neglect the difference between the formal equality of the rule of law and material equality imposed by the visible fist of the state. His attachment to the French Revolution, where he admits that equality rapidly overtook liberty, is a symptom of this neglect.

Peculiar doctrine of neoliberalism / In Liberalism and Its Discontents, Fukuyama launches a frontal attack against “neoliberalism,” which he deems to be the libertarian exaggeration of classical liberalism. He defines libertarianism as “a peculiar doctrine founded on hostility to government as such.” Some libertarians fit this description; others are only hostile to the Leviathan that has grown under the watch of the current intellectual and political establishment. He argues that “classical liberals need to acknowledge the need for government and get past the neoliberal era.” Libertarians should take notice of this criticism, but Fukuyama should understand that the “neoliberal era” he criticizes never happened except in the fantasies of statists of all stripes. His related musings are not the best part of his analysis.

In fact, it is surprising and disappointing to see a sophisticated, curious, and critical philosopher buy wholesale the canard of an era of wild deregulation and blame it for problems that, on the contrary, arose from galloping regulation and state controls that have been quantitatively and qualitatively observable over the last several decades, if not over more than a century. It is also strange to hear a theorist of directional history (as he was in The End of History) invoke the popular cliché of the swing of the political pendulum, as if the United States and other Western countries had gone back and forth from regulation to deregulation, between liberty and a soft tyranny à la Tocqueville.

With a few exceptions like freedom of speech (to the benefit of the chattering classes but also of liberty in general), the past several decades have witnessed growing regulation. Just consider the quantitative growth of federal regulation in the United States. The last available version of RegData (developed by Patrick McLaughlin at George Mason University’s Mercatus Center) shows that, from 1970 (the first year the database is available) to 2021, the number of restrictions and obligations (estimated by searching for the words “shall,” “must,” “may not,” “required,” and “prohibited”) contained in the Code of Federal Regulations (CFR) has gone from less than 500,000 to more than 1.3 million, with infrequent and only temporary breaks in the trend. To use another measure, the number of words in the CFR has increased from 33.6 million to 100.3 million over the same period. There is little doubt that the trend has been similar in local and state regulations.

In fairness, there was a slowdown in regulation growth after the stagflation of the 1970s as well as at the end of the 1990s. Another slowdown is clearly visible starting in 2019, but it appears already over. Over the whole period, actual reductions in the total volume of regulation occurred in four years only and were rapidly overrun by a return to trend.

Like many casual observers, Fukuyama is under the impression that financial deregulation was a cause of the 2008–2009 Great Recession, if not the cause. In reality, there had been little financial deregulation in America apart from liberalizing some of the anachronistic banking regulations that did not exist in other developed countries. Among these were government control over interest paid on bank deposits, the coercive separation of commercial and investment banking, and restrictions on branching. A telling example given by Stanford University economist John Taylor is that, before the Great Recession, the New York Fed had “hundreds of regulators on the premises” of large banks.

The author of Liberalism and Its Discontents also ignores that the 2008–2009 crash originated in the residential mortgage market, where close to 50% of mortgage loans were already guaranteed by federal agencies (often created in the 1930s). Moreover, mortgage-backed securities (mortgage securitization) had been a proud creation of one of those agencies, Ginnie Mae, in 1970. Banks were under political and legal pressure to sell mortgages to low-income borrowers. In 2003, Rep. Barney Frank (D–MA) echoed a redistributionist idea popular in federal circles: “I would like to get Fannie and Freddie more deeply into helping low-income housing and possibly moving into something that is more explicitly a subsidy. … I want to roll the dice a little bit more in this situation towards subsidizing housing.” They did roll the dice, and we saw what turned up.

A more realistic model / The private economy is not nirvana, but neither is state intervention. In Liberalism and Its Discontents, Fukuyama still entertains an idealistic model of the state. He shows little awareness of public choice economics and how the democratic state really works.

For example, it is not because a state is democratic that it will necessarily promote equality. Ways in which the American state (the whole structure of American governments at all levels) has been working against equality is documented by Jonathan Rothwell’s book A Republic of Equals. (See “The One-Percenter State,” Spring 2020.) These ways include not only supporting slavery until the Civil War and segregation long after, but also, more stealthily, zoning laws, the war on drugs, anticompetitive privileges to business professionals, occupational licensure, restrictions of individual investors’ access to hedge funds, business support and protectionist privileges, as well as the overarching protection of intellectual property. Rothwell suggests that if these restrictions to free exchange did not exist, current income inequality would fall by half.

“Democracy,” Fukuyama tells us, “refers to the rule by the people” and expresses “the will of the people.” Interestingly, this characterization is typical of populism, which he otherwise criticizes. He continues to ignore the problem of preference aggregation—that is, how electoral processes can coherently represent the diverse preferences and values of voters.

It is true that Fukuyama now clearly admits the necessity of constraining democracy: “No liberal democracy grants untrammeled power to democratic majorities” (his emphasis). Indeed, he points out, the American founders “designed a complex system of checks and balances to limit full democratic choice.”

But how can we square this with the idea that democratic majorities can be called to pronounce on deep matters of peaceful individual choice? Fukuyama suggests that “the trade-off between consumer welfare and intangible goods … should be open to democratic choice.” There is no reason, he explains, “why economic efficiency needs to trump all other social values,” a moot point when one understands that economic efficiency is simply a way in which voluntary exchange reconciles, without coercion, the preferences and values of all individuals.

As an example of desirable democratic choice, Fukuyama proposes the primacy of work over consumer welfare. The question is whether “human beings” are “consuming animals” or “producing animals.” “This is a choice that has not been offered to voters under the hegemony of neoliberal ideas.” The absurdity of putting such a choice before voters is easily shown by imagining a referendum that would ask “the people”: “What animal do you (or we) want to be, a consuming animal or a producing animal?” Ask yourself what would be the meaning of X% (< 100%) deciding one way or another. “We are all producing animals and now get back to work!” More realistically perhaps, we may imagine complex baskets of practical policy measures and electoral promises related to such a choice and proposed to the rationally ignorant voters, who would understand the consequences of the measures even less than their proponents. The only liberal solution, of course, is to let each individual decide for himself what sort of animal he wants to be, given the impersonal constraints generated by the equally free choices of all other individuals.

An interesting example of the importance of limiting the scope of democratic decisions was suggested by a mention of Donald Trump in The End of History. Here is somebody who found on the free market an outlet for his megalothymia: he became a real estate developer. But Fukuyama himself wondered whether the most thymotic natures will remain “satisfied with metaphorical wars and symbolic victories.” Why not real political domination? With hindsight, we can complete Fukuyama’s story: not satisfied to be rich, famous, and president of Trump University, Trump decided to get real power and become president of the United States.

Individual consent among equals / Fukuyama continues to correctly believe that national identity threatens liberalism when it takes an exclusive form, ethnic for example. But a national state, he adds, is also an opportunity when it embodies a social contract that defines the boundaries of citizenship and is strong enough to protect liberalism against external enemies and internal threats. This viewpoint deserves a hearing.

However, the idea of a liberal social contract as expressed in Liberalism and Its Discontents remains confused or at least indeterminate. We sense that Fukuyama’s thinking on this topic has not advanced much since The End of History. How can a social contract exist? How can it be unanimous as the very concept of contract implies? Fukuyama would badly need Buchanan to answer such questions, but the philosopher and Nobel economist is conspicuously absent from the new book. Fukuyama’s attempt at conceptualizing a liberal social contract without the notion of individual consent among equals, as in Buchanan’s theory, is a mission impossible.

The author of Liberalism and Its Discontents identifies political gridlock and “vetocracy” as a major political problem in the United States. Although this diagnosis may seem obvious, it clashes with the essential idea of a social contract—emphasized in Buchanan’s work—where each individual, through his capacity to refuse his consent, does have a veto at the abstract level of agreeing on fundamental rules. The individual’s theoretical veto is echoed in a practical structure of checks and balances. A social contract agreed to by rational individuals would certainly include rules favoring gridlock when the alternative amounts to Leviathan violating the contract. Buchanan’s constitutional political economy would be very useful to Fukuyama.

Repressive tolerance / Liberalism and Its Discontents criticizes the left more virulently than The End of History did. The leftist fringe attacks liberalism’s “underlying premises.” Liberalism is turning against itself.

Philosopher Herbert Marcuse argued that liberalism is nothing but “repressive tolerance.” Identity theories ended up replacing individuals with groups as the focus of political attention and finally dispensed with individualism altogether. In the meantime, postmodern theorists such as Michel Foucault preached cognitive relativism—that is, the relativity of truth itself. Language creates reality and is an instrument of power. Individuals “are shaped by social forces over which they have no control,” as Fukuyama paraphrases the enemies of liberalism. Knowledge is rooted in lived experience and emotion. He quotes feminist writer Luce Irigaray, who argued that solid mechanics is “a masculine way of looking at the world” compared to the feminine way of “fluid mechanics.”

We may wonder how these theorists can themselves escape the social forces on which other individuals have no control. We are back to Plato’s philosopher-king at best or, at worst, since universal values are also negated, to Friedrich Nietzsche’s “will to power” or, more perverse, Nazi jurist Carl Schmitt.

Fukuyama accepts the crucial liberal idea that no agreement can be required on ends. Hayek would say that social peace and efficiency require that each individual pursue his own ends, within wide and impersonal constraints. But doesn’t Fukuyama want democratic choices to determine some ends (besides the maintenance of a context of free individual choices)? As we saw, he approves of a wide range of democratic interventions, such as whether individuals really want to produce in order to consume instead of the other way around.

He also wants antitrust laws to prevent the “private power” of media organizations and internet platforms. Doesn’t interfering with freedom of speech imply that individuals have to agree on ends? Besides, no corporation or social network can maintain market power if it is not protected from competition by government regulation. Remember MySpace, once the largest social network, purchased by News Corporation for half a billion dollars in 2005?

Fukuyama observes that large internet platforms have fueled the virality of false news and the decline of rational discourse in favor of raw feelings, emotions, and group identity, both on the left and right. He notes the creation of fantasy worlds such as QAnon. Social media have amplified the cancel culture. He suggests that not all voices are equal in the marketplace for ideas, as if they were equal in election campaigns and political processes generally! The ideal state strikes again.

Barring open mob violence, the main danger of irrational opinions is that they will translate into democratic votes and state coercion. The problem lies more in the excesses of democracy than in free speech as such. Reinforcing “state capacity” (a buzzword that Fukuyama echoes) would deepen the peril. Americans and citizens of other rich Western countries don’t suffer from too little democracy, but from too much democratic power.

Fukuyama opines that, contrary to what happens on the right, “very few people on the left are toying with the idea of overtly authoritarian government.” Instead, he claims, “the extreme left tends to be anarchist rather than statist.” With due respect to the scholarly author, this is a tragic illusion. They are anarchists only to the extent that the consequences of their idealistic system would satisfy their wishes, which is anyway impossible because the comrades have different ideas on the ideal results. The different political ends they are pursuing can only be imposed coercively on others by the state or the mob.

Real liberalism? / Liberalism and Its Discontents argues that neither extreme of the left or right “proposes a realistic alternative to classical liberalism, but both have been able to chip away at liberal ideals and to discredit those who seek to maintain them.” He is right, but we can go further: the unstable and moving extreme center on the reductionist left–right spectrum is not attractive either. Perhaps we should try real classical liberalism?

The main problem with both books is that, besides Hegel’s baggage, they carry much of the baggage that the intellectual and political establishment has accumulated: a longing for an idealistic democratic state, which economic analysis shows to be unrealistic, and a growing incapacity to consider that, in the political realm, some form of unanimous consent, not a numerical majority, is the proper normative criterion.

In short, I would suggest that Fukuyama is too democratic and not liberal enough, even if Liberalism and Its Discontents marks an improvement over The End of History. The “big tent” of his liberal democracy hosts people who are democrats before being liberals. No wonder the system is unstable and on the verge of authoritarian drifts.

Readings

• “The Impossibility of Populism,” by Pierre Lemieux. Independent Review 26(1): 15–25 (2021).
• The Limits of Liberty: Between Anarchy and Leviathan, by James Buchanan. University of Chicago Press, 1975.
• The Open Society and Its Enemies, Vol. 2: Hegel and Marx, by Karl Popper. Routledge, 1945.
• “The Poverty of Historicism, Part II: A Criticism of Historicist Methods,” by Karl Popper. Economica 11(43): 119–137 (1944).
• “The Poverty of Historicism, Part III,” by Karl Popper. Economica 12(46): 69–89 (1945).