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Monday, February 25, 2002

Globalism and the Liberal Model (January 31, 2002)

[Book Review] "Against the Dead Hand: The Uncertain Struggle for Global Capitalism," Brink Lindsey (Wiley)

"In 1913 ... 'merchandise trade as a percentage of gross output totaled an estimated 11.9 percent for the industrialized countries,' a level unmatched until the 1970's. Capital flowed across borders, while transportation costs plummeted. Newly developing nations entered the world marketplace. ... That trend toward economic integration was halted ... when world leaders ... began to misapply the lessons of big business. If large commercial enterprises could advance by planning and control, they reasoned, national economies could be run the same way, with more efficient and humane results than the "chaos" and competition of the marketplace. ... this 'industrial counterrevolution' took many forms ... The result was a turn from economic openness toward closed national markets, the better to enable political planning and control. Today's globalization is occurring ... because political leaders no longer believe that state-directed economic decision making is the path to prosperity. ... Contrary to both globalization triumphalists and globalization critics ... sees the process as a result of bottom-up change at the national level. ... A result of this change in perceptions is ... a struggle: Adam Smith's invisible hand against ...the 'dead hand' of central planning."

[Bad examples: Korea, Argentina]

"In South Korea, for instance, "banks were seen as a social tool to help the chaebol," the big conglomerates. Outside financiers didn't question the conglomerates' investment decisions. ... those no-questions-asked investments destroyed wealth instead of creating it. And single-country financial systems intensified risks. A country's savers had all their assets in its banks' undiversified baskets."

" ... removing government controls isn't enough. Good institutions, particularly a trustworthy judicial system, are essential. ... In Argentina, for example, the government ... liberalized the economy but did nothing to restore the independence of the judiciary. ... 'the [Argentenian] legal system is absolutely vital for our region's economic development, but the politicians are blind to it.' Deals collapse every day ... because investors aren't willing to take the risks of an insecure legal environment."

"'There is at present only one viable vision of economic development: the liberal model of markets and competition. It is neither widely loved nor widely understood, but it is all there is ... And so when existing institutions break down so badly that changes become unavoidable, leaders in search of a template for constructive action now turn to the liberal model by default. In this way the dead hand yields, bit by bit, to the invisible hand of the market.'" ... [more]



4:13:49 PM    comment  []    

Stability, America's Enemy

From Parameters [US Army War College Quarterly], Winter 2001-02

" ... The diplomats and decisionmakers of the United States believe, habitually and uncritically, that stability abroad is our most important strategic objective. ... The United States will go to war over economic threats ... But the consistent, pervasive goal of Washington's foreign policy is stability. America's finest values are sacrificed to keep bad governments in place, dysfunctional borders intact, and oppressed human beings well-behaved."

"Our insistence on stability above all stands against the tides of history, and that is always a losing proposition. ... Historically, instability abroad has been to America's advantage, bringing us enhanced prestige and influence, safe- haven-seeking investment, a peerless national currency, and flows of refugees that have proven to be rivers of diamonds ... Without the instability of the declining 18th century, as the old European order decayed, we would not have gained the French assistance decisive to our struggle for independence. Without the instability of the 20th century, protectionist imperial regimes might have lingered on to stymie our economic expansion. ... The Monroe Doctrine was not about stability, but about protecting a new and beneficial instability from reactionary Europe."

"It all began to go wrong when we found ourselves with an accidental empire. ... the Spanish-American War made of us an extractive power, in which the earnings of fruit companies became more important than support for freedom and democracy. Our bayonets served business, not ideals. This pattern of valuing profit above our pride--or even elementary human decency--holds true in our present relationships with states as diverse as Saudi Arabia and China ... the globalization of America's economic reach was enabled only by the colossal instabilities of collapsing empires. We argued that peace was good for business, no matter the human cost of an artificial peace imposed with arms, across a century when wars, revolutions, and decade after decade of instability opened markets to American goods, investors, and ideas. Were the maps of today identical to those of a century ago, with the same closed imperial systems in place, our present wealth and power would be impossible. America has always had a genius for picking up the pieces--the problems arise when we insist on putting those pieces back together exactly as they were before. I know of no significant example in history where an attempt to restore the status quo ante bellum really worked."

"The Great War began to break up the old imperial system that hindered the expansion of American trade ... the historical force that drove so much of the developed world into the Depression was the attempt by the cartel of Great War victors to preserve the imperial trading order, with its restricted markets and an inherent stress on the metropolitan production of every type of industrial good without regard to efficiency. The imperial system, despite a bit of jerry-rigging, no longer answered the world's economic requirements. A brutally simple economic law is that only the expansion of possibilities enables the expansion of wealth, but the goal of Europe's waning empires was to restrict possibilities. Another seeming law is that developed economies cannot exist in equilibrium: When they cease to advance, they retreat. The old pre-globalization machine could not go forward anymore. The Depression marked the breakdown of a world economic system that had lingered into decrepitude. ... economic logic that drove the monstrous German and Japanese regimes to attack the tottering imperial system that excluded them from dependable access to resources."

"And the Cold War deformed American strategic thought and our applied values beyond recognition. From the amoral defender of Europe's rotten empires, we descended to an immoral propping up of every soulless dictator who preferred our payments to those offered by Moscow. We utterly rejected our professed values, consistently struggling against genuine national liberation movements because we saw the hand of Moscow wherever a poor man reached out for food or asked for dignity. At our worst in the Middle East, we unreservedly supported--or enthroned--medieval despots who suppressed popular liberalization efforts, thus driving moderate dissidents into the arms of fanatics. From our diplomatic personnel held hostage in Iran a generation ago, to the 11 September 2001 terrorist attack on the United States, we have suffered for our support of repressive, "stable" regimes that radicalized their own impoverished citizens. In the interests of stability, we looked the other way while secret police tortured and shabby armies massacred their own people, from Iran to Guatemala. But the shah always falls."

"The shah always falls. Our age--roughly the period from 1898 through the end of the 21st century--is an age of devolution, of breaking down, of the casting off of old forms of government and territorial organization in favor of the popular will.  ... the temptation is always to back the devil you know (and who allows you to explore for oil on his territory). But make no mistake--in one essential respect, today's America is on the same side as the most repressive voices in the Islamic world and the hard, old men in Beijing: We are trying to freeze history in place. And it cannot be done. In our ill-considered pursuit of stability (a contradiction in terms), we have raised up devils, from terrorists to dictators, who will not be easily put down. ... Look at our track record over the last decade: It is a litany of predetermined failures that would be laughable were it not for the human suffering that resulted."

"How did we come to this? ... How is it that our diplomats and those who must rely upon them fell in love with the past, when our national triumphs have resulted from embracing the future? Unfortunately, it can be easily explained. In times of sudden change, men look to what they know."

"Today, in 2001, America's diplomatic wisdom is that of Metternich and Castlereagh, brilliant reactionaries whose intent was to turn back the clock of history, then freeze the hands in place, after the Napoleonic tumult. ... Today, in a world that is systemically, developmentally, economically, and culturally differentiated and differentiating--despite the surface effects of globalization--our diplomacy cannot rely on easy-to-use constructs or unifying ideology ... Our strategic approach must be situational, though shaped in each separate case by our national interests and informed by our core values ... We have made a slogan of democracy abroad, imagining it as a practical means when it is, in fact, the glorious end of a long and difficult road. We speak of human rights, then wink at the mundane evil of Saudi Arabia, the grotesque oppression in China, and any African massacres that don't leak to the press--because, inside our system of diplomacy, human rights are finally regarded as a soft issue. ... The oppressor falls, whether in one year or 50, and it is easier to do business with a nation whose freedom struggle you have supported than with one whose suffering you ignored or even abetted."

"Instead of a revolving door, there should be a steel wall between Wall Street and Washington. Diplomatic and military concessions to a repressive regime that allows select US-headquartered corporations economic advantages today may prove a very poor investment for our country's greater interests tomorrow. ... Were we only to apply our own professed ideals where it is rational and possible to do so, we would, indeed, find our way to a better, safer world in time. But we must stop trying to arrest the decomposition of empire's legacy. We are in a period of unprecedented and inevitable global change, and we must learn to accommodate and to help shape local changes constructively. But we cannot prevent the future from arriving."

"Our national interest, too, evolves. Only our core values--the rule of law, the rights of the individual, and religious and ethnic tolerance--remain constant. ... democracy may shatter the remaining social bonds of weak or brutalized societies, dividing survivors into ethnic or religious factions. The over-hasty imposition of democracy can lead directly to a degeneration in the respect for human rights. Where citizens have not learned to value their collective interests, democracy intensifies ethnic and religious polarization. Democracy must be earned and learned. It cannot be decreed from without."

"Let us examine, briefly, just a small selection of the strategic issues facing the United States in which the quest for stability may prove antithetical to American interests.

[discussion of strategic issues in depth follows:]

  • The Balkans
  • The Russian Federation
  • China
  • Africa
  • The Middle East
  • Islamic Terrorism ["the United States will emerge stronger and more united, with a sobered sense of strategic reality that will serve us well n the decades to come.]
  • Afghanistan ["the falsity of the dictum that 'the enemy of my enemy is my friend.' Sometimes, the enemy of your enemy is just practicing for the big game."]
  • Cuba ["If we intervene ... to protect the 'rights' and the 'legitimate property' of the Miami Cubans at the expense of the Cuban people themselves, we will shame ourselves inexcusably."]
  • Indonesia ["If we ... are not thinking bout how to manage and facilitate Indonesia's breakup, we will find ourselves embarrassed by history again."]

"Devolution threatens a great range of other states, from Pakistan to Italy. ... attempts to arrest instability and to prolong the life of decayed, unnatural states, rather than to assist populations through longed-for political reorganizations, will always carry an exorbitant price and, ultimately, will fail. ... our role should be that of a global referee, calling time out when the players hit below the belt or get too rough, and clarifying the rules of the game (no genocide, no ethnic cleansing, no mass rape, no torture, etc.). Instead of trying to stop the game, which was our approach across the past decade, we should try to facilitate it when it is played by legitimate players for legitimate stakes. In the case of terrorists, of course, we need to throw them out of the game permanently." ... [more]



2:34:17 PM    comment  []    

hyper-power (HYE.pur.pow.ur) noun. A nation that has vastly greater economic, political, or military power than any other nation. Also: hyperpower.

"Long the principal superpower and now the single superpower — or a 'hyper-power,' in the favoured phrase of the French — the U.S. is the contemporary Rome. Its power, much of it invisible because it's based on culture or technology rather than just upon smart bombs and cruise missiles, reduces the power of all others, whether the European Union or China or Russia, let alone Canada, to the third rank, sort of like Gaul's status at the height of the Roman Empire."
—Richard Gwyn, "U.S. and Them," The Toronto Star, December 29, 2001 ... [more]



8:37:38 AM    comment  []    


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