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    Gideon Rachman’s article in this weekend’s FT  would more appropriately have been titled, “Bankrupt illusions” than “End of the world…”  He lists 5 elements to the ideology of the period before the financial crisis, which like Toynbee’s explanation  (Civilization on Trial: and the World and the West (1948) for the earlier “age of anxiety” after the First World War, are not elements of an ideology but rather, as Toynbee expressed in the earlier case, segments of an illusion.  Toynbee referred to this illusion as the fin de siecle middle-class English hallucination, but one cannot let the poor upper class public school boy off so lightly.  It was a European illusion of middle and upper class privilege.  This becomes clear when we examine Rachman’s “elements.”  

    He notes the ideal of the “march of democracy” expressed by Fukuyama’s essay on the “end of history,” certainly now one of the great failures of  bravado and ethnocentirsm.  Fukuyama and others’ belief that military power equaled democracy has wrecked America’s military on the reefs of endless conflict in Iraq and Afghanistan.  Now twenty years after the first Bush presidency invaded Iraq we still cannot force Iraqis to behave in our image of democracy.  Fukuyama and the other neocons might have looked in their own garden, as Voltaire warned, to see that the failure to address the lack of democracy in America’s class and race system was aggravated by the stagnation of income in the majority of American workers and the explosion in incomes in the highest 1% of earners. To turn Cicero’s phrase a bit (“There can be no peace without justice.”), there can be no democracy without justice.      
  Rachman’s second “element” is belief in the triumph of markets over the state and, of course, this is now seen as one of the major causes of the present crisis, a lack of governmental control of markets.  What was promoted was free markets, but what was sold was monopoly and risk.  The third “element” was a belief in “the transforming power of technology” which Rachman holds to be a king pin and it certainly was since the sheer arrogance brushed aside all indigenous markets and local economic systems. It brought about a world economy addicted to energy gadgets and computer power, now realized too late as the “garbage in, garbage out” of math quants and risk management systems.  Globalization has been a disaster allowing an economic “flu” to spread across the globe and destroy economies in even obscure remote villages.
  Rachman’s fourth “element”, the key stroke in his estimation, was the idea of “democratic peace” that democracies did not go to war against each other and with capitalism the risk of conflict would subside or disappear.  A little history might have caused reflection on this, since one can find many examples of democracies at war with each other, unless the UK’s democratic monarchy does not quality as a democracy.   One can begin with England vs France during the Directory and end with the Falklands War for beginners.  The fifth “element” was faith  in the last resort of American military power.  One only needs refer to the behavior of Republican Rome after the defeat of Carthage to see how military power always overreaches itself.  Our invasion of Iraq is much like Crassus”s invasion of the same area over  2000 years ago only at least Crassus and his son paid for it with their lives.

  What is clear is that blaming China on the west’s, and mainly Anglo-American dominance’s troubles, is not constructive.  There is no “zero-sum” game here, certainly not any more than the UK and America have played in economic policy in the past 200 years as Ha-Joon Chang has eloquently shown in this book, Bad Samaritans.  The high unemployment in the USA and the prospects of its continuance into the next decade(s) is very much like that similar trend in employment that characterized the UKs generation of “redundancies” from the 60s to the 80s. Measures that might revive American industry like a “buy American” clause in the stimulus were criticized as bad for world trade, which really means knee-jerk anti-unionism.  The anti-unionism thread in current economic reporting is so dogmatic that many rightwing economists cannot see the present, let alone the future.  An example of this is the statement on CNN on October 23rd by economist Peter Morici of the University of Maryland stated that unions destroyed economies. He is incredibly wrong.    No matter what you may think of China's political system, the country does have unions, they dominate the industrial sector.  What seems clear is that in the West, and certainly the Anglo-American countries, the lack of unions is associated with a lack of labor discipline and organized industrial enterprises.

   Rachman’s fear of China is characteristic of most economic writers today.  His repeating the idea that a rising Asia should be contained is counterproductive.  Should this happen the world would fall into the greatest depression of the last 100 years.  The world needs China’s energy and labor discipline.  It is not a “zero-sum” game that has brought us to this point but secrecy and a widening wealth gap, but undermine any hope of functioning democratic institutions.
 Finally Rachman repeats the old saw that millions of people are richer today because of the spread of democratic and capitalist ideas.  What ideas?  Those that ran plantations in pre-Civil War America?  Slavery in Africa and Central America?  What does he mean by “richer” or freer?  Free to be evicted and be homeless?  Or his argument that there is more peace and less conflict, rather we have endless wars as in Somalia and Iraq or Afghanistan, the Middle East and southern Russia?  Measurement of conflict is curious as I have shown in my book, War, Religion and Taxation (2009).
  It is not the failure of liberal ideas that have brought us to this situation, rather we are locked in the death rattle of both major ideologies of the 20th century.  The failure of capitalist and socialist theories are  now heaping up a mass of social debt that will have terrible repercussions, and the inability of today’s economists of either ideological camp to explain the rise of China is a central mark of ideological bankruptcy.  More on this can be found in my chapter in Karsone’s new book Banking and Finance Developments at (

Niccolo Caldararo, Ph.D.
Dept. of Anthropology
San Francisco State University

Originally posted to niccolo caldararo on Sun Oct 24, 2010 at 04:53 PM PDT.

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Comment Preferences

  •  the mythology of "the market" = fraud (2+ / 0-)
    Recommended by:
    DBunn, rmabelis

    it has been since 1980, when Reagan used the "laffer curve" to predict that tax cuts would INCREASE govt revenue (it doesn't).

    it has been since indoctrinated economists abandoned the concept of market "externalities" (e.g. pollution imposes a cost on society, but is external to the market, thus requiring legislation).

    It has been since the bond rating agencies "commoditized" their rating function, i.e. offering favorable ratings in return for $, instead of actually doing their job.

    The US economy increasingly resembles a greed-driven feeding frenzy, with diminishing actual production, a rabid desire to export jobs (to circumvent labor and environmental laws.

    What do these geniuses have left to offer us:  get rid of social security and medicare = increase profits.

    Thats the magic of the market, boyos and girlos...

  •  i defy anyone to produce a mathematical (1+ / 0-)
    Recommended by:

    model of an economy in which the net wealth of a small class of the participants increases geometrically, yet the economy remains stable and in control.

    it cannot be done without positing an infinite supply of resources and endlessly increasing productivity.

    To put the torture behind us is, inevitably, to put it in front of us.

    by UntimelyRippd on Sun Oct 24, 2010 at 07:43:59 PM PDT

  •  Niccolo (0+ / 0-)

    How about a link to the article you critique?

    I would love to engage your topic, but I can't tell what it is, except that you don't like an article I can't find with a reasonable google search.


    the inability of today’s economists of either ideological camp to explain the rise of China is a central mark of ideological bankruptcy.

    I can explain the rise of China: they had a bad couple of centuries, but now they're back. Not everything is explained by economics (as defined by Western self-labeled economists); some things are better explained by geography and history.

    I am just now nearing the end of a massive tome of somewhat antique vintage-- The Empire of the Steppes, by Rene Grousset (1970). It is an academic history of the nomadic peoples of Siberia and central Asia from about the year 0 up to modern times. In the first millenium of this period, the Chinese made steady inroads into barbarian territory. But in the 13th century, the Mongols conquered China. So who defeated the Mongols? Other Mongols, or rather, internal dynastic divisions among the conquering Mongols. It only took a century or so for the Mongol Empire to fracture into relatively inconsequential pieces.

    Fast forward to the present era... Western barbarians, enjoying a temporary technological advantage, have dominated China for about 150 years. But in recent decades, the barbarians have fallen into bickering among themselves, mainly in the form of the contest between capital and labor. Concerned only with our internal struggle, we Anglo-Americans failed to notice, or comprehend the significance of, the vast transfer of social, scientific, and technological capability from the West to China. But China is a civilized land, primed over five thousand years to be a ready recipient for such knowledge. What did we think would happen?

    Oh, that's right, we never thought about that.

    PS I'm not in the group that thinks we Mongols Anglo-Americans are the natural rulers of the world. I do think we could play whatever cards we have a bit smarter, though.

    •  Cipolla (0+ / 0-)

      You might enjoy Carlo Cipolla's history of inventions from the West in Asia.  Also you describe Toynbee's theory of history .  As for Rachman's article it is available at the Financial Times website.  You leave out corruption, both Rome and China suffered from a failure to control governors and military leaders.

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