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 (https://www.novapublishers.com/catalog/product_info.php?cPath=23_29&products_id=11144).
Niccolo Caldararo, Ph.D.
Dept. of Anthropology
San Francisco State University