WORLD ON FIRE: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability
by Amy Chua
Doubleday, 350 pp, $26
THE MIND AND THE MARKET: Capitalism in Modern European Thought
by Jerry Muller
Knopf, 487pp, $30
Does history have to move in stages? This is a question that occupied
Marxists and socialists for more than a century. Classical Marxism argued
that the capitalist development of the economy was a necessary precondition
for socialism. What made Lenin different is that he argued that progress
could be telescoped so that a revolutionary vanguard could both modernize
the economy and create socialism at the same time. The results were deadly.
Today a new debate about the stages of history has emerged. On one side
are thinkers like Robert Kagan and Larry Diamond who argue that logically
there is no tension between free market liberalism and democracy. Both
insist on the equality of individuals who are free to engage in commercial
activity and participate in politics. Their critics, like Robert
Kaplan and Fareed Zakaria, argue that democracy can succeed only as a
capstone to earlier legal and social foundations. They are now joined
by Amy Chua, a Yale law school professor who argues that in developing
countries democracy can exacerbate racial and ethnic tensions and threaten
individual liberties and economic freedom.
Most Americans assume that democracy, liberalism, and capitalism are
not only a natural trio but mutually reinforcing. That assumption is a
product of our history. Unburdened by a feudal past and blessed with widespread
land ownership that produced a broad suffrage from the start, we have
always been liberal, capitalist, and democratic. But historically -- and
in much of the world today -- these elements are in tension with one
another.
Ms. Chua, who helped Mexico privatize its telecom industry, is the child
of Chinese capitalists in the Philippines, part of what Chua calls a "market-dominant
minority." A tiny percentage of the Philippine population, the Chinese
Filipinos control about 60 percent of the economy including most of the
large banks, hotels, and manufacturing companies. Her family, contemptuous,
as she describes them, of ordinary Filipinos whom they regard as an inferior
breed, lives in walled estates. Fearful of instability, they keep much
of their money in "safety boxes filled with gold bars."
Chua's book was provoked by the murder of Chua's wealthy aunt. The kidnapping
and killings of wealthy Chinese are sufficiently commonplace that the
murder was treated as a routine affair by the police. Referring to the
resentment felt by poor Filipinos toward people like Ms. Chua's aunt,
the police felt they needed but one word, "revenge," to explain
the motives of the chauffeur who had killed her. But the Chuas, she notes,
had been protected under the corrupt crony capitalist regime of the Marcos
family. It was the democratization that followed the Marcos era in the
Philippines that produced widespread violence against the Chinese minority.
Her argument, baldly put, is that while the opening of free markets does
increase wealth for all it disproportionately advantages "market-dominant
minorities" like the Ibo in Nigeria, Jews in Russia, and the Chinese
in Indonesia. The resentment generated by the fast rising wealth of the
"outsiders" can become "an engine" for anger as "opportunistic
vote seeking politicians" arouse members of the "frustrated
indigenous" majority to rape and plunder.
She makes a strong case for some of her examples, but unfortunately takes
the framework of the tension between market-dominant minorities and resentful
majorities and tries to turn it into an explanation for nearly all the
conflicts in the world. Israel, she argues implausibly, is a "market
dominant minority in the Middle East," a region with which it has
virtually no trade. Further, she argues that America is, on a global scale,
a "market dominant minority." But, as the anti-Americanism of
countries as varied as Venezuela and the Sudan suggests, this anger doesn't
require democracy on either a local or global level.
Chua would have written a better book if had she read the one by Jerry
Muller, an intellectual historian at Catholic University. Muller sketches
out two versions of capitalism. The first comes from Voltaire, who himself
was a capitalist, though an unscrupulous one. He became one of the richest
men in France, though his double dealings in business arrangements had
led to his expulsion from Prussia and his flight from England. Condescending
toward the common people, whom he described as the canaille or
rabble, he assumed that they were incapable of self-improvement. It was
pointless, he thought, to try and educate them because they would never
have "the time and capacity to instruct themselves; they will die
of hunger before they become philosophers."
While Voltaire got rich and lived in a walled estate, Adam Smith lived
a modest life in Glasgow and gave generously to charity. Smith, who would
be much admired in the New World, propounded an entirely different approach
to capitalism which telescoped the stages of its development. He thought
all people were capable of reasoning on their own behalf. Elevated sentiments,
he said, were as achievable by the laborer as by the philosopher; all
have the "propensity to truck, barter and exchange." His aim
was what he called a "universal opulence which extends itself to
the lowest ranks of people producing a general plenty."
Muller includes a chapter on Justus Moser, a late-18th-century defender
of the feudal order against the arrival of both outside ideas and outside
capitalists. In it, Muller rightly notes that many of the arguments of
the contemporary anti-globalists were first penned in defense of traditional
hierarchies. Trade and manufacturing, or what Moser referred to as the
system of "simplification," were accused of undermining the
"natural order" with alien goods and ideas. He enraged the Enlightened
with his defense of serfdom. The poor, argued Moser, were better off when
they knew their place and were cared for by their betters. Manufacturing
was, he thought, dangerous, because it freed artisans from the guidance
of their guilds and left them subject to moral disorder. Peddlers, he
insisted "ruined the good morals" of the rural population by
awakening new desires that led women to buy what they didn't really need
without the supervision of their husbands. Moser's arguments would be
revived by the right wing nationalists of post-WWI Germany and Austria
as well as the contemporary critics of "Coca-Colonialization."
Amy Chua is far too modern to accept Moser-like arguments whole-hog.
The resentments she ascribes to the tension between free markets and democracy
long preceded the arrival of elections. But she's concerned that today's
speed of change is likely to produce continued violence in more traditional
societies. Her partial solutions are racial quotas for the majority population
of the sort adopted by the authoritarian Malaysian regime and more philanthropy
on the part of market-dominant minorities. The latter suggestion is clearly
a good one, but it did precious little good for the Jews of Austria who
were generous givers before the Holocaust.
Finally, it seems clear that the issue of the stages of capitalism can't
be resolved by logic. But it may well be determined by the type of capitalism
that's adopted in developing countries. Voltairian capitalism places governments
in an impossible bind. They either cater to the interests of their politically
privileged entrepreneurs and risk popular resentment or feed the resentment
by humbling their entrepreneurs, thus risking the loss of their economic
engines. Smithian, or "democratic" capitalism, on the other
hand, doesn't eliminate the resentments but it is likely to do far less
to foster them. To the extent that advancement appears open to all, governments
are more likely to be able to enforce the rule of law as a bulwark against
marauding majorities.
