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Carnegie Briefing
Technology- harness for the greater good ; most powerful force shaping institution's
domestically and internationally
Communications, genetic engineering
"Killer Technology"- totally transform an industry or society
-microchip
-space technology
-molecular biology
GOAL OF U.S.
how do we prosper in a global economy that is technologically driven?
massive job shifts occur in short periods of time.
only in service industry has employment increased.
job creation actually overwhelms the jobs loss category
technology is the key to globalization
international companies control a huge percentage of production in the world
individual and corporate interests clash because of technology
-downsizing
-attenuation of firm loyalty
"workers need to look at themselves as self-employed"
society may be jobless not workless
there is an enormous pool of labor around the world that is cheap.
"don't have to do engineering in the United States- can go elsewhere."
everything is mobile but labor
POLICIES:
We are prospering in this global economy.
We need to recognize the power of science in technology
We need to adopt incentives for science and technology
We need trade and economic policies that encourage two way flow of labor
Protect intellectual property rights
There is a large number of economically disadvantaged
Point to tremendous job growth in United States (for China MFN and Nafta)
Economically, it can't be proven that open trade provides more jobs
Openness needs the strength of the safety nets
Need to include labor, environment and human rights concerns. In the end we'll
all be better off.
(Social insecurity/ Fear of technology)
Larger number of economically disadvantaged requires a greater stress on education
We can't have growing inequities and sustain democracy
1)
Stress the relationship between broadly shared prosperity and democracy.
2)
Globalization is eroding institutions that gave us prosperity in earlier times.
Globalization puts things beyond reach of government. It will change all the
rules. Market needs to be kept in its place or it takes over everything.
3)
How do we get more broad participation in economic growth?
4)
Inflation is a myth, especially in the new global setting
5)
Create a demand for skilled people -broadly shared prosperity,
-Plantation mentality
*Some don't believe they have a stake in this system
*With growing inequality can develop plantation neutrality
*Family is less important than it used to be
6)
Need a willingness to train new workers, collective bargaining and social
safety net.
Strengthening of Safety Nets:
Pressure for:
health insurance
low wages incentive
more and more unequal wages
need to have greater worker participation
massive effort to improve education
bankrupting children- debt clock- we need an "asset clock"
full employment for targeting inflation
public investments pays high dividends
Governance- Government is interacting with private sector and nonprofits to organize our lives
Why anti-government?
-decline in most institutions
-end of Cold War
(starts in 64'(Vietnam, Watergate))
Why people don't trust government:
1)
-economy- anxiety over transformation
2)
-sociologically-post material values- community vs. individual
3)
-shift in party structure
-increased role of TV
-not use of party structure gap between political and elites and local party
structure
*
polarization of elites more- gap filled with cynicism
4)
-media change- how they cover institutions- more negative and conflict ridden
5)
-campaign- "demarketing of government" through media and political structure.
-views come through media: 72% experience gap/ anti-politics view
6)
-culturally driven
Government growth during New Deal
Narrow costing in media
Not liberal media
Anti-political media
But military and Post Office are two institutions that don't fit view of anti-government
framework. Why? They advertise brought closer to the people.
Raddiffe College
RADCLIFFE EDUCATIONAL PROGRAMS
RADCLIFFE INSTITUTES FOR ADVANCED STUDY
RADCLIFFE PUBLIC POLICY INSTITUTE
January 12, 1998
President William Clinton
The White House
1600 Pennsylvania Avenue
Washington, DC 20500
Dear Mr. President,
I would like to thank you for the wonderful dinner you and Mrs. Clinton hosted on
January 7th. The conversation was thoughtful, at moments far-reaching and consistently
stimulating. Hopefully the interdisciplinary discourse was helpful to you and the Vice
President as you think about the state of the nation from past, present and future
perspectives. And, the delicious dinner complimented the intellectual smorgasbord.
I would like to respond to your request to send you additional ideas as a next step. During
our dinner discussion, three principal themes struck me as having greatest significance:
1. The importance of creating a Human Face for the Global Economy
As I reported, we learned from our focus groups around the nation that there is deep and
persistent anxiety about the future. The "walking on jello" experience cuts across race,
class, gender, age and political persuasions. Americans, even those doing well under the
present economic prosperity, are concerned about their own future and the future of their
children and grandchildren.
The good news is that there is much common ground, if not solid ground, in this "jello"
experience. The challenge, however, is that most people fail to see political leadership
addressing the causes of their anxiety or formulating solutions that may bring about more
lasting security and confidence.
Mr. President, we need a coherent, clearly-presented analysis of the challenges confronting
us as we approach the next century, placed in the context of our history since the Industrial
Revolution. The average American needs clarity on the benefits that result from global
connections, both as a nation and in terms of how typical families gain from these often
invisible, macro-level transformations. There needs to be an honest discussion about the
fact that while a substantial expansion of global markets and capital has occurred, there has
been a lag in creating social institutions to sustain such development. The institutions that
most deeply affect our lives - the family, the workplace, schools, local and federal
government, religious and civic associations - do not seem to provide the safety necessary
to sustain us in these times. Each of the institutions that compose the foundation for our
national common ground seem under attack and increasingly fragile.
In short, we need a vision - a story that we all can believe in - that provides for a win-win
solution: that we can find common secure ground close to home AND still benefit from
global markets and connecting to our global neighbors. (e.g. Why should John and Mary
living in Atlanta feel a sense of bonding with Jose and Maria in Mexico City or Jean and
Marianne in Quebec?)
69 Brattle Street
Cambridge, MA 02138-3442
Telephone 617/496-3478
Fax 617/496-2982
E-mail [email protected]
2. Building Work-Family-Community Connection
As others have suggested, every society needs shared values and shared institutions if there
is to be social cohesion. Continuing from the section above, we have failed since the
Industrial Revolution to configure the institutions of work, family and community in ways
that sustain us, knit us together, and meet the turbulence of changes locally and globally.
In particular, women have felt the costs of these changes in the dramatic rise in labor force
participation, the continuing gender inequity in pay and care-giving responsibilities, and the
resistance of work, educational and civic institutions to re-organize to enhance family well-
being. Mr. President, as I pointed out at the dinner, you and Mrs. Clinton have helped the
nation correct this failure through your landmark FMLA legislation, your extension of the
Peace Corps Service, your recent child care, Medicare expansion and education proposals.
These are being applauded by people of all generations and I congratulate you!
Yet these are just the first strands of the fabric that must be woven.
I would like to offer a specific proposal in the spirit of creating a viable institutional quilt
for our nation's future: A Presidential Commission on Work-Family-
Community Alliance for the 21st Century. The Commission's overall mission
would be to aid our nation in formulating work, family and civic life in ways that enhance
social cohesion and recognize the economic, workplace, and demographic changes that are
occurring. The Commission would bring together outstanding representatives from
business, labor, government and civic society for a specific period (one year perhaps) with
the objectives of educating the public, spotlighting best practices and producing policy
initiatives for the public and private domains. The conceptual basis of the Commission
would be that we need to structure work, family and community institutions to mutually
support each other rather than undermine the quality of life Americans seek.
The response to the idea for such a Commission I think would be very positive, gathering
much support from women's organizations, religious and civic groups, health and
educational leaders as well as forging bipartisan efforts. I would welcome the opportunity
to discuss this proposal with you and your staff.
3. Overcoming Inequity
One of the most powerful exchanges during our dinner concerned racial inequity. I agree
with Sam Beer that you and Vice President Gore, as white Southern males, may have a
unique role to play in keeping "our eyes on the prize" of racial harmony. I also agree with
Randall Kennedy that this is exceedingly difficult to do and that the Town Meeting
approach, while good, is not sufficient. Our society contains people with many different
customs, traditions and outlooks. More than ever we need to remain clear that the only
way democracy will survive is if we can each hold dear to us the respect for human rights.
I think the costs of widening inequity need to be made crystal clear. Americans measure
what they value. If we value human rights, equal access, and equal opportunity, then we
must measure what the costs are - for the individual, for the community, for the nation - if
they do not exist.
I very much appreciate the opportunity to share my "after dinner" thoughts and ideas with
you. I hope we can continue the exchange.
A final thought. Each Sabbath a designated portion or "parshah" of the Old Testament is
read in temples around the globe. In the next weeks leading up to your State of the Union
Address, the readings will move from the end of Genesis and the death of Joseph to the
beginning of Exodus and the birth of Moses. The sages tell us that this marks the passage
from death of the patriarchs (and matriarchs) to the birth of a new leader. It also marks the
coming to fruition of the people, the nation of Israel, who reach freedom and redemption in
the Exodus story. May the Exodus story inspire you at this important moment and provide
a sense of blessing.
Park
Sincerely,
Paula M. Rayman, Ph.D.
Director
Robert Putnam - Bowling Alone - Journal of Democracy 6:1
http://muse.jhu.edu/demo/journal_of_democracy/v006/putnan.hm.
"Bowling
Copyright © 1995 The National Endowment for Democracy and The Johns Hopkins University
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Journal of Democracy 6:1, Jan 1995, 65-78
MUSE
SEARCH
SAMPLE
ISSUES
As featured on National Public Radio, The New York Times, and in other major media, we offer this
sold-out, much-discussed Journal of Democracy article by Robert Putnam, "Bowling Alone. The
Journal of Democracy is at present scheduled to go online in full text in the third year of Project Muse
(1997). You can also find information at DemocracyNet about the Journal of Democracy and its
sponsor, the National Endowment for Democracy.
Bowling Alone: America's Declining Social Capital
Robert D. Putnam
An Interview with Robert Putnam
Many students of the new democracies that have emerged over the past decade and a half have
emphasized the importance of a strong and active civil society to the consolidation of democracy.
Especially with regard to the postcommunist countries, scholars and democratic activists alike have
lamented the absence or obliteration of traditions of independent civic engagement and a widespread
tendency toward passive reliance on the state. To those concerned with the weakness of civil societies in
the developing or postcommunist world, the advanced Western democracies and above all the United
States have typically been taken as models to be emulated. There is striking evidence, however, that the
vibrancy of American civil society has notably declined over the past several decades.
Ever since the publication of Alexis de Tocqueville's Democracy in America, the United States has
played a central role in systematic studies of the links between democracy and civil society. Although
this is in part because trends in American life are often regarded as harbingers of social modernization, it
is also because America has traditionally been considered unusually "civic" (a reputation that, as we
shall later see, has not been entirely unjustified).
When Tocqueville visited the United States in the 1830s, it was the Americans' propensity for civic
association that most impressed him as the key to their unprecedented ability to make democracy work.
"Americans of all ages, all stations in life, and all types of disposition," [End Page 65] he observed, "are
forever forming associations. There are not only commercial and industrial associations in which all take
part, but others of a thousand different types--religious, moral, serious, futile, very general and very
limited, immensely large and very minute.
Nothing, in my view, deserves more attention than the
intellectual and moral associations in America." 1
Recently, American social scientists of a neo-Tocquevillean bent have unearthed a wide range of
empirical evidence that the quality of public life and the performance of social institutions (and not only
in America) are indeed powerfully influenced by norms and networks of civic engagement. Researchers
in such fields as education, urban poverty, unemployment, the control of crime and drug abuse, and even
health have discovered that successful outcomes are more likely in civically engaged communities.
Similarly, research on the varying economic attainments of different ethnic groups in the United States
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has demonstrated the importance of social bonds within each group. These results are consistent with
research in a wide range of settings that demonstrates the vital importance of social networks for job
placement and many other economic outcomes.
Meanwhile, a seemingly unrelated body of research on the sociology of economic development has also
focused attention on the role of social networks. Some of this work is situated in the developing
countries, and some of it elucidates the peculiarly successful "network capitalism" of East Asia. 2 Even
in less exotic Western economies, however, researchers have discovered highly efficient, highly flexible
"industrial districts" based on networks of collaboration among workers and small entrepreneurs. Far
from being paleoindustrial anachronisms, these dense interpersonal and interorganizational networks
undergird ultramodern industries, from the high tech of Silicon Valley to the high fashion of Benetton.
The norms and networks of civic engagement also powerfully affect the performance of representative
government. That, at least, was the central conclusion of my own 20-year, quasi-experimental study of
subnational governments in different regions of Italy. 3 Although all these regional governments seemed
identical on paper, their levels of effectiveness varied dramatically. Systematic inquiry showed that the
quality of governance was determined by longstanding traditions of civic engagement (or its absence).
Voter turnout, newspaper readership, membership in choral societies and football clubs--these were the
hallmarks of a successful region. In fact, historical analysis suggested that these networks of organized
reciprocity and civic solidarity, far from being an epiphenomenon of socioeconomic modernization,
were a precondition for it.
No doubt the mechanisms through which civic engagement and social connectedness produce such
results--better schools, faster economic [End Page 66] development, lower crime, and more effective
government--are multiple and complex. While these briefly recounted findings require further
confirmation and perhaps qualification, the parallels across hundreds of empirical studies in a dozen
disparate disciplines and subfields are striking. Social scientists in several fields have recently suggested
a common framework for understanding these phenomena, a framework that rests on the concept of
social capital. 4 By analogy with notions of physical capital and human capital--tools and training that
enhance individual productivity--"social capital" refers to features of social organization such as
networks, norms, and social trust that facilitate coordination and cooperation for mutual benefit.
For a variety of reasons, life is easier in a community blessed with a substantial stock of social capital. In
the first place, networks of civic engagement foster sturdy norms of generalized reciprocity and
encourage the emergence of social trust. Such networks facilitate coordination and communication,
amplify reputations, and thus allow dilemmas of collective action to be resolved. When economic and
political negotiation is embedded in dense networks of social interaction, incentives for opportunism are
reduced. At the same time, networks of civic engagement embody past success at collaboration, which
can serve as a cultural template for future collaboration. Finally, dense networks of interaction probably
broaden the participants' sense of self, developing the "I" into the "we," or (in the language of
rational-choice theorists) enhancing the participants' "taste" for collective benefits.
I do not intend here to survey (much less contribute to) the development of the theory of social capital.
Instead, I use the central premise of that rapidly growing body of work--that social connections and civic
engagement pervasively influence our public life, as well as our private prospects--as the starting point
for an empirical survey of trends in social capital in contemporary America. I concentrate here entirely
on the American case, although the developments I portray may in some measure characterize many
contemporary societies.
Whatever Happened to Civic Engagement?
We begin with familiar evidence on changing patterns of political participation, not least because it is
immediately relevant to issues of democracy in the narrow sense. Consider the well-known decline in
turnout in national elections over the last three decades. From a relative high point in the early 1960s,
voter turnout had by 1990 declined by nearly a quarter; tens of millions of Americans had forsaken their
parents' habitual readiness to engage in the simplest act of citizenship. Broadly similar trends also
characterize participation in state and local elections.
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It is not just the voting booth that has been increasingly deserted by [End Page 67] Americans. A series
of identical questions posed by the Roper Organization to national samples ten times each year over the
last two decades reveals that since 1973 the number of Americans who report that "in the past year" they
have "attended a public meeting on town or school affairs" has fallen by more than a third (from 22
percent in 1973 to 13 percent in 1993). Similar (or even greater) relative declines are evident in
responses to questions about attending a political rally or speech, serving on a committee of some local
organization, and working for a political party. By almost every measure, Americans' direct engagement
in politics and government has fallen steadily and sharply over the last generation, despite the fact that
average levels of education--the best individual-level predictor of political participation--have risen
sharply throughout this period. Every year over the last decade or two, millions more have withdrawn
from the affairs of their communities.
Not coincidentally, Americans have also disengaged psychologically from politics and government over
this era. The proportion of Americans who reply that they "trust the government in Washington" only
"some of the time" or "almost never" has risen steadily from 30 percent in 1966 to 75 percent in 1992.
These trends are well known, of course, and taken by themselves would seem amenable to a strictly
political explanation. Perhaps the long litany of political tragedies and scandals since the 1960s
(assassinations, Vietnam, Watergate, Irangate, and so on) has triggered an understandable disgust for
politics and government among Americans, and that in turn has motivated their withdrawal. I do not
doubt that this common interpretation has some merit, but its limitations become plain when we examine
trends in civic engagement of a wider sort.
Our survey of organizational membership among Americans can usefully begin with a glance at the
aggregate results of the General Social Survey, a scientifically conducted, national-sample survey that
has been repeated 14 times over the last two decades. Church-related groups constitute the most
common type of organization joined by Americans; they are especially popular with women. Other types
of organizations frequently joined by women include school-service groups (mostly parent-teacher
associations), sports groups, professional societies, and literary societies. Among men, sports clubs,
labor unions, professional societies, fraternal groups, veterans' groups, and service clubs are all relatively
popular.
Religious affiliation is by far the most common associational [End Page 68] membership among
Americans. Indeed, by many measures America continues to be (even more than in Tocqueville's time)
an astonishingly "churched" society. For example, the United States has more houses of worship per
capita than any other nation on Earth. Yet religious sentiment in America seems to be becoming
somewhat less tied to institutions and more self-defined.
How have these complex crosscurrents played out over the last three or four decades in terms of
Americans' engagement with organized religion? The general pattern is clear: The 1960s witnessed a
significant drop in reported weekly churchgoing--from roughly 48 percent in the late 1950s to roughly
41 percent in the early 1970s. Since then, it has stagnated or (according to some surveys) declined still
further. Meanwhile, data from the General Social Survey show a modest decline in membership in all
"church-related groups" over the last 20 years. It would seem, then, that net participation by Americans,
both in religious services and in church-related groups, has declined modestly (by perhaps a sixth) since
the 1960s.
For many years, labor unions provided one of the most common organizational affiliations among
American workers. Yet union membership has been falling for nearly four decades, with the steepest
decline occurring between 1975 and 1985. Since the mid-1950s, when union membership peaked, the
unionized portion of the nonagricultural work force in America has dropped by more than half, falling
from 32.5 percent in 1953 to 15.8 percent in 1992. By now, virtually all of the explosive growth in union
membership that was associated with the New Deal has been erased. The solidarity of union halls is now
mostly a fading memory of aging men. 5
The parent-teacher association (PTA) has been an especially important form of civic engagement in
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twentieth-century America because parental involvement in the educational process represents a
particularly productive form of social capital. It is, therefore, dismaying to discover that participation in
parent-teacher organizations has dropped drastically over the last generation, from more than 12 million
in 1964 to barely 5 million in 1982 before recovering to approximately 7 million now.
Next, we turn to evidence on membership in (and volunteering for) civic and fraternal organizations.
These data show some striking patterns. First, membership in traditional women's groups has declined
more or less steadily since the mid-1960s. For example, membership in the national Federation of
Women's Clubs is down by more than half (59 percent) since 1964, while membership in the League of
Women Voters (LWV) is off 42 percent since 1969. 6
Similar reductions are apparent in the numbers of volunteers for mainline civic organizations, such as
the Boy Scouts (off by 26 percent since 1970) and the Red Cross (off by 61 percent since 1970). But
what about the possibility that volunteers have simply switched their loyalties [End Page 69] to other
organizations? Evidence on "regular" (as opposed to occasional or "drop-by") volunteering is available
from the Labor Department's Current Population Surveys of 1974 and 1989. These estimates suggest
that serious volunteering declined by roughly one-sixth over these 15 years, from 24 percent of adults in
1974 to 20 percent in 1989. The multitudes of Red Cross aides and Boy Scout troop leaders now missing
in action have apparently not been offset by equal numbers of new recruits elsewhere.
Fraternal organizations have also witnessed a substantial drop in membership during the 1980s and
1990s. Membership is down significantly in such groups as the Lions (off 12 percent since 1983), the
Elks (off 18 percent since 1979), the Shriners (off 27 percent since 1979), the Jaycees (off 44 percent
since 1979), and the Masons (down 39 percent since 1959). In sum, after expanding steadily throughout
most of this century, many major civic organizations have experienced a sudden, substantial, and nearly
simultaneous decline in membership over the last decade or two.
The most whimsical yet discomfiting bit of evidence of social disengagement in contemporary America
that I have discovered is this: more Americans are bowling today than ever before, but bowling in
organized leagues has plummeted in the last decade or so. Between 1980 and 1993 the total number of
bowlers in America increased by 10 percent, while league bowling decreased by 40 percent. (Lest this be
thought a wholly trivial example, I should note that nearly 80 million Americans went bowling at least
once during 1993, nearly a third more than voted in the 1994 congressional elections and roughly the
same number as claim to attend church regularly. Even after the 1980s' plunge in league bowling, nearly
3 percent of American adults regularly bowl in leagues.) The rise of solo bowling threatens the
livelihood of bowling-lane proprietors because those who bowl as members of leagues consume three
times as much beer and pizza as solo bowlers, and the money in bowling is in the beer and pizza, not the
balls and shoes. The broader social significance, however, lies in the social interaction and even
occasionally civic conversations over beer and pizza that solo bowlers forgo. Whether or not bowling
beats balloting in the eyes of most Americans, bowling teams illustrate yet another vanishing form of
social capital.
Countertrends
At this point, however, we must confront a serious counterargument. Perhaps the traditional forms of
civic organization whose decay we have been tracing have been replaced by vibrant new organizations.
For example, national environmental organizations (like the Sierra Club) and feminist groups (like the
National Organization for Women) grew rapidly [End Page 70] during the 1970s and 1980s and now
count hundreds of thousands of dues-paying members. An even more dramatic example is the American
Association of Retired Persons (AARP), which grew exponentially from 400,000 card-carrying
members in 1960 to 33 million in 1993, becoming (after the Catholic Church) the largest private
organization in the world. The national administrators of these organizations are among the most feared
lobbyists in Washington, in large part because of their massive mailing lists of presumably loyal
members.
These new mass-membership organizations are plainly of great political importance. From the point of
view of social connectedness, however, they are sufficiently different from classic "secondary
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associations" that we need to invent a new label--perhaps "tertiary associations." For the vast majority of
their members, the only act of membership consists in writing a check for dues or perhaps occasionally
reading a newsletter. Few ever attend any meetings of such organizations, and most are unlikely ever
(knowingly) to encounter any other member. The bond between any two members of the Sierra Club is
less like the bond between any two members of a gardening club and more like the bond between any
two Red Sox fans (or perhaps any two devoted Honda owners): they root for the same team and they
share some of the same interests, but they are unaware of each other's existence. Their ties, in short, are
to common symbols, common leaders, and perhaps common ideals, but not to one another. The theory
of social capital argues that associational membership should, for example, increase social trust, but this
prediction is much less straightforward with regard to membership in tertiary associations. From the
point of view of social connectedness, the Environmental Defense Fund and a bowling league are just
not in the same category.
If the growth of tertiary organizations represents one potential (but probably not real) counterexample to
my thesis, a second countertrend is represented by the growing prominence of nonprofit organizations,
especially nonprofit service agencies. This so-called third sector includes everything from Oxfam and
the Metropolitan Museum of Art to the Ford Foundation and the Mayo Clinic. In other words, although
most secondary associations are nonprofits, most nonprofit agencies are not secondary associations. To
identify trends in the size of the nonprofit sector with trends in social connectedness would be another
fundamental conceptual mistake. 7
A third potential countertrend is much more relevant to an assessment of social capital and civic
engagement. Some able researchers have argued that the last few decades have witnessed a rapid
expansion in "support groups" of various sorts. Robert Wuthnow reports that fully 40 percent of all
Americans claim to be "currently involved in [a] small group that meets regularly and provides support
or caring for those who participate in it." 8 Many of these groups are religiously affiliated, but [End
Page 71] many others are not. For example, nearly 5 percent of Wuthnow's national sample claim to
participate regularly in a "self-help" group, such as Alcoholics Anonymous, and nearly as many say they
belong to book-discussion groups and hobby clubs.
The groups described by Wuthnow's respondents unquestionably represent an important form of social
capital, and they need to be accounted for in any serious reckoning of trends in social connectedness. On
the other hand, they do not typically play the same role as traditional civic associations. As Wuthnow
emphasizes,
Small groups may not be fostering community as effectively as many of their proponents
would like. Some small groups merely provide occasions for individuals to focus on
themselves in the presence of others. The social contract binding members together asserts
only the weakest of obligations. Come if you have time. Talk if you feel like it. Respect
everyone's opinion. Never criticize. Leave quietly if you become dissatisfied.
We can
imagine that [these small groups] really substitute for families, neighborhoods, and broader
community attachments that may demand lifelong commitments, when, in fact, they do not.
9
All three of these potential countertrends--tertiary organizations, nonprofit organizations, and support
groups--need somehow to be weighed against the erosion of conventional civic organizations. One way
of doing so is to consult the General Social Survey.
Within all educational categories, total associational membership declined significantly between 1967
and 1993. Among the college-educated, the average number of group memberships per person fell from
2.8 to 2.0 (a 26-percent decline); among high-school graduates, the number fell from 1.8 to 1.2 (32
percent); and among those with fewer than 12 years of education, the number fell from 1.4 to 1.1 (25
percent). In other words, at all educational (and hence social) levels of American society, and counting
all sorts of group memberships, the average number of associational memberships has fallen by about a
fourth over the last quarter-century. Without controls for educational levels, the trend is not nearly so
clear, but the central point is this: more Americans than ever before are in social circumstances that
foster associational involvement (higher education, middle age, and so on), but nevertheless aggregate
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associational membership appears to be stagnant or declining.
Broken down by type of group, the downward trend is most marked for church-related groups, for labor
unions, for fraternal and veterans' organizations, and for school-service groups. Conversely, membership
in professional associations has risen over these years, although less than might have been predicted,
given sharply rising educational and occupational levels. Essentially the same trends are evident for both
men and women in the sample. In short, the available survey evidence [End Page 72] confirms our
earlier conclusion: American social capital in the form of civic associations has significantly eroded over
the last generation.
Good Neighborliness and Social Trust
I noted earlier that most readily available quantitative evidence on trends in social connectedness
involves formal settings, such as the voting booth, the union hall, or the PTA. One glaring exception is
so widely discussed as to require little comment here: the most fundamental form of social capital is the
family, and the massive evidence of the loosening of bonds within the family (both extended and
nuclear) is well known. This trend, of course, is quite consistent with--and may help to explain--our
theme of social decapitalization.
A second aspect of informal social capital on which we happen to have reasonably reliable time-series
data involves neighborliness. In each General Social Survey since 1974 respondents have been asked,
"How often do you spend a social evening with a neighbor?" The proportion of Americans who socialize
with their neighbors more than once a year has slowly but steadily declined over the last two decades,
from 72 percent in 1974 to 61 percent in 1993. (On the other hand, socializing with "friends who do not
live in your neighborhood" appears to be on the increase, a trend that may reflect the growth of
workplace-based social connections.)
Americans are also less trusting. The proportion of Americans saying that most people can be trusted fell
by more than a third between 1960, when 58 percent chose that alternative, and 1993, when only 37
percent did. The same trend is apparent in all educational groups; indeed, because social trust is also
correlated with education and because educational levels have risen sharply, the overall decrease in
social trust is even more apparent if we control for education.
Our discussion of trends in social connectedness and civic engagement has tacitly assumed that all the
forms of social capital that we have discussed are themselves coherently correlated across individuals.
This is in fact true. Members of associations are much more likely than nonmembers to participate in
politics, to spend time with neighbors, to express social trust, and so on.
The close correlation between social trust and associational membership is true not only across time and
across individuals, but also across countries. Evidence from the 1991 World Values Survey
demonstrates the following: 10
1. Across the 35 countries in this survey, social trust and civic engagement are strongly correlated;
the greater the density of associational membership in a society, the more trusting its citizens.
Trust and engagement are two facets of the same underlying factor-social capital. [End Page 73]
2. America still ranks relatively high by cross-national standards on both these dimensions of social
capital. Even in the 1990s, after several decades' erosion, Americans are more trusting and more
engaged than people in most other countries of the world.
3. The trends of the past quarter-century, however, have apparently moved the United States
significantly lower in the international rankings of social capital. The recent deterioration in
American social capital has been sufficiently great that (if no other country changed its position in
the meantime) another quarter-century of change at the same rate would bring the United States,
roughly speaking, to the midpoint among all these countries, roughly equivalent to South Korea,
Belgium, or Estonia today. Two generations' decline at the same rate would leave the United
States at the level of today's Chile, Portugal, and Slovenia.
Why Is U.S. Social Capital Eroding?
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As we have seen, something has happened in America in the last two or three decades to diminish civic
engagement and social connectedness. What could that "something" be? Here are several possible
explanations, along with some initial evidence on each.
The movement of women into the labor force. Over these same two or three decades, many millions of
American women have moved out of the home into paid employment. This is the primary, though not
the sole, reason why the weekly working hours of the average American have increased significantly
during these years. It seems highly plausible that this social revolution should have reduced the time and
energy available for building social capital. For certain organizations, such as the PTA, the League of
Women Voters, the Federation of Women's Clubs, and the Red Cross, this is almost certainly an
important part of the story. The sharpest decline in women's civic participation seems to have come in
the 1970s; membership in such "women's" organizations as these has been virtually halved since the late
1960s. By contrast, most of the decline in participation in men's organizations occurred about ten years
later; the total decline to date has been approximately 25 percent for the typical organization. On the
other hand, the survey data imply that the aggregate declines for men are virtually as great as those for
women. It is logically possible, of course, that the male declines might represent the knock-on effect of
women's liberation, as dishwashing crowded out the lodge, but time-budget studies suggest that most
husbands of working wives have assumed only a minor part of the housework. In short, something
besides the women's revolution seems to lie behind the erosion of social capital.
Mobility: The "re-potting" hypothesis. Numerous studies of organizational involvement have shown that
residential stability and such related phenomena as homeownership are clearly associated with greater
[End Page 74] civic engagement. Mobility, like frequent re-potting of plants, tends to disrupt root
systems, and it takes time for an uprooted individual to put down new roots. It seems plausible that the
automobile, suburbanization, and the movement to the Sun Belt have reduced the social rootedness of
the average American, but one fundamental difficulty with this hypothesis is apparent: the best evidence
shows that residential stability and homeownership in America have risen modestly since 1965, and are
surely higher now than during the 1950s, when civic engagement and social connectedness by our
measures was definitely higher.
Other demographic transformations. A range of additional changes have transformed the American
family since the 1960s--fewer marriages, more divorces, fewer children, lower real wages, and so on.
Each of these changes might account for some of the slackening of civic engagement, since married,
middle-class parents are generally more socially involved than other people. Moreover, the changes in
scale that have swept over the American economy in these years--illustrated by the replacement of the
corner grocery by the supermarket and now perhaps of the supermarket by electronic shopping at home,
or the replacement of community-based enterprises by outposts of distant multinational firms--may
perhaps have undermined the material and even physical basis for civic engagement.
The technological transformation of leisure. There is reason to believe that deep-seated technological
trends are radically "privatizing" or "individualizing" our use of leisure time and thus disrupting many
opportunities for social-capital formation. The most obvious and probably the most powerful instrument
of this revolution is television. Time-budget studies in the 1960s showed that the growth in time spent
watching television dwarfed all other changes in the way Americans passed their days and nights.
Television has made our communities (or, rather, what we experience as our communities) wider and
shallower. In the language of economics, electronic technology enables individual tastes to be satisfied
more fully, but at the cost of the positive social externalities associated with more primitive forms of
entertainment. The same logic applies to the replacement of vaudeville by the movies and now of
movies by the VCR. The new "virtual reality" helmets that we will soon don to be entertained in total
isolation are merely the latest extension of this trend. Is technology thus driving a wedge between our
individual interests and our collective interests? It is a question that seems worth exploring more
systematically.
What Is to Be Done?
The last refuge of a social-scientific scoundrel is to call for more research. Nevertheless, I cannot forbear
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from suggesting some further lines of inquiry. [End Page 75]
We must sort out the dimensions of social capital, which clearly is not a unidimensional concept,
despite language (even in this essay) that implies the contrary. What types of organizations and
networks most effectively embody--or generate--social capital, in the sense of mutual reciprocity,
the resolution of dilemmas of collective action, and the broadening of social identities? In this
essay I have emphasized the density of associational life. In earlier work I stressed the structure of
networks, arguing that "horizontal" ties represented more productive social capital than vertical
ties. 11
Another set of important issues involves macrosociological crosscurrents that might intersect with
the trends described here. What will be the impact, for example, of electronic networks on social
capital? My hunch is that meeting in an electronic forum is not the equivalent of meeting in a
bowling alley--or even in a saloon--but hard empirical research is needed. What about the
development of social capital in the workplace? Is it growing in counterpoint to the decline of
civic engagement, reflecting some social analogue of the first law of thermodynamics--social
capital is neither created nor destroyed, merely redistributed? Or do the trends described in this
essay represent a deadweight loss?
A rounded assessment of changes in American social capital over the last quarter-century needs to
count the costs as well as the benefits of community engagement. We must not romanticize
small-town, middle-class civic life in the America of the 1950s. In addition to the deleterious
trends emphasized in this essay, recent decades have witnessed a substantial decline in intolerance
and probably also in overt discrimination, and those beneficent trends may be related in complex
ways to the erosion of traditional social capital. Moreover, a balanced accounting of the
social-capital books would need to reconcile the insights of this approach with the undoubted
insights offered by Mancur Olson and others who stress that closely knit social, economic, and
political organizations are prone to inefficient cartelization and to what political economists term
"rent seeking" and ordinary men and women call corruption. 12
Finally, and perhaps most urgently, we need to explore creatively how public policy impinges on
(or might impinge on) social-capital formation. In some well-known instances, public policy has
destroyed highly effective social networks and norms. American slum-clearance policy of the
1950s and 1960s, for example, renovated physical capital, [End Page 76] but at a very high cost
to existing social capital. The consolidation of country post offices and small school districts has
promised administrative and financial efficiencies, but full-cost accounting for the effects of these
policies on social capital might produce a more negative verdict. On the other hand, such past
initiatives as the county agricultural-agent system, community colleges, and tax deductions for
charitable contributions illustrate that government can encourage social-capital formation. Even a
recent proposal in San Luis Obispo, California, to require that all new houses have front porches
illustrates the power of government to influence where and how networks are formed.
The concept of "civil society" has played a central role in the recent global debate about the
preconditions for democracy and democratization. In the newer democracies this phrase has properly
focused attention on the need to foster a vibrant civic life in soils traditionally inhospitable to
self-government. In the established democracies, ironically, growing numbers of citizens are questioning
the effectiveness of their public institutions at the very moment when liberal democracy has swept the
battlefield, both ideologically and geopolitically. In America, at least, there is reason to suspect that this
democratic disarray may be linked to a broad and continuing erosion of civic engagement that began a
quarter-century ago. High on our scholarly agenda should be the question of whether a comparable
erosion of social capital may be under way in other advanced democracies, perhaps in different
institutional and behavioral guises. High on America's agenda should be the question of how to reverse
these adverse trends in social connectedness, thus restoring civic engagement and civic trust.
Robert D. Putnam is Dillon Professor of International Affairs and director of the Center for International
Affairs at Harvard University. His most recent books are Double-Edged Diplomacy: International
Bargaining and Domestic Politics (1993) and Making Democracy Work: Civic Traditions in Modern
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Italy (1993), which is reviewed elsewhere in this issue. He is now completing a study of the
revitalization of American democracy.
Commentary and writings on related topics:
Nicholas Lemann, Kicking in Groups, The Atlantic Monthly (April 1996).
Mary Ann Zehr, Getting Involved in Civic Life, Foundation News and Commentary (May/June
1996). The Foundation News and Commentary is a publication of The Council on Foundations.
Notes
1. Alexis de Tocqueville, Democracy in America, ed. J.P. Maier, trans. George Lawrence (Garden City,
N.Y.: Anchor Books, 1969), 513-17.
2. On social networks and economic growth in the developing world, see Milton J. Esman and Norman
Uphoff, Local Organizations: Intermediaries in Rural Development (Ithaca: Cornell University Press,
1984), esp. 15-42 and 99-180; and Albert O. Hirschman, Getting Ahead Collectively: Grassroots
Experiences in Latin America (Elmsford, N.Y.: Pergamon Press, 1984), esp. 42-77. On East Asia, see
Gustav Papanek, "The New Asian Capitalism: An Economic Portrait," in Peter L. Berger and
Hsin-Huang Michael Hsiao, eds., In Search of an East Asian Development Model (New Brunswick, N.J.:
Transaction, 1987), 27-80; Peter B. Evans, "The State as Problem and Solution: Predation, Embedded
Autonomy and Structural Change," in Stephan Haggard and Robert R. Kaufman, eds., The Politics of
Economic Adjustment (Princeton: Princeton University Press, 1992), 139-81; and Gary G. Hamilton,
William Zeile, and Wan-Jin Kim, "Network Structure of East Asian Economies," in Stewart R. Clegg
and S. Gordon Redding, eds., Capitalism in Contrasting Cultures (Hawthorne, N.Y.: De Gruyter, 1990),
105-29. See also Gary G. Hamilton and Nicole Woolsey Biggart, "Market, Culture, and Authority: A
Comparative Analysis of Management and Organization in the Far East," American Journal of
Sociology (Supplement) 94 (1988): S52-S94; and Susan Greenhalgh, "Families and Networks in
Taiwan's Economic Development," in Edwin Winckler and Susan Greenhalgh, eds., Contending
Approaches to the Political Economy of Taiwan (Armonk, N.Y.: M.E. Sharpe, 1987), 224-45.
3. Robert D. Putnam, Making Democracy Work: Civic Traditions in Modern Italy (Princeton: Princeton
University Press, 1993).
4. James S. Coleman deserves primary credit for developing the "social capital" theoretical framework.
See his "Social Capital in the Creation of Human Capital," American Journal of Sociology (Supplement)
94 (1988): S95-S120, as well as his The Foundations of Social Theory (Cambridge: Harvard University
Press, 1990), 300-21. See also Mark Granovetter, "Economic Action and Social Structure: The Problem
of Embeddedness," American Journal of Sociology 91 (1985): 481-510; Glenn C. Loury, "Why Should
We Care About Group Inequality?" Social Philosophy and Policy 5 (1987): 249-71; and Robert D.
Putnam, "The Prosperous Community: Social Capital and Public Life," American Prospect 13 (1993):
35-42. To my knowledge, the first scholar to use the term "social capital" in its current sense was Jane
Jacobs, in The Death and Life of Great American Cities (New York: Random House, 1961), 138.
5. Any simplistically political interpretation of the collapse of American unionism would need to
confront the fact that the steepest decline began more than six years before the Reagan administration's
attack on PATCO. Data from the General Social Survey show a roughly 40-percent decline in reported
union membership between 1975 and 1991.
6. Data for the LWV are available over a longer time span and show an interesting pattern: a sharp
slump during the Depression, a strong and sustained rise after World War II that more than tripled
membership between 1945 and 1969, and then the post-1969 decline, which has already erased virtually
all the postwar gains and continues still. This same historical pattern applies to those men's fraternal
organizations for which comparable data are available--steady increases for the first seven decades of the
century, interrupted only by the Great Depression, followed by a collapse in the 1970s and 1980s that
has already wiped out most of the postwar expansion and continues apace.
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7. Cf. Lester M. Salamon, "The Rise of the Nonprofit Sector," Foreign Affairs 73 (July-August 1994):
T09-22. See also Salamon, "Partners in Public Service: The Scope and Theory of Government-Nonprofit
Relations," in Walter W. Powell, ed., The Nonprofit Sector: A Research Handbook (New Haven: Yale
University Press, 1987), 99-117. Salamon's empirical evidence does not sustain his broad claims about a
global "associational revolution" comparable in significance to the rise of the nation-state several
centuries ago.
8. Robert Wuthnow, Sharing the Journey: Support Groups and America's New Quest for Community
(New York: The Free Press, 1994), 45.
9. Ibid., 3-6.
10. I am grateful to Ronald Inglehart, who directs this unique cross-national project, for sharing these
highly useful data with me. See his "The Impact of Culture on Economic Development: Theory,
Hypotheses, and Some Empirical Tests" (unpublished manuscript, University of Michigan, 1994).
11. See my Making Democracy Work, esp. ch. 6.
12. See Mancur Olson, The Rise and Decline of Nations: Economic Growth, Stagflation, and Social
Rigidities (New Haven: Yale University Press, 1982), 2.
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6TH STORY of Level 1 printed in FULL format.
Copyright 1995 UMI, Inc.; ABI/INFORM
Copyright National Affairs Inc 1995
Public Interest
Fall 1995
SECTION: No. 121 Pg. 42-60; ISSN: 0033-3557; CODEN: PUBIBV
LENGTH: 6828 words
HEADLINE: Capitalism and morality
BYLINE: Wilson, James Q
BODY:
TWENTY-FIVE years ago, the two founding editors of this magazine published
important essays on the cultural-and moral status of capitalism. * Irving Kristol
worried that the most intelligent contemporary defenders of capitalism were now
mostly libertarians who praised the market because it produced material benefits
and enhanced human freedom but who denied that markets had anything to do with
morality. Friedrich Hayek, for example, had written that "in a free society it
is neither desirable nor practicable that material rewards should be made
generally to correspond to what men recognize as merit." It is not practicable
because no one can supply a non-arbitrary definition of merit (or justice) ; it
is not desirable because any attempt to impose such a definition would create a
despotism. Kristol worried that people would not support any economic order in
which "the will to success and privilege was severed from its moral moorings."
Capitalism could not survive if, quoting George Fitzhugh, "none but the
selfish virtues are in repute" because in such a society "virtue loses all her
loveliness" and social order becomes impossible.
In the same issue, Daniel Bell published his famous essay on "The Cultural
Contradictions of Capitalism" in which he suggested that the bourgeois
culture--rational, pragmatic, and moral--that had created capitalism was now
being destroyed by the success of capitalism. As capitalism replaced feudal
stagnation with material success, it replaced tradition with materialism; as
privation was supplanted by abundance, prudence was displaced by prodigality.
Capitalism created both a parvenu class of rich plutocrats and corporate
climbers and a counterculture of critical intellectuals and disaffected youth.
The latter began to have a field day exposing what they took to be the greed,
hypocrisy, and Philistinism of the former.
Capitalism's great test
Both Kristol and Bell were amplifying on a theme first developed by Joseph
Schumpeter: Contrary to what Marx had taught, capitalism would be destroyed not
by its failures but by its successes. Their views did not go unchallenged; a
decade later George Gilder, in Wealth and Poverty, launched a frontal attack on
the Schumpeterian theory (and its development by Kristol and Bell) by arguing
that capitalism was, in fact, a highly moral enterprise because it "begins with
giving" and requires "faith."
However one judges that debate, it is striking that in 1970--at a time when
socialism still had many defenders, when certain American economists (and the
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Public Interest Fall 1995
CIA!) were suggesting that the Soviet economy was growing faster than the
American, when books were being written explaining how Fidel Castro could
achieve by the use of "moral incentives" what other nations achieved by
employing material ones--Kristol and Bell saw that the great test of capitalism
would not be economic but moral. Time has proved them right. Except for a
handful of American professors, everyone here and abroad now recognizes that
capitalism produces greater material abundance for more people than any other
economic system ever invented. The evidence is not in dispute. A series of
natural experiments were conducted on a scale that every social scientist must
envy: Several nations--China, Germany, Korea, and Vietnam--were sawed in two,
and capitalism was installed in one part and "socialism" in the other. In every
case, the capitalist part out-produced, by a vast margin, the non-capitalist
one.
Moreover, it has become clear during the last half century that democratic
regimes only flourish in capitalist societies. Not every nation with something
approximating capitalism is democratic, but every nation that is democratic is,
to some significant degree, capitalist. (By "capitalist," I mean that production
is chiefly organized on the basis of privately owned enterprises, and exchange
takes place primarily through voluntary markets.)
If capitalism is an economic success and the necessary (but not sufficient)
precondition for democracy, it only remains vulnerable on cultural and moral
grounds. That is, of course, why today's radical intellectuals have embraced the
more extreme forms of multiculturalism and postmodernism. These doctrines are an
attack on the hegemony of bourgeois society and the legitimacy of bourgeois
values. The attack takes various forms-denying the existence of any foundation
for morality, asserting the incommensurability of cultural forms, rejecting the
possibility of textual meaning, or elevating the claims of non-Western (or
non-white or non-Anglo) traditions. By whatever route it travels, contemporary
radicalism ends with a rejection of the moral claims of capitalism: Because
morality is meaningless, because capitalism is mere power, or because markets
and corporations destroy culture, capitalism is arbitrary, oppressive, or
corrupting.
Most critics of capitalism, of course, are not radicals. Liberal critics
recognize, as postmodernists pretend not to, that, if you are going to offer a
moral criticism of capitalism, you had better believe that moral judgments are
possible and can be made persuasive. To liberals, the failure of capitalism lies
in its production of unjustifiable inequalities of wealth and its reckless
destruction of the natural environment, Capitalism may produce material
abundance, the argument goes, but at too high a price in human suffering and
social injustice.
I do not deny that capitalism has costs; every human activity has them. (It
was a defender of capitalism, after all, who reminded us that there is no such
thing as a free lunch.) For people worried about inequality or environmental
degradation, the question is not whether capitalism has consequences but whether
its consequences are better or worse than those of some feasible economic
alternative. (I stress "feasible" because I tire of hearing critics compare
capitalist reality to socialist--or communitarian or cooperative--ideals. When
ideals are converted into reality, they tend not to look so ideal.) And, in
evaluating consequences, one must reckon up not simply the costs but the costs
set against the benefits. In addition, one must count as benefits the tendency
of an economic system to produce beliefs and actions that support a prudent
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concern for mitigating the unreasonable costs of the system.
Capitalism and public policy
By these tests, practical alternatives to capitalism do not seem very
appealing. Inequality is a feature of every modern society; Adam Smith expected
that it would be a particular feature of what we call capitalism. Indeed, he
began The Wealth of Nations by setting forth a puzzle that he hoped to solve. It
was this: in "the savage nations of hunters and fishers" (what we later learned
to call euphemistically "native cultures" or "less-developed nations"), everyone
works and almost everyone acquires the essentials of human sustenance, but they
tend to be "so miserably poor" that they are reduced, on occasion, to killing
babies and abandoning the elderly and the infirm. Among prosperous nations, by
contrast, many people do not work at all and many more live lives of great
luxury, yet the general level of prosperity is so high that even the poorest
people are better off than the richest person in a primitive society. His book
was an effort to explain why "the system of natural liberty" would produce both
prosperity and inequality and to defend as tolerable the inequality that was the
inevitable (and perhaps necessary) corollary of prosperity.
Smith certainly succeeded in the first task but was less successful in the
second, at least to judge by the number of people who believe that inequality
can be eliminated without sacrificing prosperity. Many nations have claimed to
eliminate market-based inequalities, but they have done so only by creating
non-market inequalities--a Soviet nomenklatura, a ruling military elite, an
elaborate black market, or a set of non-cash perks. Between unconstrained market
inequality and the lesser inequality achieved by some redistribution, there is
much to discuss and decide, and so the welfare-state debate proceeds.
Participants in this debate sometimes forget that the only societies in which
such a debate can have much meaning are those that have produced wealth that can
be redistributed and that have acquired a government that will do so
democratically--in short, capitalist societies.
Similarly with respect to the environment: Only rich (that is, capitalist)
nations can afford to worry much about the environment, and only democratic
(that is, capitalist) nations have governments that will listen to
environmentalists As with inequality, environmental policies in capitalist
systems will vary greatly--from the inconsequential through the prudent to the
loony-but they will scarcely exist in non-capitalist ones. If anyone doubted
this, they were surely convinced when the Iron Curtain was torn down in 1989,
giving the West its first real look at what had been hidden behind the Berlin
Wall. Eastern Europe had been turned into a vast toxic waste dump. Vaclav Havel
explained why: A government that commands the economy will inevitably command
the polity; given a commanding position, a government will distort or destroy
the former and corrupt or oppress the latter.
To compel people engaged in production and exchange to internalize all of the
costs of production and exchange without destroying production and exchange, one
must be able to make proposals to people who do not want to hear such proposals,
induce action among people who do not want to act, and monitor performance by
people who do not like monitors, and do all of this only to the extent that the
gains in human welfare are purchased at acceptable costs. No regime will make
this result certain, but only democratic capitalist regimes make it at all
possible.
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Capitalism creates what are often called "post-material values" that lead
some private parties to make environment-protecting proposals. Capitalism,
because it requires private property, sustains a distinction between the public
and the private sphere and thereby provides a protected place for people to
stand who wish to make controversial proposals. And capitalism permits (but does
not require) the emergence of democratic institutions that can (but may not)
respond to such proposals. Or to put it simply: environmental action arises out
of the demands of journalists, professors, foundation executives, and
private-sector activists who, for the most part, would not exist in a
non-capitalist regime.
Capitalism and the good life
Many readers may accept the view that capitalism permits, or possibly even
facilitates, the making of desirable public policies but reject the idea that
this is because there is anything moral about it. At best, it is amoral, a tool
for the achievement of human wants that is neither good nor bad. At worst, it is
an immoral system that glorifies greed but, by happy accident, occasionally
makes possible popular government and pays the bills of some public-interest
lobbies that can get on with the business of doing good. Hardly anyone regards
it as moral.
People with these views can find much support in The Wealth of Nations. They
will recall the famous passage in which Smith points out that it is from the
"interest," not the "benevolence," of the butcher, the brewer, or the baker that
we expect our dinner. An "invisible hand" leads him to promote the public good,
though this is "no part of his intention." Should they study the book more
carefully, they will come across passages predicting the degradation of the
human spirit that is likely to occur from the division of labor, the incessant
seeking after monopoly benefits and political privilege that will follow from
the expansion of manufacturing, and the "low profligacy and vice" that will
attend upon the growth of large cities. The average worker employed in
repetitive tasks will become "stupid and ignorant," the successful merchant
living in a big city will become personally licentious and politically
advantaged.
Karl Marx, a close student of Smith's writings, had these passages in mind
(and, indeed, referred to them) when he drew his picture of the alienation man
would suffer as a consequence of private property and capitalism. But Marx (and,
in some careless passages, even Smith) had made an error. They had confused the
consequences of modernization (that is, of industrialization and urbanization)
with the consequences of capitalism. The division of labor can be furthered and
large industrial enterprises created by statist regimes as well as by free ones;
people will flock to cities to seek opportunities conferred by socialist as well
as capitalist economies; a profligate and self-serving elite will spring up to
seize the benefits supplied by aristocratic or socialist or authoritarian or
free-market systems. Show people the road to wealth, status, or power, and they
will rush down that road; many will do some rather unattractive things along the
way.
Among the feasible systems of political economy, capitalism offers the best
possibility for checking some, but not all, of these tendencies toward
degradation and depravity. When Smith suggested that the increased division of
labor would turn most workers into unhappy copies of Charlie Chaplin in Modern
Times, he thought that only public education could provide a remedy. Because
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he wrote long before the advent of modern technology, he can be forgiven for not
having foreseen the tendency of free markets to substitute capital for labor in
ways that relieve many workers of precisely those mindlessly repetitive tasks
that Smith supposed would destroy the human spirit.
Urbanization is the result of modernity--that is, of the weakening of village
ties, the advent of large-scale enterprise, the rise of mass markets, and an
improvement in transportation--and modernity may have non-capitalist as well as
capitalist sources. Mexico City, Sao Paulo, Rio de Janeiro, and Moscow have long
been among the dozen largest cities in the world, but, until quite recently (and
still quite uncertainly), none of these was located in a nation that could be
fairly described as capitalist. They were state-dominated economies, either
socialist or mercantilist, and Smith would have had no use for any of them. And,
being non-capitalist, most of these states were barely democratic (the USSR not
at all). Lacking either a truly private sector or a truly democratic regime,
reformist and meliorist tendencies designed to counteract the adverse
consequences of massive urbanization were not much in evidence. Americans who
rightly think that high rates of crime are characteristic of big cities, but
wrongly suppose that this is especially true of capitalist cities, need to spend
some time in Moscow, Rio, and Mexico City.
Capitalism creates privilege; socialism creates privilege; mercantilism
creates privilege; primitivism creates privilege. Men and women everywhere will
seek advantage, grasp power, and create hierarchies. But to the extent that a
society is capitalist, it is more likely than its alternatives to sustain
chal lenges to privilege. These arise from economic rivals, privately financed
voluntary associations, and democratically elected power-holders; they operate
through market competition, government regulation, legal action, and moral
suasion. But they operate clumsily and imperfectly, and, in the routine aspects
of ordinary morality, they may not operate well enough.
Capitalism and the morality of everyday life
By this point, I may have persuaded a few readers that a system of rival
interests has some beneficial moral effects, at least in comparison to statist
economies in which the playing field is tilted by one set of greedy actors
having decisive power over another. But nothing I have said is inconsistent with
the view that capitalism rests on greed and therefore with the view that, at
best, capitalism is amoral.
This was not, I think, the view of either Smith or many of the other earlier
defenders of capitalism. In The Wealth of Nations, he certainly gives an
unflinchingly honest account of how self-interest drives economic decisions.
But, as Albert Hirschman has suggested, eighteenth-century thinkers did not
divide human motives into reason and interests, they divided them into reason,
passions, and interests. Having seen the failures of unaided reason and the
perils of unguided passions, they hoped that calm interests would inform reason
and temper passion.
This was the argument about the beneficial effects of doux commerce--sweet
(or gentle) commerce--and it was implicitly taken up by the American Founders
when they made their case for a commercial republic. It has been repeated of
late by the British anthropologist and philosopher Ernest Gellner who, in
reflecting on the failure of European communism, observes that no society can
avoid finding a way to channel the desire men have to advance themselves. In
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traditional and in statist societies, the way to attain wealth is first to
attain power, usually by force. But, in market societies, "production becomes a
better path to wealth than domination."
Critics of capitalism argue that wealth confers power, and indeed it does, up
to a point But this is not a decisive criticism unless one supposes,
fancifully, that there is some way to arrange human affairs so that the desire
for wealth vanishes. The real choice is between becoming wealthy by first
acquiring political or military power or by getting money directly without
bothering with conquest or domination. Max Weber put it this way: All economic
systems rest on greed, but capitalism, because it depends on profit, is the one
that disciplines greed.
In the process of imposing that discipline, capitalism contributes to
self-discipline. It encourages civility, trust, self-command, and
cosmopolitanism by first making these traits useful and then making them
habitual.
Smith alluded to this when he observed that "commerce and manufactures
gradually introduced order and good government, and with them, the liberty and
security of individuals who had before lived almost in a continual state of
war with their neighbours and of servile dependency upon their superiors." Lest
Smith be interpreted as arguing in favor of central government, he makes clear
in other places that the beneficial effects of free and orderly commerce operate
chiefly on the character of individuals, especially would-be lords and
conquerors now converted into merchants. Nor is he, in the passage quoted above,
contradicting his account of the baleful effects on ordinary people of an
extreme division of labor; capitalism may bring liberty and security, but it
also brings temerity, narrowness, and profligacy. To Smith, sweet commerce was
sweet-and-sour.
Smith's ambivalence reflected his analysis of the class structure of society.
Commerce would create a middle class whose new members would mostly be decent
people. "In the middling and inferior stations of life, he wrote, "the road to
virtue and that to fortune are, happily, very nearly the same. Among people
engaged in middle-class occupations, "real and solid professional abilities,
joined to prudent, just, firm, and temperate conduct, can very seldom fail of
success." In this circumstance, the proverb that "honesty is the best policy"
proves true. But matters are very different in "the superior stations of life,"
in part, because the rich and well-born live in a self-constructed world of
privilege that isolates them from the effective judgment of ordinary (and
ordinarily decent) men, and, in part, because merchants and manufacturers will
move to cities where they will have countless opportunities to acquire political
privileges--monopolies, loop-holes, and subsidies--that insulate them from fair
market judgments about their products, services, and practices.
Smith's worries, SO often quoted, about the affluent few detract, I think,
from the much more important impact of capitalism on the not-so-affluent many.
An economic system that provides many alternative suppliers for any desired
product or service creates an incentive for each supplier to act as if he or she
cared about the interests of the customer. Everyone has heard enough stories
about surly waiters in Soviet restaurants to acknowledge that communist managers
never took customers as seriously as they took commissars, but perhaps this was
simply the extreme result of doing business in a pathological society. I doubt
that. There has been comparable evidence available in the United States for
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Public Interest Fall 1995
many years. Until recently, most big airports supplied food to travelers by
giving an exclusive franchise to a single vendor. Of late, many airports are
giving franchises to several rival vendors--McDonald's, Burger King, Taco Bell,
and the like--to offer food competitively in airports. Without question, the
quality of food and service has gone up.
A skeptic will rejoin that competition merely requires suppliers to act as if
they cared about the customer. But, as any economist will note, a firm's
reputation has a capital value (it is sometimes measured on the balance sheet as
good will) and so business executives who wish to maximize that value will
devote a great deal of effort to inculcating a service ethic in their employees.
One cannot do that cynically. "If you can fake sincerity, you've got it made,"
someone once said. That may be true for a few individuals, but organizing such
fakery on a large scale is impossible--the teaching will be unconvincing, and
the lesson will be ignored.
But acting as if one cared has more than economic significance. Our
characters are formed, as Aristotle observed, by the process of habituation. Any
process that makes a personal disposition habitual is character forming. Parents
know this, which is why they teach good manners to their children by means of
constant small reminders and an insistence on routine observances. Though I am
aware of no evidence bearing on it, there is little reason to suppose that
habituation ends with adulthood or cannot occur outside the family. Are young
people who have worked for three years at McDonald's and been taught to parrot
learned phrases ("How may I serve you?" "Will that be all?" "Thank you.") more
likely on leaving for better jobs to be civil than are similar youngsters who
worked in a company that attached no value to civility? I don't know, but I
think SO.
When Smith wrote that the "understandings of the greater part of men are
necessarily formed by their ordinary employments," " he was worrying about the
harmful effect on the mind of dull and exhausting labor. But the shortened work
day and the use of machinery have made this effect much less likely than it was
in the eighteenth century. Today, it may be that it is the manners of people
that are formed in part by their daily employment.
Capitalist virtues
Capitalism requires some measure of trust. In any economic system, buying and
selling occurs, but voluntary buying and selling on a large scale among
strangers requires confidence in fair dealing that cannot depend on one party
having much detailed knowledge about the other. Routinized exchanges present
some of the same problems as a "Prisoner's Dilemma" in which both participants
have an incentive to cheat if they assume they will only play the game--or
engage in the exchange--once. The solution to the dilemma lies in repeating the
game in conformity with this rule: do to the other party what he has just done
to you ("tit for tat," in political scientist Robert Axelrod's phrase), but make
your first move a "nice" one in order to encourage the other party to do the
same. In some societies, mainly Western ones, this rule is enforced by contract
law; in others, notably Eastern ones, by group affiliations. Capitalism takes
advantage of this rule in order to create large, permanent markets among
strangers that can operate without incessant recourse to retribution. In so
doing, it strengthens conformity to the premise on which it depends: some
minimum level of trust. This is a moralizing activity even though every customer
knows that another rule--caveat emptor--also operates.
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In a recent paper, John Mueller of the University of Rochester has observed
that price haggling--once a common feature of most markets and still
characteristic of some-has been abandoned even though it conferred short-term
advantages on the seller. (This was true because sellers, knowing more about
their wares than customers, had an advantage over most casual shoppers. But
some sellers discovered that, in the long run, they did more business by setting
attractive, fixed prices. This practice lowered transaction costs for customers,
thereby enlarging the number of customers. (1) Mueller notes that, as early as
1727, businessman-turned-novelist Daniel Defoe argued against haggling because
it encouraged both parties to lie. The rise of fixed-price dealing has shifted
misrepresentation from price to quality (or at least to advertising about
quality)
Another premise on which capitalism depends is self-command. Smith understood
that investment was required for capital to be accumulated and that investment,
in turn, required that some people be willing to postpone immediate
gratification for later (and larger) benefits. Smith did not explain why we
should assume that the number of savers will be sufficient to produce the
necessary investment. He observed that "prodigality," the result of a "passion
for present enjoyment," will diminish the capital available for economic growth,
and so it will be necessary for the "frugal man" to save enough to spare the
rest of us from the consequences of our own prodigality. But will this occur?
Smith predicts that "the profusion or imprudence of some" will be "always more
than compensated for by the frugality and good conduct of others. Why? Well,
the desire to save comes from an innate desire to better our condition. But,
since only a few save a lot, the desire must be limited to a few. Will they be
too few?
People differ in their degree of self-command but are alike in the high
regard in which they hold people who display self-command (provided the display
is not excessive, as it is with personalities that are miserly or rigid).
Self-command is, in short, regarded (up to a point) as a virtue, one that is
essential to capitalism and that capitalism strengthens to the extent that it
induces more and more people to think about the future. (Indeed, economic growth
requires that people have a concept of a secular future, a notion that may well
have been absent or meaningless in feudal Europe.) The recent decline in the
rate of American private savings corresponds to a period in which
self-indulgence has been conspicuous. I have no idea what to make of this
parallel except to suggest that a complete understanding will almost surely
require a cultural, as well as economic, analysis. If all that mattered were net
yields on savings, the Japanese would not be saving anything. Their banks pay
very low interest rates, yet their customers save at world-record rates.
Finally, capitalism contributes to cosmopolitanism. This remark will be
laughable to any reader who, when hearing the word "capitalist," " conjures up an
image of George Babbitt or Henry Ford. Capitalism, having been linked by artists
to bourgeois culture, has forever been linked to narrow Philistinism. But, long
ago, Gary Becker explained why markets are the enemy of racial or ethnic
discrimination. Prejudice is costly: It cuts a supplier off from potential
customers and an employer off from potential workers, thus reducing sales and
raising factor costs.
Embedded in a thoroughly racist community, capitalism can easily exist side
by side with prejudice because there are no competitive disadvantages to acting
on the basis of prejudice: Since white workers and customers will not mingle
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with black workers and customers, all employers are on the same footing. But let
a crack develop in the unanimity of racist sentiment; let some workers and some
customers become indifferent to the racial identity of their colleagues; let
nationwide enterprises discover that some customers dislike racism and will make
their purchasing decisions on that basis; let this happen, and market pressures
will swiftly penalize employers who think that they can, without cost, cater to
prejudice.
None of this is to deny the important role played by law, court order, and
the example of desegregated government agencies. But imagine rapid desegregation
occurring if only law, order, and example were operating. It would be slow,
uneven, and painful. Public schools desegregated more slowly than hotels and
restaurants not only because white parents cared more about who their children
*
went to school with than about who was in the next: hotel room or at the next
cafe table but also because school authorities lacked any market incentive to
admit more or different pupils. Indeed, a statist economy would not only resist
desegregation, it would allocate economic benefits--franchises, licenses,
credit--precisely on the basis of political, class, ethnic, or racial status.
Capitalism against slavery
In a remarkable essay, historian Thomas L. Haskell of Rice University has
connected capitalism to the attack on slavery in a bold and new way. The
conventional view among historians of the social-control school has been that
reform efforts, including the attack on slavery, were intended to further the
hegemonic interests of the bourgeoisie. When abolishing slavery was the most
rational way to insure the docility of the workers and enhance the legitimacy of
the bourgeoisie, slavery was abolished.
This argument is not crudely Marxist; sophisticated control theorists do not
necessarily say that businessmen stood to benefit immediately and materially
from an end to slavery. They are even prepared to concede that the business
classes deceived themselves about what they were doing. But, what they insist
upon is that the bourgeoisie could not really have acted out of altruistic
motives. And it does seem strange to think that they might have done so. After
all, British capitalists were practicing profitable large-scale agriculture in
the West Indies. They had many allies, including customers, in London. Then, all
of a sudden, slavery was ended after a public debate that rested almost
entirely, as far as I can tell, on humanitarian principles. Control theorists
suggest that it came about because the capitalists wanted to enhance their
legitimacy by abolishing slave labor SO that labor for slave wages would not be
suspect. As David Brion Davis put it, the abolitionist movement "helped clear an
ideological path for British industrialists" that, by exaggerating the harshness
of slavery, "gave sanction to less barbarous modes of social discipline."
Haskell finds this a somewhat tortured argument. Can capitalist opponents of
slavery, notably the successful Quaker businessmen of the late eighteenth
century, really have thought that their "ideological hegemony" (whatever they
thought that might be) would be enhanced by attacking the slave system, and that
this was more important to them than what they repeatedly and eloquently said
was their motive--namely, the horror they felt toward involuntary servitude?
In place of the social-control theory, Haskell suggests that capitalism
supported, and was wholly consistent with, the religious convictions of the
Quaker abolitionists. As capitalism spread, it carried with it a
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universalistic message. An important part was the new, high value attached to
keeping promises and the concordant development and enforcement of contract law.
As commerce spread, promise keeping and contract writing were increasingly
carried on with strangers and foreigners, including Jews, heathens, and
Levantines. Capitalism sharpened one's sense of, and commitment to, the future,
and it equipped its more skillful practitioners with experience in dealing with
contingencies. Successful capitalists learned to deal fairly with distant
strangers and thus learned to attach greater importance to individual
reliability than to group membership.
Commerce across cultures can be profitable, but it is risky. In coping with
the risks, capitalists learned ways of dealing with remote circumstances. They
acquired, in Haskell's phrase, "recipes for intervention, or what a social
scientist would call a sense of efficacy. By this route, some came to believe
that it was possible, as well as desirable, to challenge slavery. Haskell does
not argue that capitalism was inherently a moral argument against slavery, only
that it was a cultural, as well as economic, movement that contained within its
assumptions and practices certain preconditions--beliefs, experiences,
recipes-for expanding the humanitarian sensibility to strangers. This cultural
change made possible, in about the length of one man's life, the abolition of a
practice supported by custom, profits, argument, and property rights.
Capitalism and bureaucracy
Capitalism is a system of action, but it is also one in which large-scale
institutions operate. Like politics, economics creates bureaucracies, and
bureaucracies have a logic different from that of either markets or politics. A
large enterprise, whether private or public, tends to generate tments to
co-workers and subunits rather than to the enterprise as a whole, to separate
employees from the customers or citizens affected by employee actions, and to
operate on the basis of standard operating procedures that seem instrumentally
rational even when they are substantively irrational. In short, bureaucracy
diffuses or displaces the sense of personal responsibility Firms differ from
government agencies in many important respects, but this does not mean that they
are free from the vices attendant on large-scale organization. There may be
economic returns to scale, but not moral ones.
With all the talk about white-collar crime, we have remarkably little
information about what kinds of organizational arrangements stimulate or impede
misconduct. Big firms probably are more likely than smaller ones to obey certain
laws and regulations because they have a more visible reputation to protect and
the financial resources to hire specialists to do the protecting (for example,
by discovering and complying with government rules). But big firms may be less
inclined to right conduct of a different sort--that is, fair play in the most
general sense.
One meaning of fairness is the Golden Rule: Treat customers, workers, and
suppliers as you would wish to be treated under the same circumstances. That
rule, however, will operate differently when the other party is dealt with at
second or third hand, invisibly and impersonally, than when he is confronted
personally. Even when we deal with a person face to face, we often find it quite
easy to invent rationales for discounting their interests or rejecting their
claims: "This guy is (take your pick) different, insincere, or unworthy." But it
is much easier to conceive of other people as convenient abstractions when they
are known only by labels, words, or numbers, as is likely the case when we are
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members of a large organization.
Fairness can also be defined as receiving rewards proportional to effort. In
face-to-face transactions, effort is the product delivered or the service
rendered, and rewards are the cash received or the thanks expressed. In
impersonal transactions, effort may be the skill displayed at currying favor
from one's superiors and rewards the promotions and preferment that result from
successful currying. Bureaucratization not only insulates some parts of a firm
from market forces but also isolates them from human forces. Bureaucratization
involves specialization that often implies encapsulation, reducing the
proportion of workers who deal intimately and regularly with other specialists.
(In sociological jargon, there is a decline in boundary-spanning roles.)
Bureaucratization also requires measures of employee achievement that are
poor proxies for market success. In a firm, a successful accountant, lawyer, or
personnel officer is rarely the one who has increased profits or sales for the
enterprise (managers rarely can know whether these people have materially helped
or hurt profits); it is the person who has best conformed with higher-level
expectations as to how an accountant, lawyer, or personnel officer is supposed
to behave (and these may be reasonable, unreasonable, or self-serving
expectations).
Robert Jackall, in his book Moral Mazes, explores how managers in two large
corporations define the rules, and thus implicitly the moral requirements, of
their jobs. In both firms, he found struggles for status and dominance,
perceived gaps between reward and merit, and a preoccupation with the
maintenance of good public relations over sound policy. Managers seeking
advancement had to keep their eye out for "the main chance," and that, in turn,
meant, among other things, "unrelenting attentiveness to the social intricacies
of one's organization. The tone of Jackall's book suggests that he is no friend
of corporations, but his detailed observations cannot for that reason be
ignored.
Corporate executives are aware that they live at a time when great attention
is paid to "corporate responsibility" and "business ethics." Observers who are
well-disposed toward capitalism and suspicious of elite fads may dismiss these
preoccupations as mere catering to a hostile media. That would be a mistake.
Though much of this talk may be fatuous or superficial, the problem of imbuing
large-scale enterprise with a decent moral life is fundamental. Chester Barnard
made this clear nearly 60 years ago in The Functions of the Executive. However
ready people are to comply with the self-regarding demands of a group and
conform to the narrow culture of an organization, most people know the
difference between doing things they are proud to tell their children about and
things they hope their children never find out about.
Serious executives know this and worry about it. The emergence of codes of
corporate ethics and the emphasis on fashioning a defensible corporate culture
are not, I think, merely public relations (though they are sometimes just that).
They are, at their best, a recognition that people want to believe that they
live and work in a reasonably just and decent world. Americans are gloomy about
the decency of their culture and the justice of their politics; it may be one of
the supreme ironies of our time that they are often more satisfied with their
employer than with their community. If true, Marx has been stood squarely on his
head: Life has become more alienating than work.
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Public Interest Fall 1995
As Michael Novak has observed, the corporation is an important mediating
structure that stands, like the family and the church, between the individual
and the state. It constitutes not simply a utilitarian arrangement but a
community of sorts that shapes human conduct. People, of course, know the
difference between a profit-making firm, on the one hand, and a child-rearing
family or a soul-comforting church, on the other. They have different
expectations from each. But no economist should suppose that since firms are
about profits, that is all they are about, anymore than he should imagine that
because families are about sex, that is all they are about. Corporations are not
vehicles for realizing the ideal society; one of their good features, as Paul
Johnson has noted, is that they attach little value to Utopian causes. But they
are systems of human action that cannot for long command the loyalty of their
members if their standards of collective action are materially lower than those
of their individual members.
Capitalism is not irrelevant to morality: It assumes the existence of certain
moral dispositions, strengthens some of these, and threatens still others. The
problem for capitalists is to recognize that, while free markets will ruthlessly
eliminate inefficient firms, the moral sentiments of man will only gradually and
uncertainly penalize immoral ones. But, while the quick destruction of
inefficient corporations threatens only individual firms, the slow anger at
immoral ones threatens capitalism--and thus freedom--itself.
1 Why, then, does price haggling still occur in the sale of automobiles? In
part, it is because the purchaser, as well as the dealer, has something to sell.
The purchaser usually has a used car to trade in and has little incentive to set
a fixed price for it. He bargains over what the trade-in is worth and SO the
dealer must bargain over what the new car is worth. Even here, however, some
dealers are experimenting with fixed-price sales.
LANGUAGE: ENGLISH
JOURNAL-CODE: PBI
AVAILABILITY: Full text online. Photocopy available from ABI/INFORM 6081.00
ABI-ACC-NO: 01096057
LOAD-DATE: March 26, 1996
PAGE
2
1ST STORY of Level 1 printed in FULL format.
Copyright 1997 UMI, Inc.; ABI/INFORM
Copyright British Sociological Association Publications Ltd
1997
Sociology: The Journal of the British Sociological
Association
February 1997
SECTION: Vol. 31, No. 1 Pg. 190-191; ISSN: 0038-0385; CODEN: OPRQAK
LENGTH: 643 words
HEADLINE: From Post-Industrial to Post-Modern Society: New Theories of the
Contemporary World
BYLINE: Levitas, Ruth
BODY:
Krishan Kumar, From Post-Industrial to Post-Modern Society: New Theories of
the Contemporary World, Oxford: Blackwell, 1996, 40.00 & 11.99, 253+viii pp.
In 1978, Kumar discussed theories of post-industrial society in Prophecy and
Progress: The Sociology of Industrial and Post-Industrial Society. This book is
a sequel to that earlier account, examining revived ideas of 'the information
society', as well as post-Fordism and postmodernism. Reflecting Kumar's abiding
interest in utopianism, the utopian and anti-utopian inflections of contemporary
theories are again a recurrent theme. The different accounts of the
peculiarities of (post) modern times are presented with clarity and lucidity. The
book undoubtedly succeeds in its primary aims, which are firstly to describe the
different ways in which theorists have tried to make sense of the sense that
there is something qualitatively new about the present age, whether that be
called late modernity, postmodernity, the information age, late capitalism or
new times, and secondly to note the objections that have been levelled at these
various accounts. Kumar writes much better than most sociologists; students and
teachers will find this book a relief. So will anyone wanting an overview of
current theories.
In 1978, I reviewed Prophecy and Progress for an in-house review journal at
the institution where I then worked; I can't find the review, but I remember how
exciting I found it. This book moved me less. Perhaps this in itself is a
symptom of the times. But I think it is also because in the end Kumar adopts
rather a non-committal position in relation to the theories he is discussing,
and is insufficiently attentive to the implications of the different terms which
they deploy. He says that he aims only to give a clear account of and to raise
critical questions about the theories under discussion, not to engage in a
thorough critique. There are of course points in the discussion which go beyond
this. Among these is the discussion of the distinction between postmodernism and
postmodernity-collapsing in the end because of the way in which even those
theorists like Jameson who seek to separate them have grave difficulty in
preventing the material and the discursive from collapsing into each other.
Kumar's sympathies appear to rest more with Jameson and Harvey than with some
others. But his general evaluation of all the theories is that they are
commendable in their ambition, that they do speak to our condition, but they are
one-sided and exaggerated. A more definite, more provocative stance would have
given the book an overall argument and an added edge.
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Copyright 1997 The Daily Yomiuri
The Daily Yomiuri
September 10, 1997, Wednesday
SECTION: Pg. 7
LENGTH: 1094 words
HEADLINE: Havel expresses hope for global future
BYLINE: Toshiaki Arai i Yomiuri
DATELINE: PRAGUE
BODY:
World figures convened here for a three-day international forum last week to
discuss a variety of issues of concern to the global community, including human
rights, religion, the environment, poverty and national sovereignty.
Forum 2000, which concluded on Sept. 6, was initiated by Czech President
Vaclav Havel and involved debates by 60 prominent scholars and experts.
Participants agreed to hold the conference periodically in upcoming years.
In his opening address, Havel offered some solutions to the problems of
poverty, pollution, human rights abuses and other issues discussed at the
conference.
In a question-and-answer session with The Yomiuri Shimbun, he recounted his
country's achievements since the bloodless 1989 "Velvet Revolution" and offered
his opinions on the likely state of the world in the 21st century.
Can you briefly recount events in your country in the eight years since the
end of Communist rule?
Havel: As far as the main issues are concerned, our country has taken the
course that we all hoped it would when we fought for the fall of communism. That
is to say, we have built democratic institutions, we enjoy freedom of the press
and we have introduced a market economy.
However, it is happening in a slower and more complex way than we had
anticipated in the early post-revolution months, which were filled with
enthusiasm. Many problems surfaced, problems which are a legacy of the Communist
era, and have manifested themselves as a general demoralization (of the
populace).
On the other hand, a number of things have been accomplished. For instance,
we have functional democratic institutions, we have held several free elections
and we have privatized most of the economy There have been some difficulties
transforming the economy-which was formerly state-controlled--into a
pluralistic economy based on market principles.
What importance will joining the North Atlantic Treaty Organization and the
European Union have for the Czech Republic and the Czech people?
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The Daily Yomiuri, September 10, 1997
I believe it is an issue of enormous importance, however, one that is not
instantly visible. The importance lies in the long-term nature of the matter.
We have learned a lesson from the dramatic and complex history of our
country, a nation that lies in the heart of Europe. That history teaches us how
important it is for us to be firmly and equitably anchored in the Pan-European
order, and to be an integral part of its collective defense structures. From
this perspective, I believe this is a truly historic opportunity, even though at
this point in time--and I am speaking about not only hours, days or months, but
years it will cost us rather than bring us instant reward. But it is necessary
to take this path for the benefit of future generations.
At the Forum 2000 conference, you said that the world was becoming
increasingly atheistic. Can you elaborate on that?
When I spoke about the atheistic character of our civilization, I did not
mean the number of people who do or do not believe in God. I was referring to
what links the entire globe: banking systems, economic principles,
communications networks, fashion, forms of popular culture, advertising and so
on--items that you can find anywhere in the world and they will be the same.
This is something that is, in my opinion, based on materialistic principles and
A
ideas, and what I refer to as atheistic.
What I am referring to is like a peel or a shell around the globe that
creates the atmosphere of our lives. I was not talking about what is happening
in individuals' souls. I dare say that the increased stress of religion on
peoples' individuality and originality that we witness today is perhaps brought
on by contemporary society and an attempt to oppose its unifying pressure.
What about the purported clash of the world's civilizations?
This is part of a theme that I have been contemplating, which is also a topic
of this conference.
I would not call it a clash of civilizations, since I believe we live in one
single, common civilization. I would refer to it as a clash between different
religious, cultural and even societal traditions. Since the end of colonial rule
and the bipolar division of the globe, our world has certainly become bipolar In
the cultural sense.
If we consider the enormous growth of the global population, we come to
understand that one of the threats we are facing in today's world is the one you
ask about.
However, I do not think it is unavoidable. One way of fighting it is to
emphasize whatever themes the various religions have in common, and dismiss
their differences. I think the various cultures have a great deal in common, but
it is necessary to look at their roots. But that in itself may not be enough, we
need to do a lot more to avert such a conflict or at least to resist it.
In your opinion, are the ideas of democracy and market economics interpreted
the same universally, or are they defined differently in Asia and Europe?
Of course, there are major differences according to history and tradition.
Nevertheless, it seems to me that we are heading toward a world that is going
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The Daily Yomiuri, September 10, 1997
to adopt both a democratic political establishment- with natural variants and a
market economy. To a great extent, a market economy has already been adopted by
the entire world, with a few exceptions,
I believe the right thing to do is to build and develop a democratic
political establishment, while trying to respect customs, rules, ethical norms
and the traditions of different countries and continents. Nowhere in the world
should democracy be perceived as an import from Europe or America. Instead, it
A,*
should be viewed as the fairest form of political establishment available.
Do you think mankind will be able to cope with the problems that we face in
the next century?
Of course, I am not clairvoyant and I do not know what is going to happen.
What I do know is that we must do all we can to first, recognize, describe and
understand a situation, and second, to find its cause and look for ways to avert
future threats.
I have not lost hope that things are going to turn out well, and toward that,
I would like to make a small contribution. The conference I have organized here
in Prague is a small contribution.
What about your health and home life--two items that are of interest to the
entire world?
I am not sure they are of interest to the entire world, but I will answer you
and with good news. Several examinations recently have shown that I am healthy.
And my marriage is a happy one.
LOAD-DATE: September 10, 1997
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27TH STORY of Level 1 printed in FULL format.
Copyright 1997 The New York Times Company
The New York Times
December 15, 1997, Monday, Late Edition - Final
SECTION: Section A; Page 23; Column 2; Editorial Desk
LENGTH: 890 words
HEADLINE: It's Immoral to Buy the Right to Pollute
BYLINE: By Michael J. Sandel; Michael J. Sandel, a professor of government at
Harvard, is the author of "Democracy's Discontent: America in Search of a Public
Philosophy."
DATELINE: CAMBRIDGE, Mass.
BODY:
At the conference on global warming in Kyoto, Japan, the United States found
itself at loggerheads with developing nations on two important issues: The
United States wanted those countries to commit themselves to restraints on
emissions, and it wanted any agreement to include a trading scheme that would
let countries buy and sell the right to pollute.
The Administration was right on the first point, but wrong on the second.
Creating an international market in emission credits would make it easier for us
to meet our obligations under the treaty but undermine the ethic we should be
trying to foster on the environment.
Indeed, China and India threatened to torpedo the talks over the issue. They
were afraid that such trading would enable rich countries to buy their way out
of commitments to reduce greenhouse gases. In the end, the developing nations
agreed to allow some emissions trading among developed countries, with details
to be negotiated next year.
The Clinton Administration has made emission trading a centerpiece of its
environmental policy. Creating an international market for emissions, it argues,
is a more efficient way to reduce pollution than imposing fixed levels for each
country.
Trading in greenhouse gases could also make compliance cheaper and less
painful for the United States, which could pay to reduce some other country's
carbon dioxide emissions rather than reduce its own. For example, the United
States might find it cheaper (and more politically palatable) to pay to update
an old coal-burning factory in a developing country than to tax gas-guzzling
sports utility vehicles at home.
Since the aim is to limit the global level of these gases, one might ask,
what di fference does it make which places on the planet send less carbon to the
sky?
It may make no difference from the standpoint of the heavens, but it does
make a political difference. Despite the efficiency of international emissions
trading, such a system is objectionable for three reasons.
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The New York Times, December 15, 1997
First, it creates loopholes that could enable wealthy countries to evade
their obligations. Under the Kyoto formula, for example, the United States could
take advantage of the fact that Russia has already reduced its emissions 30
percent since 1990, not through energy efficiencies but through economic
decline. The United States could buy excess credits from Russia, and count them
toward meeting our obligations under the treaty.
Second, turning pollution into a commodity to be bought and sold removes the
moral stigma that is properly associated with it. If a company or a country is
X
fined for spewing excessive pollutants into the air, the community conveys its
judgment that the polluter has done something wrong. A fee, on the other hand,
makes pollution just another cost of doing business, like wages, benefits and
rent.
The distinction between a fine and a fee for despoiling the environment is
not one we should give up too easily. Suppose there were a $100 fine for
throwing a beer can into the Grand Canyon, and a wealthy hiker decided to pay
$100 for the convenience. Would there be nothing wrong in his treating the fine
as if it were simply an expensive dumping charge?
Or consider the fine for parking in a place reserved for the disabled. If a
busy contractor needs to park near his building site and is willing to pay the
fine, is there nothing wrong with his treating that space as an expensive
parking lot?
In effacing the distinction between a fine and a fee, emission trading is
like a recent proposal to open carpool lanes on Los Angeles freeways to drivers
without passengers who are willing to pay a fee. Such drivers are now fined for
slipping into carpool lanes; under the market proposal, they would enjoy a
quicker commute without opprobrium.
&
A third objection to emission trading among countries is that it may
undermine the sense of shared responsibility that increased global cooperation
requires
Consider an illustration drawn from an autumn ritual: raking fallen leaves
into great piles and lighting bonfires. Imagine a neighborhood where each family
agrees to have only one small bonfire a year. But they also agree that families
can buy and sell their bonfire permits as they choose.
The family in the mansion on the hill buys permits from its neighbors
paying them, in effect, to lug their leaves to the town compost heap. The market
works, and pollution is reduced, but without the spirit of shared sacrifice that
might have been produced had no market intervened.
Those who have sold their permits, and those who have bought them, come to
regard the bonfires less as an offense against clean air than as a luxury, a
status symbol that can be bought and sold. And the resentment against the family
in the mansion makes future, more demanding forms of cooperation more difficult
to achieve.
Of course, many countries that attended the Kyoto conference have already
made cooperation elusive. They have not yet agreed to restrict their emissions
at all. Their refusal undermines the prospect of a global environmental ethic as
surely as does our pollution trading scheme.
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The New York Times, December 15, 1997
But the United States would have more suasion if these developing countries
could not rightly complain that trading in emissions allows wealthy nations to
buy their way out of global obligations.
GRAPHIC: Drawing (Wesley Bedrosian)
LANGUAGE: ENGLISH
LOAD-DATE: December 15, 1997
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Copyright 1997 Information Access Company, a Thomson Corporation Company;
IAC (SM) Industry Express (SM) ;
Copyright 1997 National Review Inc.
National Review
September 1, 1997
SECTION: VOL. 49; No. 16; Pg. 38
LENGTH: 2755 words
HEADLINE: Reinventing Socialism: The triumph of neosocialism is the defining
characteristic of politics today.
BYLINE: MURDOCH, RUPERT
BODY:
THE 1990s increasingly reminds me of the 1890s that decade, exactly one
hundred years ago, when Joseph Pulitzer was directing the New York World from
his yacht and Lord Northcliffe was founding the Daily Mail. That, too, was an
era of new technology and new markets when peace seemed universal and everything
seemed possible. The French still call it la Belle Epoque That world was mostly
divided between the great European powers. But they were, after all, liberal
powers. They generally operated according to a rule of law, certainly more SO
than most of their subjects had seen before or, in all too many cases, have
seen since.
The other day, someone showed me this quotation from a book called The
History of the Freedom of Thought by the great Cambridge historian J. B. Bury,
published at the tail end of that era, in 1913 "The struggle of reason against
A
authority has ended in what appears to be a decisive and permanent victory for
liberty. "
Sound familiar? How about this?
"Less than 75 years after it officially began, the contest between socialism
and capitalism is over: capitalism has won." That's from Robert Heilbroner, the
author and economist at New York's New School, writing in The New Yorker in
1989.
or this?
"The century that began full of self confidence in the ultimate triumph of
Western liberal democracy seems at its close to be returning full circle to
where it started: not to an end of ideology' or a convergence between
capitalism and socialism, as earlier predicted, but to an unabashed victory of
economic and political liberalism. The triumph of the West, of the Western idea,
is evident first of all in the total exhaustion of viable systematic
alternatives to Western liberalism. " That comes from Francis Fukuyama's
much-discussed essay "The End of History."
The note of liberal capitalist triumphalism is identical in all three
quotations. And, frankly, it's chilling. Because look what happened last time.
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National Review September 1, 1997
In 1914, the year after Bury's book appeared, the First World War broke out
in Europe. It was followed by the Russian Revolution, the invention of
totalitarianism, Hitler's rise to power, the Second World War, the Cold War, the
Chinese Cultural Revolution all this entailing tens of millions of deaths.
Let's be clear about this. The first half of this century at least, was an
$
unspeakable tragedy.
We naturally hope that today's liberal capitalist triumphalists are right.
Indeed, many of us have contributed to that triumphalism. But you have to
wonder. Could anything unforeseen, unexpected, be coming at us today?
Caspar Weinberger's book The Next War, published last year, sketched out
several alarming scenarios for a sudden collapse in world order over the next
few years. Some of these scenarios are triggered by rogue countries that acquire
nuclear weapons. But all of them are made possible by an American military and
intelligence build-down that is, of course, already under way.
It is easy enough to shrug off this sort of exercise as far-fetched and
alarmist. But, of course, practically no one in 1913 had heard of Sarajevo or
would have thought that a political murder there could plunge the world into
fifty years of devastation.
(Incidentally, a foreign policy scenario that everyone does seem to have
heard of is the idea that China is going to be our enemy in the twenty-first
century. To be sure, it is theoretically possible that any two countries might
come into conflict. But it seems to me that to have a serious rivalry, you have
to have serious, ineluctable conflicts of interest. Where are these ineluctable
conflicts of interest with the Chinese? Are they showing any real interest in
the world beyond their immediate environs -- other than to trade with it?
Not that trade will solve everything. It was President Reagan's military
build-up, rather than President Ford's detente, that broke the will of the
Soviet Union. But China is not the Soviet Union. It is not the country that went
into Czechoslovakia, Afghanistan, and Angola, that built a worldwide navy, that
strove for nuclear parity.
So I say, give trade a chance and give the Chinese credit for the almost
unimaginable progress they have made in the last twenty years.)
NO, the danger that I want to discuss is not external, not foreign, and not
military It is operating within our own societies, right under our noses. Let
me put it in this way: If socialism is dead, why won't it lie down?
Or, in terms of my own petty preoccupations: If we're living in such a
paradise of free enterprise, why can't I get my Fox TV news service onto more
American cable systems and compete?
Well, the answer in both cases is the same. Socialism is not dead, but alive
and well and living in the regulatory agencies. It is because of regulation
and the monopolies and oligopolies it inevitably fosters that there are such
formidable barriers to entry in the TV news business.
The classical definition of socialism, of course, is that contained in clause
four of the old British Labour Party's constitution: public ownership of the
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National Review September 1, 1997
means of production, distribution, and exchange. Socialism in that sense is
dead. No one talks about nationalizing industries any more.
But then no one has to nationalize industries because the extraordinary
growth of regulation has given effective control of them to the government
without its having to assume the hassle of ownership. Socialism has effectively
reinvented itself. We can call it "Neosocialism." And it's right here.
Anyone who owns or manages a business must be aware of this neosocialism.
They find hiring, firing, buying, selling, just trying to operate, vastly more
complicated than they were fifteen or twenty years ago.
We can even see it in our hobbies. I have been involved in a small way with
ranching cattle virtually all my adult life, first in Australia and now also in
California. In that time, the change in what you can do and what you can't do
has been simply extraordinary whether it is digging a well or trying to get
rid of a gopher. Farmers, whether they be in the United States, Europe, or
Australia, now spend a day a week in their offices filling in forms.
Farmers in the U.S. are now outnumbered by employees of the Department of
Agriculture. (Sure, they have computers to help them cope. But are they any
further ahead? And are we as a society further ahead? Maybe this is part of the
answer to the Great Computer Conundrum that you hear economists discussing: why
the spread of computers does not seem to have increased service-sector
productivity very much.)
Here in the U.S., of course, we have a characteristically American touch:
regulation through litigation. Trial lawyers (with a little help from the way
legislators write the laws) become in effect private vigilantes, enforcing
neosocialist writ. It takes a lawyer a whole village of lawyers to create
the ludicrous situations we now see in employment law.
For example: "In January, a former truck driver for Ryder Systems Inc. won a
$ .5-million jury verdict after claiming under the Americans with Disabilities
Act that Ryder unfairly removed him from his position after he suffered an
epileptic seizure, saying that his health condition could be a safety hazard.
During the time he was blocked from his job at Ryder, the driver was hired by
another firm, had a seizure behind the wheel, and crashed into a tree."
(I am not making this up. It was a front-page story in the Washington Post on
April 8 of this year.)
Maybe 30 or 40 per cent of that $ 5.5 million will go to the lawyers in
expenses and contingent fees. So the profit motive is in good shape, but private
enterprise less SO.
Why do we hear SO little about this surging neosocialism? One reason is that
it is quite new. The regulatory revolution in the United States really only
began in the 1960s. Many people now prominent in the media and public life were
already adults when it started. Yet it may take a new generation to discern the
pattern beneath a phenomenon as important as neosocialism.
Socialism was advanced the first time under the banner of efficiency. It was
supposed to be scientific. Planning was supposed to be rational. The waste of
capitalism epitomized by the Great Depression was to be eliminated.
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National Review September 1, 1997
Today, neosocialism is being advanced, under the banner not of efficiency,
but of equity. It is supposed to make things fairer, more just, according to
some non-economic scheme of values, as in the case of the environment. And this
turns out to be an argument that is very difficult to resist.
The common thread, of course, is that the government still gets to tell the
rest of us what to do. It has just changed its rationale and wrapped itself in a
new all-embracing doctrine of political correctness. But it still asserts that
individuals cannot be relied on to make their own decisions. Or as Chairman Mao
said, "Put politics in command."
What is the underlying pattern behind this neosocialism?
It seems to me that the central sociological fact about modern societies is
the rise of what Irving Kristol has called "the New Class" that group that
makes its living from running the government and its ancillary manifestations.
In Kristol's view, the New Class includes career professional politicians, who
are a relatively recent development in democracies. It includes the government
bureaucracy, which in most countries is now large enough to constitute a
special-interest group of its own
perhaps the largest group of all.
(For the record, there were more people employed in the federal regulatory
apparatus at the end of President Bush's term than at the end of President
Carter's. President Reagan's efforts had simply been erased. Today, of course,
the number is higher.)
The New Class also extends to most of the educational establishment, which is
in the business of extracting tax money from the rest of us. It has a strategic
alliance with groups like the trial bar and other lawyers, who need legislative
support and patronage. And it embraces members of the media, both for cultural
reasons and because there is a constant interchange of personnel.
Significantly, the New Class is beginning to be noticed as the force behind
neosocialism. There is a phenomenon in the history of science called
synchronicity in which several researchers independently stumble on a new
discovery. I have cited Irving Kristol already. Also, while I was writing this,
John O'Sullivan in NATIONAL REVIEW April 21, 1997 explained the GOP's current
troubles as a result of its servitude to New Class orthodoxy. Synchronicity is
usually a sign that the discoverers are really onto something -- like seconding
a motion.
How does the New Class get its way? Sometimes you see the groups making it up
acting together dramatically. For example, the two main funders of the so-called
Taxpayers Against 187, which tried to stop Californians from voting to deny
illegal immigrants certain government benefits, were the California Teachers
Association and the California Public Employees Union. To both unions, of
course, illegal immigrants mean more clients -- and more reasons to demand more
money from taxpayers.
They lost in the ballot box. Significantly, though, Prop. 187 has since been
tied up in the courts. Whatever you think of the measure itself, that is a
striking expression of the government's (and the New Class's) power to frustrate
the popular will.
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National Review September 1, 1997
It is the self-interest of this bureaucratic class that drives neosocialism.
These are the people who benefit from proliferating regulations because they
administer them. They want to see the nanny state, because they are the nannies.
They want to see "politics in command," because they are the commanders
elected and unelected.
If we had been having this conversation in the 1890s, we would probably have
been talking about the Rise of the Proletariat, the labor unions, and the
Socialist parties. Today, the rise of the New Class is just as ominous. As in
the 1890s, we don't really know where it will take us. But we can see reason for
real concern.
To begin with, the New Class is an international phenomenon. Take the
European Union -- this is a quintessential New Class creation. It is basically a
supra-national bureaucracy built above the heads of the national legislatures.
It is constantly having to circumvent national insurrections. But its impact on
everyday life in those national communities is tremendous through ubiquitous and
detailed regulation.
For example, EU regulations dictate that British farmers not allow their
fields to be used as parking lots for country fairs because land "set aside"
under an EU program to reduce production cannot be used for commercial purposes.
This applies even if the car park is free.
British commercial growers of oak -- a patriotic symbol in England -- can't
use British acorns because Brussels says they're not pure enough. Caerphilly
cheese is no longer made in Caerphilly because EU rules required uneconomic
production changes. It is illegal to sell small Cox's orange pippin apples
Britain's most famous apple -- because EU regulations require apples to be more
than 55 millimeters in diameter.
All Wellington boots sold in Britain must come with a user's manual which
includes this advice: "Each boot should be tried for fitting before use.
Now, 18,000 European Union officials spend their time on this sort of
invasive nonsense. They, incidentally, were not tried for fitting before use.
The New Class is also a party political phenomenon. Many commentators are
puzzled by the success of Center - Left parties -- in Britain, the United
States, Canada -- at a time when capitalism was supposed to have triumphed.
Well, one answer is that capitalism has not triumphed. Neosocialism is
triumphing. And the parties that are most firmly based on the new social force
that underlies it are reaping the benefits.
In fact, one of the interesting things about recent politics is how
completely the traditional parties of the Center - Right which are also,
after all, run by professional politicians -- have been subverted by the New
Class and its values.
George Bush, who used to say, "I'm a government guy," presided over a vast
rebound in regulation.
I guess he wasn't joking.
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National Review September 1, 1997
In Britain you see the utter inability of the Conservative Party, at least
until now, to handle the gulf between the grass roots' and the elite's views of
the European Union.
Some of you may have noticed that our London Sun endorsed the Labour Party in
the recent election. One reason is that Prime Minister Tony Blair is a
much-needed new broom. The Blair party repositioned itself brilliantly as the
voice not of the old working class, but of the frustrated lower middle class
which Margaret Thatcher had captured and John Major abandoned. The Conservative
government was simply not giving us -- and more to the point our readers much
to get excited about.
What, then, is to be done?
The current situation is not particularly stable. Neosocialism is prone to
economic breakdown, just as the old model was. It confronts an inexorable
reality. If the farmer is filling out forms, he cannot be raising cattle -- let
alone getting rid of gophers.
For another thing, there are obvious signs that New Class monopolization of
politics causes the party structure to break down, as people look for new
vehicles to express their discontents. New parties are making waves in
Australia, New Zealand, Canada, Austria, Italy, and France. In Britain --
unnoticed over here, and indeed over there amid the carnage of the last election
a small anti - European Union party cost the Conservatives perhaps twenty
seats. And in the U.S., of course, we have seen Ross Perot.
Not all these parties will amount to anything, and no doubt some are led by
undesirables of one type or another. But, as a head of a mass-media business, I
tell you: something is stirring out there.
Still -- what is to be done?
Let me put it this way. As a boy in Australia during World War II, I dimly
remember the headlines about the fall of Singapore where the great guns
notoriously faced out to sea. Nobody had ever imagined an attack could come
overland. Nobody imagined this new neosocialist attack on life, liberty, and the
pursuit of happiness, either.
Let me suggest that, as a first step, all of us who believe in private
enterprise and individual responsibility make sure our guns are facing the right
way.
LANGUAGE: ENGLISH
LOAD-DATE: August 14, 1997
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5TH STORY of Level 1 printed in FULL format.
Copyright 1997 Council on Foreign Relations, Inc.
Foreign Affairs
September, 1997 /October, 1997
SECTION: 75TH ANNIVERSARY ISSUE; Pg. 2
LENGTH: 3803 words
HEADLINE: Has Democracy a Future?
BYLINE: Arthur Schlesinger, Jr.; ARTHUR SCHLESINGER, JR., is a writer,
historian, and former Special Assistant to President Kennedy. This article is
based on the James Bryce Lecture on the American Commonwealth, to be delivered
at the Institute of United States Studies of the University of London in
September.
BODY:
THROUGH A GLASS DARKLY
THE TWENTIETH century has no doubt been, as Isaiah Berlin has said, "the most
terrible century in Western history. But this terrible century has -- or
appears to be having -- a happy ending. As in melodramas of old, the maiden
democracy, bound by villains to the railroad track, is rescued in the nick of
time from the onrushing train. As the century draws to a close, both major
villains have perished, fascism with a bang, communism with a whimper.
A season of triumphalism has followed. Two centuries ago Kant argued in his
Idea for a Universal History that the republican form of government was destined
to supersede all others. At last the prophecy seemed on the way to fulfillment.
Savants hailed "the end of history. "For the first time in all history,
President Clinton declared in his second inaugural address, "more people on this
planet live under democracy than dictatorship.' " The New York Times, after
careful checking, approved: 3.1 billion people live in democracies, 2.66 billion
do not. According to end-of-history doctrine as expounded by its prophet, the
minority can look forward to "the universalization of Western liberal democracy
as the final form of human government."
For historians, this euphoria rang a bell of memory. Did not the same radiant
hope accompany the transition from the nineteenth to the twentieth century? This
most terrible hundred years in Western history started out in an atmosphere of
optimism and high expectations. People of good will in 1900 believed in the
inevitability of democracy, the invincibility of progress, the decency of human
nature, and the coming reign of reason and peace. David Starr Jordan, the
president of Stanford University, expressed the mood in his turn-of-the-century
book The Call of the Twentieth Century. "The man of the Twentieth Century,'
Jordan predicted, "will be a hopeful man. He will love the world and the world
will love him."
Looking back, we recall a century marked a good deal less by love than by
hate, irrationality, and atrocity, one that for a long dark passage inspired the
gravest forebodings about the very survival of the human race. Democracy,
striding confidently into the 1900s, found itself almost at once on the
defensive. The Great War, exposing the pretension that democracy would
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Foreign Affairs, September, 1997
guarantee peace, shattered old structures of security and order and unleashed
angry energies of revolution revolution not for democracy but against it.
Bolshevism in Russia, Fascism in Italy, Nazism in Germany, militarism in Japan
all despised, denounced, and, wherever they could, destroyed individual rights
and the processes of self-government.
In another decade the Great Depression came along to expose the pretension
that democracy would guarantee prosperity. A third of the way into the century,
democracy seemed a helpless thing, spiritless, paralyzed, doomed. Contempt for
democracy spread among elites and masses alike: contempt for parliamentary
dithering, for "talking-shops," for liberties of expression and opposition, for
bourgeois civility and cowardice, for pragmatic muddling through.
In another decade the Second World War threatened to administer the coup de
grace. Liberal society, its back to the wall, fought for its life. There was
considerable defeatism in the West. The title of Anne Morrow Lindbergh's 1940
bestseller proclaimed totalitarianism The Wave of the Future. It was, she wrote,
a "new, and perhaps even ultimately good, conception of humanity trying to come
to birth. Hitlerism and Stalinism were merely "scum on the wave of the future
The wave of the future is coming and there is no fighting it." By 1941 only
about a dozen democracies were left on the planet.
The political, economic, and moral failures of democracy had handed the
initiative to totalitarianism. Something like this could happen again. If
liberal democracy fails in the 21st century, as it failed in the twentieth, to
construct a humane, prosperous, and peaceful world, it will invite the rise of
alternative creeds apt to be based, like fascism and communism, on flight from
freedom and surrender to authority.
After all, democracy in its modern version representative government,
party competition, the secret ballot, all founded on guarantees of individual
rights and freedoms is at most 200 years old. A majority of the world's
inhabitants may be living under democracy in 1997, but democratic hegemony is a
mere flash in the long vistas of recorded history. One wonders how deeply
democracy has sunk roots in previously nondemocratic countries in the years
since the collapse of the totalitarian challenges. Now the democratic adventure
must confront tremendous pent-up energies that threaten to blow it off course
and even drive it onto the rocks.
THE LAW OF ACCELERATION
MUCH of this energy is pent up within democracy itself. The most fateful
source in the United States is race. "The problem of the twentieth century,
W.E.B. Du Bois observed in 1900, "is the problem of the color line. His
prediction will come to full flower in the 21st century. Minorities seek full
membership in the larger American society. Doors slammed in their faces drive
them to protest. The revolt against racism has taken time to gather strength.
White America belatedly awakens to the cruelties long practiced against nonwhite
peoples, and the revolt intensifies. As Tocqueville explained long ago,
"Patiently endured SO long as it seemed beyond redress, a grievance comes to
appear intolerable once the possibility of removing it crosses men's minds. For
the mere fact that certain abuses have been remedied draws attention to others,
and they now appear more galling; people may suffer less, but their sensibility
is exacerbated."
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Foreign Affairs, September, 1997
There are other pent-up energies. Modern democracy itself is the political
offspring of technology and capitalism, the two most dynamic that is to say,
destabilizing forces loose in the world today. Both are driven ever onward by
self-generated momentum that strains the bonds of social control and of
political sovereignty.
Technology created the clock, the printing press, the compass, the steam
engine, the power loom, and the other innovations that laid the foundation for
capitalism and that in time generated rationalism, individualism, and democracy.
At first technological advance was unsystematic and intermittent. Soon it was
institutionalized. "The greatest invention of the nineteenth century," said
Alfred North Whitehead, "was the invention of the method of invention."
In the twentieth century, scientific and technological innovation increased
at an exponential rate. Henry Adams, the most brilliant of American historians,
meditated on the acceleration of history. "The world did not double or treble
its movement between 1800 and 1900," Adams wrote in 1909, "but, measured by any
standard
the tension and vibration and volume and so-called progression of
society were fully a thousand times greater in 1900 than in 1800; -- the force
had doubled ten times over, and the speed, when measured by electrical standards
as in telegraphy, approached infinity, and had annihilated both space and time. "
Nothing, Adams thought, could slow this process, for "the law of acceleration
cannot be supposed to relax its energy to suit the convenience of man.
The law of acceleration now hurtles us into a new age. The shift from a
factory-based to a computer-based economy is more traumatic even than our
great-grandparents' shift from a farm-based to a factory-based economy. The
Industrial Revolution extended over generations and allowed time for human and
institutional adjustment. The Computer Revolution is far swifter, more
concentrated, and more drastic in its impact.
HYPERINTERACTIVE STATE
THE COMPUTERIZED world poses problems for democracy. Where the Industrial
Revolution created more jobs than it destroyed, the Computer Revolution
threatens to destroy more jobs than it creates. It also threatens to erect new
and rigid class barriers, especially between the well-educated and the
ill-educated. Economic inequality has already grown in the United Stares to the
point where disparities are greater in egalitarian America than in the
class-ridden societies of Europe. Felix Rohatyn, the investment banker and
rescuer of a bankrupt New York City, speaks of the "huge transfers of wealth
from lower-skilled middle-class workers to the owners of capital assets and to a
new technological aristocracy." Those who skip or flunk the computer will fall
into the Blade Runner proletariat, a snarling, embittered, violent underclass.
The computer will also affect the procedures of democratic politics. James
Madison in The Federalist Papers distinguished between "pure democracy,' by
which he meant a system in which citizens assemble and administer the government
in person, and a republic, by which he meant a system in which the majority
expresses its will through "a scheme of representation." " For most of American
history, "pure democracy" was necessarily limited to town meetings in small
villages. Now the interactivity introduced by the Computer Revolution makes
"pure democracy" technically feasible on a national scale.
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Brian Beedham in an article in the December 21, 1996, Economist applauds this
development, claiming representative democracy is "a half-finished thing." Every
citizen, Beedham argues, is entitled to an equal say in the conduct of public
affairs. The rise of public opinion polls, focus groups, and referendums
suggests popular demand for a finished democracy. With a nation of computers
plugged into information and communication networks, "full democracy" is just
around the corner. Full democracy, pure democracy, plebiscitary democracy,
direct democracy, cyberdemocracy, the electronic town hall: under whatever name,
is this a desirable prospect?
Perhaps not. Interactivity encourages instant responses, discourages second
thoughts, and offers outlets for demagoguery, egomania, insult, and hate. Listen
to talk radio! In too interactive a polity, a "common passion," as Madison
thought, could sweep through a people and lead to emotional and ill-judged
actions. Remembering the explosion of popular indignation when President Truman
fired General Douglas MacArthur, one is grateful that the electronic town hall
was not running the country in 1951. The Internet has done little thus far to
foster the reasoned exchanges that in Madison's words "refine and enlarge the
public views."
UNBRIDLED CAPITALISM
WHILE THE onrush of technology creates new substantive problems and promises
to revise the political system through which we deal with them, the onrush of
capitalism may have even more disruptive consequences. Let us understand the
relationship between capitalism and democracy. Democracy is impossible without
private ownership because private property resources beyond the arbitrary
reach of the state provides the only secure basis for political opposition
and intellectual freedom. But the capitalist market is no guarantee of
democracy, as Deng Xiaoping, Lee Kuan Yew, Pinochet, and Franco, not to mention
Hitler and Mussolini, have amply demonstrated. Democracy requires capitalism,
but capitalism does not require democracy, at least in the short run.
Capitalism has proved itself the supreme engine of innovation, production,
and distribution. But its method, as it careens ahead, heedless of little beyond
its own profits, is what Joseph Schumpeter called "creative destruction. " In its
economic theory, capitalism rests on the concept of equilibrium. In practice,
its very virtues drive it toward disequilibrium. This is the dilemma of
contemporary conservatism. The unfettered market conservatives worship
undermines the values stability, morality, family, community, work,
discipline, delayed gratification conservatives avow. The glitter of the
marketplace, the greed, the short-termism, the exploitation of prurient
appetites, the ease of fraud, the devil-take-the-hindmost ethos all these are
at war with purported conservative ideals. "Stationary capitalism, as
Schumpeter said, "is a contradiction in terms."
Even premier capitalists are appalled by what runaway capitalism has wrought.
If understanding of capitalism can be measured by success in making money out of
it, no one understands contemporary capitalism better than the financier and
philanthropist George Soros. "Although I have made a fortune in the financial
markets,' Soros writes, "I now fear that the untrammeled intensification of
laissezfaire capitalism and the spread of market values into all areas of life
is endangering our open and democratic society." The "uninhibited pursuit of
self-interest," Soros continues, results in "intolerable inequities and
instability."
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The Computer Revolution offers wondrous new possibilities for creative
destruction. One goal of capitalist creativity is the globalized economy. One
&
unplanned candidate for capitalist destruction is the nation-state, the
traditional site of democracy. The computer turns the untrammeled market into a
global juggernaut crashing across frontiers, enfeebling national powers of
taxation and regulation, undercutting national management of interest rates and
exchange rates, widening disparities of wealth both within and between nations,
dragging down labor standards, degrading the environment, denying nations the
shaping of their own economic destiny, accountable to no one, creating a world
economy without a world polity. Cyberspace is beyond national control. No
authorities exist to provide international control. Where is democracy now?
THE ASIAN SHIFT
THE END of the Eurocentric era raises further problems for democracy.
Self-government, individual rights, equality before the law are European
inventions. Now the age of the Pacific is upon us. The breakthrough of Japan in
the century coming to an end heralds the breakthrough of China and India in the
century ahead. The economic magnetism of Asia is already altering the contours
of the global economy, and foreshadows historic shifts in the planetary balance
of power
I am not greatly concerned about the "clash of civilizations" that worries
some thoughtful analysts. Civilizations are rarely unified. Countries within the
same civilization are more likely to fight with each other than to join in
monolithic assaults on other civilizations. But the impact of the rise of Asia
on the future of democracy is worth consideration. The Asian tradition, we are
told, values the group more than the individual, order more than argument,
authority more than liberty, solidarity more than freedom. Some Asian leaders,
notably Lee Kuan Yew of Singapore and Mahathir bin Mohamad of Malaysia, love to
contrast Asian discipline and stability with the disorder and decadence they
impute to the individualistic West. They denounce the attempt to hold Asian
countries to Western democratic standards as the new form of Western
imperialism.
Nevertheless, both India and Japan are functioning democracies. If the claim
that human rights are universal is proof of Western arrogance, the restriction
of those rights to Europe and the Americas brands non-Western peoples as lesser
breeds incapable of appreciating personal liberty and self-government, and that
is surely Western arrogance too. In fact, many Asians fight for human rights,
and at the risk of their freedom and their lives. "Why do we assume, asks
Christopher Patten, the last British governor of Hong Kong, "that Lee Kuan Yew
is the embodiment of Asian values rather than Daw Aung San Suu Kyi, the
courageous opposition leader under prolonged house arrest in Burma? A
pre-Tiananmen Square wall poster in Beijing proclaimed: "We cannot tolerate that
human rights and democracy are only slogans of the Western bourgeoisie and the
Eastern proletariat only needs dictatorship. In the words of the Indian
economist Amartya Sen, "The so-called Asian values that are invoked to justify
authoritarianism are not especially Asian in any significant sense. Chris
Patten concludes, "I think the Asian value debate is piffle. What are these
Asian values? When you home in on what one or two Asian leaders mean by them,
what they actually mean is that anyone who disagrees with me should shut up.
Still, the new salience of Asia on the world scene, the absence of historical
predilections for democracy, and the self-interest of rulers who see democracy
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as a threat to their power suggest a period of Asian resistance to the spread of
the democratic idea.
CULTURE LASHES BACK
THAT RESISTANCE will be reinforced by the defensive reaction around the
planet to relentless globalization a reaction that takes the form of
withdrawal from modernity. The world today is torn in opposite directions.
Globalization is in the saddle and rides mankind, but at the same time drives
people to seek refuge from its powerful forces beyond their control and
comprehension. They retreat into familiar, intelligible, protective units. They
crave the politics of identity. The faster the world integrates, the more-people
will huddle in their religious or ethnic or tribal enclaves. Integration and
disintegration feed on each other.
A militant expression of what Samuel Huntington calls cultural backlash is
the upsurge of religious fundamentalism. Islamic fundamentalism seems especially
hostile to freedom of expression, to women's rights, and, contrary to historical
Islam, to other religions. Nor is the fundamentalist revival confined to the
Third World. Many people living lives of quiet desperation in modern societies
hunger for transcendent meaning and turn to inerrant faith for solace and
support.
According to a 1995 Gallup poll, more than a third of American adults claim
that God speaks to them directly. One hopes it is the God of love rather than
the God of wrath on the other end of the line. Fundamentalism, carried too far,
has ominous implications for democracy. Those who believe they are executing the
will of the Almighty are notably harsh on nonbelievers. A fanatic, as the
Irish-American wit Finley Peter Dunne's Mr. Dooley once observed, "does what he
thinks th' Lord wud do if He only knew th' facts in th' case. Fanaticism is the
mortal enemy of democracy.
Back to the question: Has democracy a future? Yes, Virginia, it does, but not
the glorious future predicted in the triumphalist moment. Democracy has survived
the twentieth century by the skin of its teeth. It will not enjoy a free ride
through the century to come
In America, democracy must run a gauntlet of challenges. The most crucial is
still Du Bois' color line. Much depends on the availability of jobs, especially
in the inner city. If employment remains high, political action will mitigate
racial tensions, particularly when minorities understand that in the longer run
ethnic gerrymandering will reduce, not increase, their influence. Tension will
be mitigated even more by intermarriage. Sex and love between people of
different creeds and colors can probably be counted on to arrest the disuniting
of America.
The national capacity to absorb and assimilate newcomers will remain
powerful. The call of the mainstream will appeal far more than linguistic or
ethnic ghettos, above all to the young. English will continue as the dominant
language. Indeed, in essentials the national character will be recognizably much
as it has been for a couple of centuries. People seeking clues to the American
mystery will still read, and quote, Tocqueville.
Technology will rush on according to Adams' law of acceleration. But for all
the temptations of interactivity and all the unpopularity of elected
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officials, I doubt that Americans will sanction the degradation of
representative democracy into a system of plebiscites. Capitalism too will
careen on, through downs as well as ups, but laissez-faire ideology will
probably wane as capitalists discover the range of troubles the unfettered
market cannot solve, or makes worse. Unbridled capitalism, with low wages, long
hours, and exploited workers, excites social resentment, revives class warfare,
and infuses Marxism with new life. To move along constructive lines,
capitalism must subordinate short-term plans and profits to such long-term
social necessities as investment in education, research and development,
environmental protection, the extension of health care, the rehabilitation of
infrastructure, the redemption of the city. Capitalists are not likely to do
this by themselves. Long-term perspectives demand public leadership and
affirmative government.
In the world at large, can capitalism, once loose from national moorings, be
held to social accountability? Will international institutions acquire the
authority to impose, for example, a global SEC? This won't happen next week, but
continuing abuse of power will build a constituency for reform. Wars will still
disturb the tenor of life, but where in the past they generally arose from
aggression across national frontiers, the wars of the 21st century will more
likely be between ethnic, religious, ideological, or tribal factions within the
same country. Such wars are harder to define and to control. Let us pray that no
factional zealot gets hold of an atomic bomb.
Nation-states will continue to decline as effective power units: too small
for the big problems as the sociologist Daniel Bell has said, and too big for
the small problems. Despite this decline, nationalism will persist as the most
potent of political emotions. Whether democracy, a Western creation, can be
transplanted to parts of the world with different cultures and traditions is far
from certain. Yet I would expect a gradual expansion of democratic institutions
and ideals. It is hard to believe that the instinct for political and
intellectual freedom is limited to a happy few around the North Atlantic
littoral
Democracy in the 21st century must manage the pressures of race, of
technology, and of capitalism, and it must cope with the spiritual frustrations
and yearnings generated in the vast anonymity of global society. The great
strength of democracy is its capacity for self-correction. Intelligent diagnosis
and guidance are essential. "Perhaps no form of government," said the historian
and diplomat Lord Bryce, "needs great leaders so much as democracy. Yet even
the greatest of democratic leaders lack the talent to cajole violent,
retrograde, and intractable humankind into utopia. Still, with the failures of
democracy in the twentieth century at the back of their minds, leaders in the
century to come may do a better job than we have done of making the world safe
for democracy.
GRAPHIC: Picture, "The world must be safe for democracy. Woodrow Wilson at
Independence Hall, Philadelphia, July 4, 1914, CORBIS-BETTMANN
LANGUAGE: ENGLISH
LOAD-DATE: September 03, 1997
2000
A statement delivered by
H.E. VACLAV HAVEL
THE PRESIDENT OF THE CZECH REPUBLIC
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Conference FORUM 2000
September 4, 1997
Ladies and Gentlemen,
Distinguished Participants,
Allow me to welcome you all very cordially to the Czech Republic, to Prague and
Prague Castle. Thank you for accepting the invitation to the FORUM 2000 conference
- which is being held here and has been made possible especially thanks to the
foundations sponsoring and organizing it.
First, if you allow me, I would like to say a few words about our country, about this city
and this Castle. The Czech Lands, probably due mostly to their location in the centre
of Central Europe, have, since time immemorial, been a crossroads of diverse power
interests and currents of thought; it is certainly not a chance circumstance that in ancient
ages, as well as in more recent times, a number of great wars have erupted in this
particular location - - and not infrequently also ended here, as for example in the Thirty
Years' War and lately at the time of the Munich dictate, then during the Communist
putsch of 1948 and at the attack by armies of the Warsaw Pact against our country in
1968. Events in our country were a test for all Europe, a warning to the continent, and
a challenge to redefine its basic values and demonstrate coherently the amount of
courage it was willing to exert to defend those values. Probably even more important
than this political fate was what I would choose to call the spiritual record of our
country. The East and the West, Catholicism and Protestantism, democracy and
totalitarianism, republicanism and monarchist absolutism, mysticism and enlightenment,
national subjugation and national blossoming, tolerance and chauvinism, awareness of
global context side-by-side with provincialism and isolationism, Central Europeanism and
a traditional deep interest in matters non-European, selfish and ignorant short-sightedness
and astonishing historical vision all have combined and clashed over the long decades
and centuries in a very extraordinary manner.
An amazing specimen of what I have just said about our country bears the name Prague.
This city has been, every so often in its history, a true crossroads of European spiritual
trends - as in the period of Rudolf II, currently the theme of a large exhibition being
held in Prague; this city has often been called magical, mysterious, enchanting,
spellbinding, particularly because of its eventful and multi-layered history growing from
the perpetual entwinement of the Czech, Jewish, German and Italian elements with
various other European influences that has made an indelible mark on its appearance and
Addresses 1993-1997
permeated the atmosphere of the city.
The Castle, on whose premises we find ourselves today, is central and dominant to
Prague, a city which - in my opinion - is more Central European and European than
just Czech. With almost encyclopaedic consistency it has been a great witness to the
history of the city and country, offering a lens-like, converging reflection of the past ages.
It is, or rather for long centuries has been, also the centre of our life - both spiritual and
cultural.
For all the reasons indicated above I feel that the Czech Republic, Prague and Prague
Castle are a most fitting location for the meeting which opens here today. Where
should wise people from all over the world meet to reflect together for a few days on elg
fate and future of our common civilization than in a place with such eventful history.
place which had always felt with such sensitivity the threats looming over humanking
and its culture, as well as the hopes that man may and must nourish?
Our conference follows a series of similar events organized over the years by
foundation established by Marion and Elie Wiesel, some of which I had the honour
attending; it also, however, has unique and individual features distinguishing it somewh
from the mentioned series. I am hinting not only at the items on its agenda, not only
the external framework of the conference and accompanying events, not only at
ambition to establish a certain tradition, but mainly at the circle of its guests. Invitation
to this conference have been sent out to about one hundred prominent personalities
public life, philosophers, political scientists, politicians, scientists, religious authorities
and intellectuals from all cultural regions or areas of civilization of the contemporam
world. Of course, not all the invited have been able to attend. Nevertheless, I think thx
you, who did find time to travel to Prague, are a truly brilliant sample of the people who,
on this planet, are engaged in the most fundamental questions of its destiny.
Before I assume the part of a keen listener to your debate, I shall try to outline in a brief,
and indeed rather simplified, manner my personal expectations- of this conference.
Humankind today is well aware of the varied spectrum of threats looming over its head
We do know that the number of people living on our planet is growing at a soaring rate
and that within a relatively short time we can expect it to number tens of billions. We
do know that it shall be almost impossible to feed so many people. We do know how
the already-deep abyss separating the planet's poor and rich could deepen further, and
dangerously, because of this rapid population growth. We do know how difficult it will
be for people of various nationalities and cultures to coexist crowded SO dramatically
together; and we know how many different kinds of conflicts such a situation could lead
to. It is also a commonly known fact that modern humankind has been destroying the
environment on which its existence depends; that it is ever faster exhausting non-
renewable sources of energy and other riches of this planet; that its activities are
contributing to global warming, to the build-up of the greenhouse effect; to the
enlargement of the holes in the ozone layer; that it is disturbing the balance of all
ecosystems. We all know, too, about the danger into which humankind is hurling itself
by developing, producing and proliferating nuclear weapons and weapons of mass
destruction in general. And finally we all know about the current and the expected future
rise of social problems, crime, drug abuse and various forms of human alienation and
frustration in the event of further concentration of people in large agglomerations
destroying natural human communities and bonds. Any one of us could certainly go on
listing similar threats for a long time, describing them in more detail and in rich colours,
explaining how deeply they are entwined; hundreds of books have been written about
these threats, some have even become topics of expensive global summits.
I see a large, yet typical, paradox for our era in the fact that though contemporary
humanity has been aware of these dangers, it does almost nothing to confront or avert
them. It is fascinating how preoccupied people are today with all kinds of catastrophic
prognoses - is it not common for titles containing impressive evidence of the disasters
into which we are tumbling headlong become bestsellers? — and how very little people
take these into account in their everyday activities. For how many years now have these
warning data been taught in schools and yet how small is the effect of this knowledge
on human behaviour! Does not every schoolchild know today that the resources of this
planet are limited and that if exhausted faster than recovered would mean we could not
but be doomed? And still we continue in our ways and, moreover, do not even seem
perturbed. Quite the contrary - rising production, and therefore also consumption, is
felt as the main sign of success of a state, and that not only of poor states where such
feelings could be justified, but also of the wealthy ones, cutting the branch on which
they are sitting by their ideology of stupidly indefinite and senseless growth.
It seems to me that it is not, now, critical to point out again and again such horrors
which may be lying in wait, unless our whole global civilization changes its essential
direction. Today, the most important thing, in my view, is to study the reasons why
humankind does nothing to avert the threats about which it knows so much and why it
allows itself to be carried onward by some kind of perpetual motion basically
unaffected by self-awareness or a sense of future options and, as it seems, virtually
incapable of being affected.
I believe and hope that our conference will touch this topic. Indeed, the prerequisite of
any change for the better is first naming correctly the situation which needs to be
changed and then analyzing its causes.
It would be unfair, of course, to deny the existence of numerous projects for the aversion
of this danger or for its limitation as well as the fact that a lot has been done for the
implementation of such projects. However, all attempts of this kind have one thing in
common - they do not at all touch basic trends of development from which the threats
I am speaking of sprout, but merely regulate their impact using technical or
administrative instruments. A typical example of such instruments are legal acts,
ordinances or international treaties stipulating how much toxic matter this or that product
may contain or how much toxic waste this or that plant may discharge into the
environment. I am not criticizing this type of standards or safeguards against any type
of threat, quite the opposite: I am glad that something like this is being done at all. I only
claim that these are technical tricks reducing the unfavourable impact of other techniques
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State 01 me umon
- without, however, such regulatory activity having any effect on the substance of the
matter.
What then is the substance of the matter? What indeed could change the tendencies of
today's civilization? What could really stop the perpetual motion which we have not
been able to control so far?
It is my deep conviction that the only option is for something to change in the sphere
of the spirit, in the sphere of human conscience, in the actual attitude of man towards
the world and his understanding of himself and his place in the overall order of
existence. It cannot suffice to invent new machines, new regulations, new institutions.
It is necessary to understand differently and more perfectly the true purpose Of
existence on this Earth and of our deeds. Only such new understanding will allow
development of new models of behaviour, new scales of values and life objectives.
through this means finally attach a new spirit and new meaning also to the specd
regulations, treaties and institutions.
in short: it appears to me that it would be better to start from the head rather than
tail.
I would welcome it, of course, to hear whether you share this conviction of mine
further and more specific points you would like to add to this topic.
perhaps, relying on your life experience, your knowledge and your beliefs or faith, why
One of the reasons I believe that a true and essential turn for the better can derive only
from changes in the sphere of the spirit is because of an observation of mine. Whenever
I encounter any kind of deeper civilization problem anywhere in the world - be 1
logging of rain forests, ethnic or religious intolerance or the brutal destruction of the
cultural landscape which had taken centuries to develop - then somewhere at the end
of the long chain of causes that gave rise to the problem at issue always find one ang
the same reason: a lack of accountability to the world and responsibility for it.
There are countless types of responsibility, perceived as either more or less pressing
many of which vary naturally among individuals. We feel responsible to ourselves or
for ourselves, for our health, our performance, our welfare; we feel responsible for our
families, our companies, our communities, our professions, political parties, churches
regions, nations or countries; and somewhere in the background of all these feelings of
responsibility there is, in every one of us, a small feeling of responsibility for the world
as a whole and for its future; do we not all feel that the world does not end at the
moment of our death and that it is wrong to act as if we do not care if the floods come
after we are gone. Nevertheless, it seems to me that this last and deepest responsibility.
that is responsibility for the world, is very low for a number of reasons and is actually
dangerously low against the background of the fact that the world today is a more
interlinked place than ever before in history and that we are de facto living one global
destiny and that almost anything that happens anywhere in the world may in one was
or another affect the lives of us all.
And yet we live in a world which seems to legitimize very strongly all kinds of possible
and impossible particular interests, which however seems unable to legitimize properiv
the universal interests, those which reach beyond the framework of the family, company
party, state or current generation. That is namely those interests which could be expected
to dominate in today's globally networked world and one threatened by multiple of
civilizations. Those who pursue such interests - not superficially and only verbally, be:
truly sincerely - are today being pushed more obviously to the margins of society as
idealists standing apart from the real state of affairs.
The current world is dominated by several great religious systems whose differences
seem to be coming to the fore with increasing perspicuity and actually forming the
background to many real or potential political and armed conflicts in the present and
future. In my opinion this fact which is attracting, understandably, the concerned
attention of all observers conceals somewhat a considerably more substantial
circumstance - the contemporary global civilization inside which the tension within the
areas of the individual religion is taking place is indeed in essence a deeply atheistic
one. Indeed, it is to date the first atheistic civilization in the history of humankind.
Simultaneously, it is the first civilization which embraces the whole planet.
The reason why I am stressing this fact namely at this moment is, I hope, obvious: the
atheistic nature of this civilization coincides deeply, I believe, with the hypertrophic
pursuit of individual interests and individual responsibilities together with the crisis of
global responsibilities.
Could the fact that humanity thinks only within the limits of what lies in its field of
vision and is incapable of remembering also what lies beyond, whether in the temporal
or spatial sense, not be the result of loss of metaphysical certitude, vanishing points and
horizons? Could not the whole nature of the current civilization - with its
shortsightedness, with its proud emphasis on the human individual as the crown of all
creation and its master and with its boundless trust in humanity's ability to embrace the
Universe by rational cognition, could it not all be but the natural manifestation of a
phenomenon which, in simple terms, amounts to the loss of God? Or more specifically:
the loss of respect to the order of existence of which we are not the creators but mere
components, to the mysterious inherent meaning or spirit which does possess this order,
to its memory capable of not only recording that part of our deeds concealed from others
but of recording it for eternity, that is of evaluating our deeds so as to say from the point
of view of eternity? Could it not be that the issue is a crisis of respect for the moral
order extended to us from above, or simply a crisis of respect for any kind of authority
higher than our own earthly being, with its material and thoroughly ephemeral earthly
interests? Succinctly, could not the crisis of responsibility and accountability for the
world as a whole and for its future be but the logical consequence of the modern
conception of the world as a complex of phenomena controlled by certain scientifically
identifiable laws, formulated for God-knows- what purpose that is, a conception
which does not question the meaning of existence and renounces any kind of
metaphysics or any kind of its own metaphysical roots?
I have been thinking about the basic questions and paradoxes of the contemporary
civilization for many years and in recent times I have even had the opportunity of
encountering different aspects of these issues in various countries of all continents. And
without my view being burdened a priori by any kind of paradigm, I become repeatedly
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and increasingly convinced of the validity of that which I have just outlined. It is for this
reason that I shall be especially interested in the views of this assembly of wise people,
to see how they either refute, or on the other hand supplement my conviction.
To put it simply: amongst other things, I expect this conference to give me and many
others an answer to whether I am right or mistaken when I think what I am thinking —
that the crisis of the so much-needed global responsibility is in principle due to the fact
that we have lost the certainty that the Universe, nature, existence and our lives are the
work of creation guided by a definite intention, that it has a definite meaning and follows
a definite purpose, and together with this certainty of course also all and every humility
towards what reaches beyond us and surrounds us. This loss IS of course accompar
by the loss of the feeling that whatever we do must be subjected to the regard for
vision every one of us is permanently present.
higher order of which we are part and to the respect for its authority in whose field
I have mentioned that the image of today's world reflects the predominance of
great religious systems which are playing an increasingly important role - or sevez ratro
whose mutual "otherness" seems to be becoming increasingly important, and that
people actually perceive a conflict between these different religious worlds as one of
threats mankind will encounter the future.
Yes, after the fall of the colonial system and the end of the bipolar division of the work
and due to the population boom and the growing self-confidence and influence
various countries and continents lying outside the limits of the hitherto dominant
American civilization sphere, humankind is actually entering a world who
characteristic features are multipolarity and multiculturalism.
It would seem so far that the more tied the various civilization, cultural and religio
groups are by the bonds of a single global civilization - exerting unavoidably a unify
influence - the more they try to confront such grip by emphasizing their sovereign
inalienable identity, specificity, or simply things by which they differ from the circle
the other groups. As if one lived in an epoch of accentuated spiritual, religious
cultural "otherness". This growing accent is indeed another large threat to this world
But how to restore in the human mind a shared attitude to what is above if peopie
everywhere have a different image of that which is above and everywhere feel the
to stress that "otherness"? Is there any sense in trying to turn the human mind to
heavens when such a turn would only aggravate the conflict among our various deitiest
I am not, of course, an expert on various religions, but from all that I know about the
main ones, learning about them over the time and in direct contact with them, I have
gained the indelible impression that they have much more in common than they adms
or are willing to admit. Starting from the basic point of departure - that is, that the
world and our existence here are not a freak chance having little meaning but are
of a mysterious, yet integral, act whose sources, direction and purpose are difficult for
us to perceive in their entirety - to the large complex of moral imperatives which the
act applies in addressing us - all this, surprisingly, seems to unite the various religious
systems while the specific aspects of their traditions, accents, liturgies and interpretation
remain, in my view, an immensely important, but not dominant, factor. What, on the
other hand, I think does dominate is the similarity in what the various religions ask
US, as human beings, or how they perceive us.
The last but perhaps most important question I would like to ask is, whether the way
of the current bleak situation could not be found in the actual search for what unites the
various religions and cultures, in the search for common sources, principles, certitud
aspirations and imperatives, a purpose-minded search; and then, applying mean
adequate to the needs of our time, to cultivate all matters of human coexistence an
endeavour as well as the treatment of the planet on which it is our destiny to live, and
to suffuse it all with the spirit of what I wish to call, with your permission, the common
spiritual and moral minimum.
Do you suppose this might be a way to stop that blind perpetual motion dragging us into
hell, or would it seem to you to be unrealistic and naïve? Would you presume that such
general and universal recovery of the human spirit and human responsibility for the
world, such - as I once called it- it "existential revolution" could be provoked only by
some unprecedented shock or disaster, or is it within the power of wise people to bring
them about by their own will and by joining their forces without the need for any
appalling impulse from the outside? Would you presume that convincing words of wise
people would simply be enough to achieve what has been described or would we need,
like in the past, charismatic prophets or modern messiahs or even some kind of historical
miracle?
Distinguished Friends,
I would be very surprised if any two of you give an identical answer to the several very
general questions which I have posed here. It is not, however, our purpose to reach an
agreement on something of neutral content, or on a compromise, and then issue that as
a joint manifesto nobody would bother to read because it is too vague. We can bravely
leave that procedure to official conferences and summits. The agenda of this assembly
is different: an opportunity for its participants — and they are truly a varied group to
express, in the most original and interesting way possible, their own views of the issues
which are undoubtedly of concern to us all, and to turn the mutual exchange and
confrontation of these views into a true forum.
A forum as space where people reflect on matters concerning everybody and discuss
them.
Thank you for your attention and I wish us all a successful meeting. I also wish you a
pleasant stay in Prague and hope you will absorb some of its special atmosphere - let
it be an enrichment for you, at least to the same degree as your presence here and the
ideas you voice enrich my fellow citizens.
Addresses 1993-1997
State 01 me umon
P\V: Net Prophet
http://www.bookwire.com/PW/OntheWeb.articleS39.
PWHOME CLASSIFIEDS SUBSCRIBE BOOKWIRE SEARCH BOOKWIRE
PWinteractive
(lhe web)
Net Prophet
Calvin Reid -- Nov 4, 1997
It will come as no surprise that digital theorist, entrepreneur and
cyberspace cheerleader Esther Dyson's much awaited new book,
Release 2.0: A Design for Living in the Digital Age (Broadway
Books, $25) comes complete with its own website. The site has
the usual amenities; excerpts, surveys, links and a series of
discussion forums that Broadway Books publicist Jennifer Prost
expects to be very busy. "For such an intellectual," Prost said
happily, "she's as popular as a movie star. We can't keep up with
the media requests." And the busier the forums the better, said
Prost, because Broadway already has an "upgrade" planned for
the book's trade paper edition, Release 2.1, due next year, that
will incorporate material from the discussion topics. Nine topics,
one each week, are scheduled, and discussions on work,
communities and education have already begun, with Dyson and
guests participating. The site also features a sample of the book
presented in Trellix, an innovative frames-based Web interface
devised by Dan Bricklin that BDD New Media director Jonathan
Guttenberg called "a different way to maneuver through text on
the Web."
Bookwire has more about: Broadway Books, Esther Dyson, Release 2.0
Back to The Web
PW HOME CLASSIFIEDS SUBSCRIBE BOOKWIRE SEARCH BOOKWIRE
Copyright 1997. Publishers Weekly. All rights reserved.
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Books
Ehr
Name
The New York Times Bank Weslew
Sporch
Perves
Help
Digital Dreams
Date: November 30, 1997, Late Edition - Final
Byline: By Derek Bickerton
Lead:
RELEASE 2.0
A Design for Living in the Digital Age.
By Esther Dyson.
307 pp. New York:
Broadway Books. $25.
Text:
I am writing this review on my laptop. Twenty years ago, I'd have been
pounding away on a typewriter, bottle of White-Out at the ready, wastebasket
filling with crumpled drafts. Now whole paragraphs magically appear and
disappear, change places effortlessly, instantaneously. Just 10 years ago, the
prelude to writing would have consumed days of phone tag. Now I respond to
the initial inquiry and within minutes the reply pops onto my screen. In those
days, when I was done, I'd have stood in line at the post office to see what the
review would cost to send. Now, one click and it's home free -- or just for the
cost of a local telephone call. Surely only a rabid technophobe would deny that
the world has changed for the better.
At least that's the contention of Esther Dyson, daughter of the
scientist-futurologist Freeman Dyson, called "the most influential woman in all
the computer world" in The New York Times Magazine and now the author of
"Release 2.0: A Design for Living in the Digital Age." With her father's optimism
and faith in technological solutions, Dyson looks forward to a world of fulfilling
communities in which creativity is rewarded, the powerless become powerful
and governments, if not quite withering away, lose many of their teeth. Though
an idealist, she is far from starry-eyed: she realizes that these things will not
come about unless Internet users the growing hyper-community of E-mailers
and Web-site browsers - act responsibly and with foresight. However, as a firm
believer in the power and beneficence of the free market, she opposes any
attempt to control the Net by legislation (such as the ill-fated Communications
Decency Act) and insists that self-regulation works best: rather than trying to
squelch pornography by limiting free speech, we should exploit the wide range
of content-rating systems that already exist (the chapter on content control gives
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a handy survey) and use blocking software to keep offensive material from the
impressionable.
Dyson surveys most of the legal and ethical issues that have surfaced during the
past decade, and generally makes moderate and judicious suggestions. Should
material posted on Web sites lie within the public domain? Yes, but it's crass to
copy without permission. Should anonymous postings be allowed? On balance,
yes, despite the admitted evils of electronic stalkers and slanderers --
whistle-blowers and political dissidents, among others, would suffer unjustly if
anonymity were outlawed. In addition, she raises some less widely appreciated
issues. Encrypting messages in (one hopes) unbreakable code is still frowned on
by government agencies, because it's a potential cover for criminal activity. But
soon, Dyson predicts, insurance companies will make all businesses routinely
encrypt databanks and communications, to avoid the huge claims that would
otherwise result from disgruntled customers and ex-employees trashing records,
posting confidential data and carrying out similar acts of electronic sabotage.
All this and more Dyson accomplishes with a minimum of the techie jargon that
turns off so many potential users. On the whole she does an excellent job of
explaining acronyms and Netspeak, although the neophyte may still puzzle over
"intranet," or "groupware" and "E-cash." Indeed, one of her goals is to demystify
the Net and thus disarm those who would demonize it. One telling anecdote
involves the reaction of Hungarian police officers to a bomb explosion: instead
of rounding up the usual suspects, they visited the local Internet provider and
demanded a list of his clients. A system that lets people communicate globally,
instantly and often free of charge must seem to many the way witchcraft seemed
in the Middle Ages; anything that helps dispel such attitudes must be salutary.
Yet at times Dyson's determination to proclaim the Net's virtues steers her away
from the grittier particulars. Detailed discussion of cases like the one brought by
the Bavarian government against Compuserve, based on alleged violations of
local laws by pedophile and neo-Nazi Compuserve clients, might have
highlighted tensions between free speech and social policy more sharply than
Dyson's more generalized treatment of such issues. But the case, though twice
briefly mentioned, is never explored. And occasionally her statements take one's
breath away. "Eventually," she says, "criminals will be using the Net." Doesn't
she know that since the 1980's Scotland Yard (like many other police forces)
has had its own computer crime unit, or that pedophiles and con men were
among the first to log on? If Dyson's subtitle were "How to Manage and Live
With the Internet," such criticisms could be dismissed as quibbles. When she
confines herself to giving outsiders a user-friendly insider's view of the Internet
and how it works (or should work), she writes clearly and convincingly. But
won't "living in the digital age" involve rather more than that?
Not according to Dyson. In her view, "the profundity of the changes that the
Net will bring to human institutions" will be accompanied by "its lack of impact
on human nature" people will go on living as they have always done. But how
can they? More time spent sitting alone, staring into a screen, can only mean less
time spent interacting with flesh-and-blood creatures. Dyson ignores the sinister
temptations of virtual reality, including virtual sex, temptations bound to grow
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as real reality gets ever scarier and more complex. She sees no essential
difference between real communities and on-line communities: as the former
decline, the latter will replace them.
But in one's family or village, even in one's church or political party, there is
always the challenge of coping with those whose opinions, attitudes and
interests differ radically from one's own. In cyberspace, there's the seductive
appeal of being able to confine oneself to meeting only those who share some
obsession, of hanging out in chat rooms with virtual clones of oneself. It's not
just the individual psyche that will suffer. The new tribalism is threatening
enough without this new arena, in which cults and militias have already shown
themselves among the savviest operators.
Dyson knows that "on-line communities can exist sealed away from reality," but
she merely mentions this as a possibility, in a single paragraph, without
discussion. On the social dangers of isolated, alienated individuals, she has
nothing to say. Perhaps she believes that the potential for anyone to
communicate with anyone else outweighs those dangers. But when everyone's
shouting, no one's listening; the power to reach others may prove a cruel
illusion.
And when it comes to the world at large, her narrowness of vision becomes
scary. She is not comfortable, she says, "saying that everyone in the world
should be on the Net," but "in the end, everyone will be, except for a few
holdouts." Everyone? Mongolian herdsmen, Brazilian hunter-gatherers, the
peasants of Indonesia or India or Iran, the uncounted slum dwellers of the third
world's exploding cities? Technophobia and culture lag just aren't the problems.
Now and far into the future, barriers of poverty and illiteracy (not to mention
language) will exclude the majority of humankind from membership in what
Dyson calls (without acknowledgment to Marshall McLuhan) the "global society
of the connected."
The second half of this century has already seen serious increases in inequality,
both within and between nations. Whether we will it or no, the Net adds another
dimension to that inequality. Moreover, the advantages that accrue to Net users
-- wired schools, enhanced job searches, consumer choice -- further compound
that inequality. Dyson is justly proud of the work she has done getting former
Eastern bloc countries on line, but she must know that in those countries Net
use is the privilege of a tiny, precariously poised minority. What will be the
ultimate social impact of all this? Nobody knows, but authors like Dyson are
precisely those who should be thinking about it.
Maybe Dyson should have taken another hint from McLuhan. Of course he
exaggerated -- the medium isn't the whole message -- but our environment
shapes us at least as much as we shape our environment. In the end, this book
recalls science fiction stories of the midcentury, set in the year 3000 with space
travel, time travel and all manner of exotic gizmos, but where all the characters,
earthlings and aliens alike, talk, think, feel and behave exactly like 1950's
Americans. We should be wiser now. We should realize that whatever future the
Internet brings us, however sensibly and fairly we manage it, it won't be merely
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1ST STORY of Level 1 printed in FULL format.
Content and programming copyright (c) 1998 National Public
Radio, Inc. All rights reserved. Transcribed by Federal
Document Clearing House, Inc. under license from National
Public Radio, Inc. Formatting copyright (c) 1998 Federal
Document Clearing House, Inc. All rights reserved.
NPR
SHOW: MORNING EDITION (NPR 10:00 am ET)
JANUARY 12, 1998 11:40 am ET
Transcript # 98011214-210
SHOW-TYPE: PACKAGE
SECTION: News; International
LENGTH: 1560 words
HEADLINE: U.S. Role in Global Economy
BYLINE: Kathleen Schalch, Washington, DC; Bob Edwards, Washington
HIGHLIGHT: NPR's Kathleen Schalch reports on the likely U.S. role in th new
global economy. Trade representatives are calling for the U.S. to lead the way.
They say President Clinton needs fast track authority to win the best offers
from our trading partners. But some critics say the economic crisis in Asia
will lead to an immense trade deficit with the U.S. -- possibly reaching a
record $300 billion. Anxiety over trade issues has united an unlikely coalition
of environmentalists, Christian conservatives, labor activists and some
lawmakers on Capitol Hill. They advocate a more protectionist stance.
BODY:
BOB EDWARDS, HOST: This is MORNING EDITION. I'm Bob Edwards.
When it returns to work this month, Congress will confront new questions about
the costs and benefits of the emerging global economy. The huge volume of goods
and money moving throughout the world has created unprecedented wealth, but it's
also blurred national boundaries, formed new classes of winners and losers, and
threatened to bankrupt entire countries.
The Clinton administration wants the U.S. to forge ahead by toppling trade
barriers and seizing new opportunities. But Congress may not cooperate.
Instead, many analysts foresee a growing wave of protectionism.
NPR's Kathleen Schalch reports.
KATHLEEN SCHALCH, NPR REPORTER: U.S. Trade Representative Charlene Barshefsky is
adamant. She says the United States cannot afford to retreat from its
leadership role in the global economy.
CHARLENE BARSHEFSKY, U.S. TRADE REPRESENTATIVE: It is critical that we maintain
our leadership in defining the rules of trade, in defining the rules of
commerce, and in helping to write the rules by which economies become more
PAGE
3
MORNING EDITION (NPR), JANUARY 12, 1998
market-oriented, more commercially in tune with the way in which we like to do
business.
SCHALCH: Barshefsky says the U.S. is facing crucial trade negotiations in the
coming months on issues ranging from intellectual property to agriculture, and
needs fast track authority to get the best deals possible. Without it, she
says, our trading partners won't put their best offers on the table since they
won't know what they' get in return.
Most economists, including Jeffrey Garten (ph), dean of the Yale School of
Management, argue that new trade agreements will benefit the U.S.
JEFFREY GARTEN, DEAN, YALE SCHOOL OF MANAGEMENT: Generally speaking, our economy
is much more open than other economies. So, we're in the process of really
leveling the playing field.
SCHALCH: Historically, such arguments have won over lawmakers as well. But
during last year's fast track debate, skeptics in Congress outnumbered
believers.
And since then, there have been more setbacks. In December, for the first time,
the World Trade Organization ruled against the U.S. It was a landmark case which
pitted Kodak against its Japanese rival
Fuji. Even Ambassador Barshefsky expressed dismay. She says the WTO ignored
the way Japan's distribution system discriminates against imports.
BARSHEFSKY: This is widely recognized, widely acknowledged, and indeed, even
Japan admits as much.
SCHALCH: The WTO decision could heighten trade tensions between the U.S. and
Japan, and undercut the administration's argument that the international trading
system is essentially free and fair.
Another looming problem is the financial crisis in Asia. Ironically, the reforms
the IMF is demanding will wrench some of that region's economies open in ways
U.S. trade negotiators could only dream of.
At the same time, the U.S. trade deficit with Asia is likely to explode.
Exports from the region were already competitive. Now, plummeting currencies
could make them up to 70 percent cheaper. And with demand shrinking at home,
these nations will have to export.
Marcus Nolan (ph) of the Institute for International Economics predicts that the
U.S. global trade deficit could reach a record $300 billion and that Congress
isn't going to like it.
MARCUS NOLAN, INSTITUTE FOR INTERNATIONAL ECONOMICS: When the U.S. trade deficit
goes up, the U.S. gets into trade disputes with foreign countries, regardless of
whether these disputes have anything to do with the trade deficit or not. It's
just a political lightening rod.
And I am afraid, as the trade deficit reaches new historical heights, that there
will be a temptation in the Congress and in the administration to resort to
protectionism in the United States. This, if it spread to other countries,
PAGE
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MORNING EDITION (NPR), JANUARY 12, 1998
could be very, very bad for the world's economy, given the fragility of world
financial markets at this time.
SCHALCH: According to Eric Peterson (ph) of the Center for Strategic and
International Studies, arguments against protectionism could fall on deaf ears
in Congress. Peterson says Democrats are increasingly beholden to organized
labor, which opposes free trade, and Republicans have splintered over the issue.
ERIC PETERSON, CENTER FOR STRATEGIC AND INTERNATIONAL STUDIES: American trade is
now in a squeeze play. There have been a number of centrist Democrats and
Republicans over the years who have been the core of a cohesive trade agenda
that the United States has championed. But unfortunately, that core is now
diminishing. There are fewer and fewer Democrats and Republicans in the center
now who seem willing to champion freeing of international trade.
SCHALCH: Edward Graham (ph) of the Institute for International Economics offers
a harsher assessment.
EDWARD GRAHAM, INSTITUTE FOR INTERNATIONAL ECONOMICS: A substantial percentage
of the Congress -- and I would say that this
includes the vast majority of those who were elected in 1994 -- are simply very
ignorant on this issue and they're somewhat inclined to react under the
pressures of the moment. I would say, in fact, even further that not only are a
lot of these members quite ignorant of international trade issues, but some of
them seem to be downright proud of it.
SCHALCH: But many members of Congress say the problem is not ignorance, it's
that they've looked into the matter and don't like what they see.
Massachusetts Democrat Barney Frank says liberals like himself are tired of the
government acting like its sole purpose is to make sure goods and capital flow
freely across international boundaries.
U.S. REPRESENTATIVE BARNEY FRANK (D-MA) The ability of capital to move
undercuts the ability of unions and government to provide fairness. We are
told, "cut back on your unemployment compensation rules, reduce your taxes, take
a wage cut, take a cut in your health care benefits, or else we will move."
SCHALCH: Frank says open markets and the free movement of capital have triggered
a race to the bottom. House Minority Leader Dick Gephardt has warned that as
globalization has knit the world's economies together, it has pulled Americans
apart. Tennessee Republican Zach Wamp voices the same concerns.
U.S. REPRESENTATIVES ZACH WAMP (R-TN) I think we've gotta be very careful as a
country that we do not lose our own soul because of our desire to make money.
SCHALCH: Wamp says U.S. commercial interests should not undermine American
values.
WAMP: Other countries do not have our values, they do not have our culture. We
should be careful in working out agreements with them. If they have no regard
for human rights, or very little regard for human rights, as our friends in
China do today and it's proven. Out in the countryside, they have sweatshops
for teenage girls that would make any decent human being sick.
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MORNING EDITION (NPR), JANUARY 12, 1998
SCHALCH: Wamp and other lawmakers say their qualms are shared by the American
people. Indeed, anxieties over trade have brought together an unlikely
coalition of environmentalists, Christian fundamentalists, human rights and
labor activists.
Steve Frank (ph) heads a national organization of conservative Republicans.
STEVE FRANK, HEAD OF A NATIONAL ORGANIZATION OF CONSERVATIVE REPUBLICANS: The
policies that are being made on trade are being made by faceless bureaucrats in
other countries, and we don't have the right to question 'em. As citizens and
voters, we don't have the right to elect and unelect them.
And the grassroots, as I travel throughout the country, recognize that trade
policy is an area that we have not taken a great interest
in over the years. Now we must. And we recognize the impact on families and
jobs and communities in the United States. And it's time that we speak out.
SCHALCH: Eric Peterson of CSIS says the trade debate has moved inexorably from
Wall Street to Main Street. Closed plants make headlines, he says, while the
benefits of trade, such as cheap imports and good export jobs, don't. Peterson
worries that the old internationalist consensus will crumble just as it's begun
to pay off.
PETERSON: Over the last 10 years, one-half of humanity has projected itself into
the global market economy. And this is exactly what we have wanted for over
half this century, what the U.S. has championed. And now, precisely at the time
when all these societies are working to liberalize their economies, to instill
free market practices, the champion of free trade, the United States, runs the
risk of retreating from its historical commitment. That, I believe, is serious
business.
SCHALCH: But Peterson says heading off protectionism won't be easy, and he
expects trade to be the hot button issue in the next elections.
Kathleen Schalch, NPR News, Washington.
No quotes from the materials contained herein may be used in any media
without attribution to National Public Radio, Inc. This transcript may not be be
reproduced in whole or in part without prior written permission. For further
information please contact NPR's Office of the General Counsel at (202)
414-2040.
LANGUAGE: ENGLISH
LOAD-DATE: January 12, 1998
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2ND STORY of Level 1 printed in FULL format.
Copyright 1995 Information Access Company, a Thomson Corporation Company
ASAP
Copyright 1995 Carnegie Endowment for International Peace
Foreign Policy
September 22, 1995
SECTION: No. 100 ; Pg. 50; ISSN: 0015-7228
LENGTH: 7208 words
HEADLINE: The global jobs crisis; world unemployment
BYLINE: Marshall, Ray
BODY:
The world is experiencing the worst employment crisis since the 1930s.
Almost one-third of the Earth's 2.8 billion workers are either jobless or
underemployed, and many of those who are employed work for very low wages with
little prospect for advancement.
High levels of joblessness result not only in an enormous waste of resources
but also in human suffering and hopelessness, rising inequality within and
between countries, and a host of social ills. These conditions threaten social
cohesion and undermine democratic institutions--or make them much more difficult
to establish. And growing global interdependence causes such problems in one
country to affect others negatively as well.
Global employment problems intensified in the early 1970s after a long
period during which prosperity was relatively equitably shared among people in
the United States and other industrialized countries (ICs) and among those in
some developing countries (DCs). Almost every country suffers from a combination
of insufficient employment growth and a lack of jobs adequate to enable workers
to maintain and improve their incomes. Europe's unemployment rate, for example,
was very low for most of the postwar period, but by 1994 it had surged to 12 per
cent. To make matters worse, a large portion of Europe's jobless have been
unemployed for a year or longer, and they face diminishing chances of returning
to work.
The U.S. unemployment rate is lower than that of Europe; however, real wages
have fallen for most American workers, and, since the end of World War II,
joblessness has increased. Between 1979 and 1993, wages paid to young male high
school and college graduates fell 30 per cent and 8 per cent, respectively.
Since 1987, only workers with post-graduate and professional degrees have
enjoyed rising real wages. Lower real wages account for most of America's income
inequality--which is much greater than that of other ICs and is currently higher
than at any other time in the postwar period. These trends imply that most
American workers will have little chance of earning the real incomes their
parents did in the 1960s and 1970s.
Employment conditions elsewhere have also worsened since the 1970s: Many of
the "transition" economy countries (TECs) of Eastern and Central Europe have
experienced sharp declines in output, the rapid emergence of mass unemployment,
and rising inequality and poverty. Between 1990 and 1993, TEC output fell by
more than 10 per cent per year, and a growing portion of those unemployed were
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Foreign Policy, September 22, 1995
out of work for a year or more. In Hungary, a majority of those unemployed had
been out of work for more than six months.
Most TECs have had dramatic increases in poverty. In mid-1992, 73 per cent
of all Bulgarian households had incomes below the officially set social minimum,
up from 42 per cent in 1990. In 1992, over 50 per cent of Polish households were
classified as at or below the poverty level, up from about 40 per cent in 1991.
The situation was even worse in the countries of the former Soviet Union, where
100 million people had incomes below the poverty line at the end of 1991.
Conditions have also deteriorated in the DCs since the 1970s, especially in
sub-Saharan Africa, which has retrogressed, and in many countries, especially
Benin and Niger, where the modern sectors have collapsed. Most employment growth
has been in low-productivity, informal sectors, which probably contain more than
60 per cent of a given region's urban workforce. Urban unemployment rates in
sub-Saharan countries in the early 1990s were 50 to 100 per cent higher than in
the mid-1970s. Of the 15 countries for which data for the 1980s are available,
real manufacturing wages fell in 12--at an average annual rate of 12.3 per cent.
A steady decline in Latin America's modern-sector employment during the
1980s reversed the trend of the previous three decades. During this period,
urban, informal-sector employment rose from 13.4 to 18.6 per cent of total
employment, the average real minimum wage fell 24 per cent, and informal-sector
wages shrank by 42 per cent.
Globally, the brightest spots are East and Southeast Asia, which have had
high growth in productivity, output, employment, and real wages, along with
declining poverty and unemployment. Throughout the region, unemployment rates
remained between 2.0 and 2.7 per cent from the mid-1980s to the early 1990s, and
average annual real earnings grew by more than 5 per cent during the 1980s. The
region also experienced low approximate poverty rates--15 per cent--compared
with 59 per cent in South Asia, 54 per cent in sub-Saharan Africa, and 28 per
cent in Latin America and the Caribbean. The lessons from East and Southeast
Asia, discussed below, provide important insights into what both DCs and ICs
might do to improve their economic performance.
ADJUSTING TO SHOCKS IN AMERICA AND ABROAD
The oil price shocks of the 1970s interrupted a long period of global
growth, which neared 5 per cent per year between 1966 and 1973. This growth
slowed to 3.5 per cent between 1974 and 1980, then to 3.3 per cent in the 1980s,
and it sunk to 1.1 per cent during the recession of the early 1990s.
The world's employment problems are closely associated with the slowdown of
global growth; however, there is disagreement among economists about what caused
the slowdown and how to restore equitably shared global growth. Clearly, many of
the world's economic problems are due to the absence of the kind of
consensus-based, domestic and international economic policies that existed until
the 1970s--at least in the major ICs--and were associated with rising and more
evenly distributed incomes between the end of World War II and the early 1970s.
The growth in global output before the 1970s was also boosted by the rapid
spread of technology and modern production systems in an increasingly open
global economy. International transactions--mainly trade and
investment--increased much faster than global output.
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Foreign Policy, September 22, 1995
The problems faced by the ICs are illustrated by the United States, whose
interests shaped the global economy after World War II, and whose domestic
production systems and policies produced the world's strongest economy and
highest standard of living. For the most part, America owed its economic success
to an abundance of natural resources, economies of scale in its mass production
system, a large and growing internal market, and supportive institutions and
policies. While the United States can claim huge advantages in its mass
production system and still boasts the world's wealthiest economy, it
nonetheless faces enormous disadvantages in the more competitive,
knowledge-intensive world of the 1990s.
By the end of the 1960s there were signs that America's economy was in
trouble. The main forces for change were technology and increased international
competition, which combined to weaken the mass-production system and to alter
dramatically the conditions for economic viability. In this more competitive
world, dominated by knowledge-intensive technology, the keys to economic success
became human resources and more effective production systems, not natural
resources and domestic economies of scale. Technology makes possible new
organizations of production, but competition makes them essential in order to
maintain and improve incomes.
Technological advances and the globalization of markets have yielded
significant public policy consequences: national governments exercise less
control over their economies, national companies wield less influence over their
markets, and unions hold less authority with respect to negotiating working
conditions.
No longer can a country maintain high wages and full employment through the
traditional combinations of monetary-fiscal and international trade policies,
administered wages and prices, and fixed exchange rates. Keynesian policies to
maintain aggregate demand contributed significantly to prosperity in the ICs but
could not deal adequately with the inflationary pressures induced by the
external supply shocks of the 1970s. Keynesian remedies did little to foster
productivity, which is the main determinant of economic success in a more
competitive global economy. Most importantly, in the 1970s and 1980s,
internationalization weakened the links between domestic consumption,
investment, and output that formed the basic structure of Keynesian demand
management. The weakening of these Keynesian links was made clear when U.S. tax
cuts in the early 1980s increased consumption, but then--in marked contrast with
the 1960s--also greatly stimulated imports. These tax cuts therefore produced a
much smaller increase in domestic investment than had earlier tax cuts in a
less-globalized market. Indeed, imports accounted for a large share of the
available consumer goods and almost all of the increased demand for capital
goods following the 1981 tax cuts.
A more competitive, knowledge-intensive economy thus poses new employment
policy dilemmas. For an economy in which wages are high to remain competitive,
growth sufficient to prevent rising unemployment due to advances in productivity
must be sustained. At the same time, countries are less able to stimulate their
economies through demand-management policies alone. Similarly, employment
problems are exacerbated by the absence of a global "engine of growth,' a role
played by the United States and expanding global markets during the three
decades after World War II. The United States no longer can serve this function,
and the absence of policy coordination--especially among the United States,
Germany, and Japan--hampers global growth and stability. In addition, obsolete
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Foreign Policy, September 22, 1995
international economic institutions and policies make it difficult to provide
the investment, development programs, and markets needed to raise demand in
Third World countries and thus to stimulate the global economy.
HIGH-PERFORMANCE SYSTEMS OR LOW WAGES?
With internationalization, countries, companies, and people must yield to
the imperatives of global competition. The most basic imperative is that we can
compete in only two ways: by reducing wages and incomes or by increasing
productivity and product quality. We can no longer rely on natural resources and
the economies of scale sustained by oligopolistic firms in domestic markets
insulated from international competition and sustained by macroeconomic
policies. Most high-income ICs, and some of the top-performing DCs in Asia, have
either implicitly or explicitly rejected the low-wage option because it implies
more unequal incomes--which is exactly what most American workers have
experienced in the last 20 years. These countries see that lower and more
unequal incomes threaten their political, social, and economic health. The only
way to improve total incomes under this system is to work longer and harder, a
reality that clearly limits economic progress. By contrast, since technological
change is essentially the substitution of ideas, skills, and knowledge for
physical resources, the high-performance option could create very steep learning
and earning curves, thus rapidly increasing personal, organizational, and
national advancement. For example, because agriculture has become more knowledge
intensive, farmers have greatly improved output with less land, labor, and
physical capital. Economic and political analyst Peter Drucker provides another
illustration of this process: The seminal product of the 1920s was the
automobile, which was 60 per cent energy and raw materials and 40 per cent
skills and knowledge; the seminal product of the 1990s is the computer chip,
which is 2 per cent energy and raw materials and 98 per cent ideas, skills, and
knowledge.
What must we do to pursue the high-performance option? Global experience
suggests that countries first must develop national consensus and then fashion
policies and strategies to achieve the high-performance option. Under modern
conditions, competitive market forces alone will produce low-wage outcomes and
global stagnation. National policies should therefore encourage companies to
organize for high performance and discourage the low-wage alternative.
In general, high-performance organizations stress quality, productivity, and
flexibility--rather than economies of scale and fragmented production processes
that require most workers to exercise limited thinking skills. High-performance
organizations develop lean, participative governance structures that
decentralize decisionmaking, have positive reward systems, develop and use
leading-edge technologies, and stress continuing education and training for all
workers, not--as was the case with the mass production system--for managers and
professional workers alone.
Unfortunately, far fewer American companies have organized for high
performance than have European and Japanese firms. Most American companies
pursue low-wage strategies that maximize shortrun company objectives, but could
hurt workers and communities by contributing to joblessness and polarized
incomes.
There are several reasons why so few American companies have organized for
high performance. First, the mass production system, supported by New Deal
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Foreign Policy, September 22, 1995
policies aimed at sustaining the economy's aggregate demand for goods and
services, was most successful in the United States. Therefore, it spawned the
development of deeply entrenched supporting institutions and policies that
resist change.
Second, change requires a consensus-based strategy, which is difficult to
achieve in the United States because of fragmented governmental institutions, a
strong laissez-faire philosophy, greater freedom for business decision making,
and a weaker sense of community than in other countries, especially Germany and
Japan.
Third, the high-performance option forecloses the low-wage alternative,
because it requires high minimum wages, income-support systems, strong labor
organizations, and the empowerment of workers. Other ICs meet these conditions
better than does the United States.
Fourth, American education and training catered to the mass-production
system's bifurcated skill and knowledge requirements. A few professional and
technical people needed higher-order thinking skills, but most workers required
only basic skills for routine work. In high-performance systems all workers need
higher-order thinking skills. However, in the United States, only research
universities and some technical training programs are world class. Few American
public schools, school-to-work systems, and on-the-job learning processes can
compete with those of Germany, Japan, or certain East Asian countries. Relative
to other ICs, the United States gives much more support to higher education than
to primary and secondary education.
Finally, the absence of coherent, consensus-based economic policies creates
uncertainties in the American environment. Those uncertainties deter businesses
from investing the time and resources required to establish high-performance
systems.
This background provides a better understanding of the diverse ways in which
the United States and Europe responded to the economic disruption associated
with the oil price shocks of the 1970s. It illustrates, too, the dissimilar
employment problems they are now experiencing. In general, most European
policies support high-performance systems and higher unemployment, while most of
those in the United States encourage low-wage practices and faster job growth.
DIVERSE RESPONSES
The immediate problem created by the oil price shocks concerned the income
reductions required to pay for higherpriced imported oil. Because of their more
highly coordinated policies and flexible production systems, the Japanese
absorbed these shocks pretty well, keeping unemployment relatively low and
realwage growth relatively high. Since the United States had no consensus-based
mechanism to negotiate ways of absorbing the shock, it allowed inflation to
reduce real incomes.
It was not until the early 1980s that U.S. and European policies began to
diverge. The Reagan administration's policies were based on the supply-side
argument that large tax cuts would so energize the American economy that the
budget could be balanced by the end of 1983 or 1984, even as defense spending
was greatly increased. The Reagan policy demonstrated the reduced effectiveness
of budget stimulus by a single country in an increasingly open global system
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Foreign Policy, September 22, 1995
and illustrated the ways in which disruptions in major countries spread to other
nations. The tax cuts stimulated domestic consumption, but, by greatly widening
the budget deficit, they also significantly raised real-interest and exchange
rates. Rising interest rates contributed considerably to the debt crisis in the
DCs, especially in Latin America. The debt crisis, in turn, contributed to Latin
America's economic stagnation during the 1980s, which reduced American exports
to the region and further exacerbated the U.S. trade deficit.
Thus, the U.S. adjustment to inflation and the economic slowdown of the
1970s led to a combination of restrictive monetary policies and high
unemployment during the early 1980s, with an expansive fiscal policy from 1982
on. High unemployment in the early 1980s and the growing globalization of
production weakened unions and put downward pressure on wages, as did the
declining real value of both the minimum wage and social safety nets. This
combination of policies, plus the shift of employment from manufacturing to
services, led to lower real wages for most workers and growing wage inequality.
In Europe, by contrast, the outcome of restrictive policies to check inflation
was high unemployment that each country was powerless to counteract alone
because of the reduced effectiveness of national economic policies. France
discovered this fact in the early 1980s when its attempted unilateral stimulus
resulted in mounting trade and budget deficits. Due to Germany's fear of
inflation and the creation of the European monetary system, which in effect
links currencies to the deutsche mark, European policies are highly restrictive.
Some economists and politicians often argue that labor-market institutions
have contributed to high European unemployment. There are several parts to this
argument.
First, unemployment, it is posited, results from excessively high wages,
which labor-market mechanisms prevent from falling as they have in the United
States. The evidence suggests that European wages did not fall with the oil
price shocks, so profit margins were compressed. However, by the end of the
1980s, European wage restraint and the elimination of wage indexing had restored
profit margins and relative wage positions in most European countries. Despite
these adjustments, unemployment remained high, casting doubt on the validity of
this argument.
Second, it is argued that Europe's employment problems were caused by
inflexible industrial-relations systems. While industrial-relations systems do
need to become more compatible with the productivity and flexibility
requirements of high-performance systems, European industrial-relations systems
in fact have been fairly adaptable. A labor movement that is accepted as a
"social partner," which is largely true in Europe, seems quite willing to adjust
to new economic realities. Moreover, negotiated changes generally enjoy greater
credibility and acceptance than those made by government mandate or unfettered
market forces. In particular, European labor movements are major barriers to
low-wage strategies and have more power than their American counterparts to tilt
policies toward the high-performance option.
Third, the critics say that another troubling source of rigidity is high
minimum wages. However, the employment effects of maintaining a minimum wage are
small, and, as part of an overall strategy, they serve the functions of
providing work incentives, limiting lowwage competition, and assuring more
adequate earned incomes.
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Foreign Policy, September 22, 1995
Finally, it is argued that the generous unemployment compensation systems in
Europe and the greater ease with which employers can lay off workers in the
United States account for the differences in their respective employment
experiences. However, it is difficult to compare the United States with all of
Europe. It is more appropriate to compare the United States with a major country
like Germany, which, critics argue, suffers from rigidities and growing
unemployment due to high income supports, especially generous unemployment
compensation, rigorous labor standards, and extensive worker participation at
every level in major companies.
However, the German case is not so simple. Germany has slower job growth
partly because its work force has simply grown less rapidly than has that of the
United States. Nevertheless, if we use one definition of unemployment and
restrict our analysis to West Germany and the United States, Bureau of Labor
Statistics data show that West German unemployment was lower than that of the
United States for most of the years between 1972 and 1993, and it was lower
every year between 1990 and 1993, as the following chart shows.
ILLUSTRATION OMITTED
The upward trend in German and U.S. unemployment rates suggests both common
labor-market developments and other factors. First, generous social benefits
probably account for a small part of Germany's higher unemployment levels. The
main causes of higher unemployment lie with labor-market and economic
developments. In particular, the merger with East Germany created major problems
for West Germany. And comparisons with the United States are distorted by the
fact that Germany is just entering its recovery, while the United States is
nearing the end of a long recovery. If social benefits are a major cause of
unemployment, U.S. unemployment levels should be much lower than Germany's,
which is not the case.
Second, much of the recent rise in U.S. and European unemployment rates is
due to excessively tight macroeconomic policies instituted to counter inflation.
While there is considerable doubt that, under present conditions, low
unemployment will produce inflation, there is no doubt that high unemployment
will dampen inflationary pressures, but at very high economic and social costs.
Third, European unemployment is of a longer duration than is that of the
United States. In 1992, 33.5 per cent of German unemployment consisted of
workers without jobs for a year or longer, compared with only 11.2 per cent of
similarly jobless workers in the United States. It is not known, however, how
much of the higher unemployment in Europe and other ICs is due to macroeconomic
policies and how much is due to other causes. In the March/April 1994 issue of
International Economic Insights, Robert Solow, M.I.T.'s Nobel laureate in
economics, proposes
a concerted steady expansion of aggregate demand in Europe, aimed at
eliminating a substantial margin of unemployment, perhaps as much as 5 or 6
percentage points. In the course of this exploration, we would no doubt discover
just how big that margin actually is. Europeans would then be in a better
position to think intelligently about the proper scope for the welfare state for
guarantees of job security.
Solow adds, "The
belief that the only good labor market is a dog-eat-dog
jungle strikes me as both socially wrong and economically unproductive."
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Foreign Policy, September 22, 1995
Fourth, there is a correlation between long-term unemployment in Europe and
the duration of unemployment benefits and the magnitude of severance payments,
though causation is unclear. While correlations do not prove causation,
longer-term income supports than are available in the United States undoubtedly
are a factor in European workers' reluctance to take marginal low-wage jobs. A
better economic policy would minimize passive income supports like those in
Germany and would encourage more active policies to improve skills and
labor-market performance, as is done in Sweden.
Still, Katharine Abraham, U.S. commissioner of labor statistics, and Susan
Houseman, senior economist at the W.E. Upjohn Institute for Employment Research
in Kalamazoo, Michigan, who have scrutinized the impact of German labor-market
policies and the adjustment process, discount the argument that these policies
make the German labor market more rigid than that of the United States. "In
fact," they concluded in a Summer 1993 Brookings Review article, "U.S. and
German companies faced with similar declines in sales make very similar labor
cuts. The difference is that U.S. firms lay off many workers immediately, while
German companies reduce workers' hours.' These scholars add: "Overall, we
conclude that German policies have been fairly successful in giving workers more
stable employment without inhibiting labor adjustment and without imposing
burdensome costs on employers. (1)
HIGH-PERFORMING ASIAN ECONOMIES
As was noted earlier, DCs have adjusted differently to the more competitive
international economy. In general, countries with export-oriented strategies
have performed much better than those that remain inward looking. While the
successful countries in East and Southeast Asia have taken advantage of global
market opportunities, they have not adopted purely laissez-faire policies,
because they recognize the need for active strategies to promote key infant
industries, correct market failures, and achieve an equitable sharing of the
benefits and costs of change. None of these things would happen with market
forces alone.
The eight high-perforing Asian economies (HPAEs) -Hong Kong, Indonesia,
Japan, Malaysia, Singapore, South Korea, Taiwan, and Thailand--provide some
insight into what is required to succeed in a globalized economy. In particular,
these economies demonstrate the possibilities for virtuous cycles whereby
policies to stimulate growth and reduce income inequality actually reinforce
each other.
According to World Bank studies, the HPAEs not only have outperformed the
ICs since the 1960s, but they have had higher growth rates than ever experienced
by the ICs. Moreover, while the per capita income gap between the ICs and most
DCs has grown, the HPAEs are closing this gap rapidly, and they are doing so
with reduced income inequality and declining poverty rates.
What accounts for this remarkable performance? One factor is the "shared
development" strategies these countries adopted, at least partly in response to
the formidable communist challenge they perceived in the 1940s and 1950s. To
gain greater credibility and support, these countries adopted measures that
simultaneously had grassroots appeal and made good economic sense. These
measures included massive investments in basic education, land reform (Korea and
Taiwan), housing (Hong Kong and Singapore), and rural infrastructure
(Indonesia).
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Foreign Policy, September 22, 1995
These countries' education policies were basic to their economic success.
All HPAEs except Thailand had much higher levels of primary and secondary school
enrollment than countries with similar per capita incomes. Most importantly, the
HPAEs had much smaller male-female enrollment gaps than other DCs. And, unlike
the experiences of other DCs, school enrollment and educational quality improved
simultaneously in the HPAEs.
A growing body of research finds education to be one of the most important
factors associated with rapid productivity growth. Education augments learning
skills, improves workers' ability to develop and use technology, and increases
productivity. World Bank research shows that high primary and secondary school
enrollment enhanced HPAE growth by 20 per cent and 40 per cent, respectively,
between 1960 and 1985.
Education boosts economic performance in different ways for males and
females. Education for males enhances their performance directly when young men
enter the work force, while educated women have the added benefit of improved
individual, family, enterprise, and national economic performance through lower
fertility rates and healthier and better-educated children. In East Asia, the
fertility rate for women with more than seven years of schooling is 54 per cent
that of uneducated women. Thus, relative to other DCs, lower fertility in the
1960s resulted in fewer school-age East Asian children in the 1970s and 1980s,
which permitted faster growth in school expenditures per child. These
developments, as well as robust growth, enabled Asian countries to provide
much-higher-quality education than was possible for DCs with faster population
growth, more school-age children, and much slower economic growth. In 1960, East
Asian education expenditures relative to gross national product (GNP) were
slightly higher than in other areas, but they were not much higher in 1989.
(They were 2.5 per cent in 1960 and 3.7 per cent in 1989, compared with 2.4 per
cent and 4.1 per cent for sub-Saharan Africa and 2.2 per cent and 3.6 per cent
for all DCs.) Due to much faster economic growth and fewer school-age children,
public school expenditures per eligible child between 1970 and 1989 quadrupled
in South Korea but did not even double in Mexico. Over this same period, public
school expenditures as a percentage of GNP fell in South Korea and rose in
Mexico, even though in 1989 Mexican expenditures per eligible child were only 26
per cent of South Korea's. Similarly, relative to per capita GNP, per-pupil
operating costs of Indonesian and Malaysian schools were less than half the
African average.
In the HPAEs, where the proportion of well-educated people is relatively
large, the education wage premium was reduced and, therefore, income
inequalities were diminished. Low inequality, in turn, reduced poverty and
increased the demand for education by low-income households, which spend a large
proportion of their income on education. For example, if income in Brazil was
distributed as equitably as it is in Malaysia, Brazilian school enrollment would
be at least 40 per cent higher.
of course education is critical, but it cannot be considered apart from
overall economic strategies. For example, the strong demand for education in
Asia was boosted by a brisk demand for skilled workers. These educated workers
were needed to satisfy the requirements of high-performance development
strategies that included the export of products with greater value added at
home.
.
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Foreign Policy, September 22, 1995
The HPAEs share several common characteristics that vary in magnitude and
intensity in different countries. These include rapid and sustained growth
between 1960 and 1990, dynamic demographic transformations due to population
displacements and reduced population growth, relatively equal income
distributions, and unusually rapid export growth.
Between 1960 and 1990 several factors separated the HPAEs from
less-successful DCs. High combined public and private investment rates of more
than 20 per cent of gross domestic product and extensive human capital formation
account for roughly two-thirds of the HPAEs' growth. High productivity growth
accounts for the rest.
The HPAEs' rapid productivity growth stemmed from various sources. Highly
skilled workers and managers helped raise productivity in these countries.
Additionally, exceptional allocation efficiencies due to a combination of market
forces and intervention from public-private consensus-based "deliberative
councils" facilitated growth. Other factors figuring in the HPAEs' success
include the importation, adaptation, and development of advanced technology.
Finally, efficient production organizations stressed hard work, which was made
acceptable by low but rising real wages and relatively equal income
distribution.
The HPAEs' successes were therefore based on a combination of economic
fundamentals and market-friendly interventions, one of which was the maintenance
of macroeconomic stability to prevent inflation and to facilitate savings,
investment, and long-range public and private planning. Investment--especially
in human capital, infrastructure, and price systems--minimized unplanned price
distortions and contributed to the HPAEs' economic strength. Finally, stable and
secure financial systems and an openness to international investment, trade, and
foreign technology allowed these countries to prosper.
At times, East Asian governments intervened in their economies by
maintaining low interest rates to stimulate capital investment and by allocating
credit to preferred economic and financial activities. Additionally, East Asian
leaders promoted strategic industries, and, in markets with little competition,
they held supervised contests that distributed rewards to enterprises based on
performance. In contrast to the orthodox view that intervention should correct
only "market imperfections,' according to the World Bank study, The East Asian
Miracle, the HPAEs understood that "markets consistently fail to guide
investment to industries that would generate the highest growth for the overall
economy.
Another HPAE "shared growth" strategy, not found in most DCs, was support
for rapid agricultural productivity growth and rough parity between farm incomes
and urban wages. This combination helped keep food prices and wages low.
Unfortunately, low wages also were maintained through strategies such as the
suppression of labor standards, especially of workers' rights to organize and
bargain collectively. Rural incomes were improved by land reform, the
availability of credit, technology, and technical assistance, and by allowing
agricultural prices to be set by market demand in the early stages of national
economic development. Other DCs have suppressed farm prices and incomes, thus
reducing agricultural efficiency and actually raising food prices.
Analysts disagree about how "shared development" improved HPAE performance.
Indeed, this outcome is contrary to orthodox economic development theory,
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Foreign Policy, September 22, 1995
which stresses "trickle down" policies favoring the wealthy in order to
encourage the capital formation needed to stimulate economic growth. However,
economists Nancy Birdsall, David Ross, and Richard Sabot suggest that income
equality could stimulate growth by inducing savings and investment by the poor,
especially for education and health; by contributing to political and
macroeconomic stability; and by increasing the efficiency of low-income workers.
LESS-SUCCESSFUL MODELS
The sub-Saharan African countries provide a vivid contrast with the HPAEs.
These countries have held to inward-looking economic polices and have had
negligible attachments to the global economy. Some countries changed their
policies during the 1980s, but these countries still have strong barriers to
economic reform, including high risks for investors, abrupt policy shifts,
insecure property rights, and weak accounting and judicial systems. According to
the U.N.'s International Labour Organization (ILO), aid is given to African
governments in a way that raises exchange rates, thus inhibiting exports and
crowding out private investment. In addition, aid is usually conditioned on
easily evaded promises for reform rather than on actual past performance.
Since most of the poverty and unemployment in Africa is concentrated in
rural areas and urban informal activities with low productivity and unstable
incomes, to become more productive and better integrated with modern industries,
these informal sectors require greater access to capital. Informal urban sectors
should receive special attention because they help build a safety net where
social supports are either weak or nonexistent. In addition, informal sectors
absorb surplus labor and provide useful goods and services.
The East European economies also face unique problems. For these TECs, the
issue is one of moving from managed economies to market systems. Because the
TECs have strong human capital endowments, they could perform very well in the
long run. However, whether they can become democratic, market-oriented countries
depends heavily on their ability to make the transition to market systems
through the institutions and policies needed to compete in global markets.
Because of the absence of social safety nets and essential market-oriented
institutions, this transition is much more daunting than many people imagine.
Developing these institutions and mechanisms is inherently a slow process. The
task is not adequately appreciated by proponents of rapid change, or "shock
treatment," who argue that instant restructuring is required for advancement
toward market systems.
However, as the ILO report World Employment 1995 argues, there are policy
instruments to facilitate gradual adjustment, such as abandoning import quotas
and subsidies to state-owned enterprises in favor of assistance--with time
limits--for the enterprises most likely to succeed in domestic and international
markets. Substituting markets for production subsidies will make it easier to
determine which enterprises will most likely succeed. In order to attract
capital, the TECs also need to safeguard property rights, reform capital
markets, improve labor-market and training processes, and promote
self-employment as well as public and private job creation.
The main challenge for the TECs is to build enough economic and social
stability to prevent political destabilization. Since the world has a big stake
in a successful outcome, the international community should do whatever it can
to facilitate that process.
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Foreign Policy, September 22, 1995
THE NEED FOR CONSENSUS
The world's employment crisis is due largely to policy paralysis: Officials
and analysts differ in their priorities and their degree of uncertainty over how
to function in a more competitive, knowledge-intensive global economy. In the
past, economies in the United States and other ICs were based on national
mass-production systems sustained by Keynesian demand-management measures and an
open and expanding global economy, which was greatly facilitated by the Bretton
Woods mechanisms.
However, globalization and technological change have significantly reduced
the effectiveness of these traditional policies and institutions. In this new
economy, those who develop flexible and adaptable organizations to produce
quality products at competitive costs maintain and improve their incomes and
will achieve a more equitable distribution of the benefits and costs of change.
By contrast, those who attempt to compete mainly by reducing wages will
experience lower and more unequal incomes and a limited ability to improve
living conditions. Similarly, adjusting from traditional to high-performance
economies requires consensus-based strategies, because under present conditions
market forces alone will produce low-performance outcomes. Clearly, however, the
high-performance option, by boosting productivity, will lead to rising
unemployment unless it is accompanied by adequate growth. It is equally clear
that the stimulus for growth must come from both the DCs and the ICs.
There is much uncertainty about how to achieve adequate global growth, but
the companies and countries that succeeded during the 1970s and 1980s provide
insights into the broad contours of new organizational, market, political, and
institutional frameworks. Mutually advantageous processes by which all groups
gain are required. This is posited by the principle of comparative advantage,
but it is not automatic, either between or within countries.
In sum, policies to address the global employment crisis should include
several dimensions. First, consensus for the high-performance option must be
established, both within countries and internationally. It is in everybody's
interest to narrow income gaps by raising wages in the DCs rather than by
lowering them in the ICs.
Second, consensus for coordinated national and international policies must
be secured to restore global, equitably shared growth. Global expansion must,
however, be combined with structural adjustments within DCs to maintain and
improve incomes. Although world output growth recovered to 3.7 per cent in 1994,
without faster growth the number and quality of jobs will remain unfavorable
almost everywhere, making national and global adjustments very difficult.
Third, existing institutions and policies must be reformed--or new ones must
be created based on high-performance concepts, rather than on the self-defeating
and inequitable low-wage, laissezfaire, "trickle-down" policies too often
followed in the past. As the HPAE experiences suggest, development policies
should give priority to education and self-help programs to improve
income-earning opportunities, especially for the poor. As was noted, the
communist threat caused many HPAEs to improve the conditions of low-income
people, which made sense economically as well as politically and socially. We
need to find the moral equivalent of the Cold War. Perhaps aid and loans from
international institutions, conditioned on economic incentives and "bottom up"
rather than "trickle down" policies, could serve that function.
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Foreign Policy, September 22, 1995
Fourth, the international financial system must be reformed to prevent a
recurrence of the policies that led to the DCs' debt crises during the 1980s and
to create safeguards against financial speculation that distorts, and could
destabilize, international financial markets. In 1971, for example, before the
collapse of the Bretton Woods arrangements, 90 per cent of all foreign exchange
transactions was for trade and investment and only 10 per cent was for
speculation. Today, the situation is reversed: over 90 per cent derives from
speculation and less than 10 per cent from trade and investment. Perhaps a
strong international financial institution that functions like an international
central bank acting as a lender of last resort might introduce sounder
international financial practices.
Fifth, international policies to encourage high-performance shared growth
must be implemented. The policies must be based on market-friendly interventions
while paying careful attention to the economic fundamentals and cultural
realities of each organization and place. In addition, economic performance can
benefit from supportive infrastructure, social safety nets, the adaptation and
improvement of technology, and human resource development.
Finally, labor standards need to be reformed so that they are a component of
the rules for all international trade, investment, aid, and employment
transactions. Labor standards could prevent these transitions from suppressing
working conditions by withholding competitive advantages from enterprises or
countries that violate basic international labor standards, improving
productivity and efficiency, and permitting low-wage workers to increase global
demand by participating in their countries' development.
(1) For a more extensive treatment of these issues, see Ray Marshall, "The
importance of international labour standards in a more competitive global
economy," in International labour standards and economic interdependence, Werner
Sengenberger and Duncan Campbell, eds. (Geneva: International Institute for
Labour Studies, 1994).
IAC-NUMBER: IAC 17338595
IAC-CLASS: Magazine
LANGUAGE: ENGLISH
LOAD-DATE: November 08, 1995
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29TH STORY of Level 1 printed in FULL format.
Copyright 1995 Information Access Company, a Thomson Corporation Company
ASAP
Copyright 1995 Monthly Review
Monthly Review
September, 1995
SECTION: Vol. 47 ; No. 4 ; Pg. 16; ISSN: 0027-0520
LENGTH: 3230 words
HEADLINE: The third sector as a protective layer for capitalism; non-profit
corporations
BYLINE: Roelofs, Joan
BODY:
Those who wish to promote change should look closely at what sustains the
present system. One reason capitalism doesn't collapse despite its many
weaknesses and valiant opposition movements is because of the "nonprofit
sector Yet philanthropic capital, its investment and its distribution, are
generally neglected by the critics of capitalism. Most studies of the subject
are generously funded by the nonprofit sector itself; few researchers have
followed up on the observation of Marx and Engels in The Communist Manifesto: A
part of the bourgeoisie is desirous of redressing social grievances, in order to
secure the continued existence of bourgeois society
To this section belong
the economists, philanthropists, humanitarians, improvers of the condition of
the working class, organizers of charity, members of societies for the
prevention of cruelty to animals, temperance fanatics, hole-and-corner reformers
of every imaginable kind.
The United States is unique in the size and scope of this sector which
spends over $ 400 billion annually. Its tax-free wealth is largely
unaccountable: just imagine the land, the buildings, their contents, and the
investments of churches, private universities and schools, museums, zoos,
teaching hospitals, conservation trusts, opera houses, etc. This model has been
exported to everywhere for over a century. Currently the United States
philanthropy network is attempting to create entire "nonprofit" sectors in
Eastern European countries. "Bible imperialism" was an early version; another
was a large Rockefeller infusion into the London School of Economics during the
1920s and 1930s.
Some may see a galaxy of organizations doing good works - a million points
of light - but the nonprofit world is also a system of power which is exercised
in the interest of the corporate world.
What is the nonprofit sector? In the United States, it includes churches,
private schools and universities, cultural institutions, advocacy groups,
political movements, research institutes, charities and foundations. One subset
is particularly noteworthy: those organizations covered by section 501 (c) (3)
of the Internal Revenue Code. These are the benevolent organizations whose
receipts are tax-exempt, and whose contributions are tax-deductible for the
donors. They are generally the only organizations that receive foundation
grants. In turn, they must restrict political advocacy and may not engage in
election campaigns. They also may not distribute profits to shareholders.
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Monthly Review, September, 1995
Not all in this sector are corralled into innocuous system-protecting
activities; there are a few independent, usually poor and obscure organizations.
However, most organizations are linked to each other and to the major
corporations by their funding, their invested assets, technical assistance,
interlocking directorates, and peak organizations such as the Independent Sector
and Council on Foundations. (1)
Independent Sector, the trade association of the nonprofit sector, was
founded in 1980. It has a budget of $ 5 million and 800 members, including (as
of November 1988) the AT&T Foundation, the Aga Kahn Foundation, the American
Association of Community and Junior Colleges, the American Association of
University Women, B'nai B'rith International, Boy Scouts of America, Coors
Foundation, Environmental Law Institute, Mexican-American Legal Defense and
Educational Fund, Mothers Against Drunk Driving, NAACP Legal Defense and
Education Fund, National Audubon Society, Sierra Club, and World Wildlife
Foundation. There are over 1500 foundations in the United States that are
affiliates of profit-making corporations, and they work along with the
traditional charities and foundations to keep the ship afloat.
In what way does this sector serve as a protective layer? First of all,
non-profits play an important role in the concentration and distribution of
capital for the profit making sector. For example, prominent on nonprofit
hospital boards of trustees are businesspeople, bankers, real estate developers,
insurance executives, etc. Expansion decisions provide a major stimulus to the
economy of a region, as well as plums for individual corporations. In addition,
foundations and other charitable institutions invest assets in stocks and bonds
and can exert power along with other institutional investors.
Second, nonprofits provide goods and services that the market cannot, from
homeless shelters to opera and BBC TV drama. The latter are quite important, as
the defection of intellectuals tends to be more dangerous than dire poverty.
Unprofitable but necessary activities could be carried out by government, as
they are in many countries. However, privatization of charity, culture,
education, and reform has many advantages. If philanthropic capital were taxed,
its disposition would be subject to political debate. Nonprofit organizations,
on the other hand, are directed by self-perpetuating boards, and there is no
democratic control over their private policy-making. Staff members have no civil
service status or security; they are dependent on philanthropy and its visible,
hugging arms. Almost all organizations look to corporations and foundations for
funding. Small donations or dues arc rarely adequate for any major undertaking,
and require much energy to collect. Even the NAACP Legal Defense and Education
Fund was crucially dependent on foundation money for the litigation leading to
Brown V. Board of Education in 1954.
Some of these unprofitable functions could be performed by political
parties, unions, or social movements. Elsewhere in the world, political parties
sponsor youth groups, daycare centers, children's camps, and other charitable
and educational activities. One might think it particularly appropriate in a
democracy for political parties to be the primary locus for social reform and
public policy research and advocacy. Nevertheless, in the United States advocacy
and reform are largely monopolized by foundation-supported nonprofits.
Yet another protective function is employment for sons and daughters of the
rich who might otherwise be unemployed and disaffected, along with those of
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Monthly Review, September, 1995
any class who are dissident and troublesome. Mix a "soup" of potential and
actual troublemakers with lots of gold floating around, and it will go down very
smoothly, soothing sore throats and sore heads.
The nongovernmental and nonpartisan status of these organizations generates
a halo of altruism and independence, and this is all the more useful in their
international activities. Their geographical and functional range is exhaustive,
and there is scant recorded evidence of resistance to the penetration of
philanthropy. Recent activities include support for Christian Democratic
parties, unions, and grassroots organizations throughout Latin America; the
creation of a nonprofit sector in Eastern Europe and the former Soviet Union;
the fostering of a nonracial, nonsocialist solution in South Africa; and the
"sustainable" development response to critics of third world exploitation. The
United Nations itself, by origin and development, owes much to multinational
philanthropy.
The contours of the nonprofit system become clearer when we look at its
great planning and funding arms: the large foundations. They contribute to
amusement, to placation of artists, to biochemical research, and to routine
charity, but perhaps their most interesting endeavors are in directing social
reform. They and their creations supply the ideas for political change. The
great multipurpose foundations first arose in the early 20th century, closely
connected in spirit and practice with Progressivism and the rise of the social
sciences. The new millionaires of robber baron infamy saw foundations as devices
to serve several purposes. First, they would provide a systematic way to dispose
of vast fortunes. Second, they would permit considerable social control through
philanthropy. John D. Rockefeller decided "to establish one great foundation.
This foundation would be a single central holding company which would finance
any and all of the other benevolent organizations, and thus necessarily subject
them to its general supervision. Third, foundations could improve public
relations; many believed that the Rockefeller Foundation was created to erase
the scandal of the Ludlow Massacre.
In the period prior to the First World War, foundations could ameliorate the
lot of the masses and at the same time coopt intellectuals who often had
socialist sympathies. They promoted an ideology that regarded social ills as
problems to be' solved by social scientists. Class struggle, or even conflicts of
interest, was of no moment.
After the Second World War, foundation intervention in the policy process
increased dramatically. For example, fear of political disorder brought forth an
amelioration strategy from the Ford Foundation. Its Report for 1949 argued that
we had to strengthen our system in order to meet the challenge of communism.
Problems included the unfinished business of the Civil War, the lack of
political participation, and the care of maladjusted individuals. Ford's initial
strategy was to fund litigation for Supreme Court decisions, which successfully
obtained increased legal equality for blacks, reform of the criminal justice
system, and reapportionment of legislatures.
During the 1960s, as one response to burgeoning protest movements, the Ford
Foundation took the lead in developing public interest law, which included law
firms, clinical programs in law schools, specialized law reviews, and an
appropriate ideology. Among the litigation organizations created were the
Women's Law Fund, Environmental Defense Fund, Natural Resources Defense Council,
and a number of Legal Defense and Education Funds (LDEFs) including the Puerto
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Monthly Review, September, 1995
Rican LDEF, Mexican-American LDEF, and Native-American LDEF. Older
organizations, such as National Association for the Advancement of Colored
People Legal Defense and Education Fund and the American Civil Liberties Union,
also became dependent on foundation funding.
Foundation ideology, disseminated through conferences, reports, and
sponsored research and books, holds that radical protests are signs of
inadequacies in pluralism. Disadvantaged groups such as blacks, Chicanos, women,
children, and the poor need help in getting their rights. Grant money enables
them to participate in the interest-group process on an equal basis with the
more advantaged groups. Note that the poor are seen as just another minority
group. Any idea that poverty, militalism, racism, and environmental degradation
are related by-products of the capitalist system is ruled out.
Foundations have also poured money into existing organizations to steer them
to reasonable, pragmatic goals. There were no rewards for those who wanted
blacks in the United States to see themselves as part of the world anticolonial
uprisings. Moderate black organizations, including the National Urban League,
NAACP, NAACP/LDEF, and Southern Regional Council have been funded; radical
groups have been ignored or repressed.
Foundations promote coalitions that are weighted towards the status quo.
Thus, the National Urban Coalition (NUC) was formed in 1967 as an alliance
between civil rights organizations, foundations, and major corporations.
Previously, corporate philanthropy was usually devoted to public relations,
product promotion, employee training, and similar purposes. Beginning in the
1960s, most major corporations developed foundations that participated, along
with Ford, Carnegie, Rockefeller, etc., in supporting capitalism in general They
also became members of Independent Sector. The legality of philanthropic use of
corporate funds is often questioned by stockholders, but the significance of
this new wing of the "nonprofit sector" is generally ignored by leftists.
One program of the NUC, under Ford Foundation leadership, was the creation
of Community Development Corporations, in an attempt to transform the "Black
Power" slogan into the more acceptable "Black Capitalism." These entities, which
combine financing from government, corporations, and foundations, develop small
businesses and industries in impoverished areas--white and black, urban and
rural. Although their return on investment is trivial, their payoff can be
measured in terms of pacification, the development of moderate leadership, and
social mobility for individuals.
Another project of the foundation-corporation alliance was the establishment
of the Martin Luther King Jr. Center for Non-Violent Social Change in Atlanta.
It was financed by the large foundations, as well as the corporate foundations
of Ford Motor Company, Atlantic Richfield, Levi Strauss, Amoco, General Motors,
Heublein, Corning, Mobil, Western Electric, Proctor and Gamble, US Steel,
Monsanto, Morgan Guaranty Trust, etc. Along with innocuous programs like daycare
centers, housing rehabilitation, and information on how to celebrate Dr. King's
birthday, are two striking projects. One is work with military chaplains to
provide King Birthday observances at military bases. The other is cosponsorship
of an annual lecture series entitled: "The Free Enterprise System: An Agent for
Nonviolent Social Change."
Other minority movements have been transformed into standard Washington
lobby format. The Southwest Council of La Raza and National Council of La Raza
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Monthly Review, September, 1995
wère created by the Ford Foundation from what were once militant movements of
Chicanos in the Southwest.
Leadership training and technical assistance programs for protest and
advocacy organizations also stress pragmatic goals. The foundations claim that
their programs enhance "pluralism." What they mainly do is increase the clout of
the foundation-corporation network. For all the emphasis on participation,
ordinary people have become alienated from politics in any form, and
foundation-supported policy experts nearly monopolize the political debate.
The major foundations have always had overseas interests. Before the Second
World War they had a more active foreign policy than the U.S. government,
working through organizations such as the Council on Foreign Relations, the
pre-eminent foreign policy think tank created by the Rockefeller Foundation and
the Carnegie Endowment. The idea and funds for the United Nations owe much to
foundation and Rockefeller family philanthropy.
Instability in Latin America has been greeted by the "hard cops," the CIA
and the military, but also by innumerable foundation-supported projects, carried
out directly or by funded nonprofits. These include aid to noncommunist
grassroots organizations (especially "Christian Democratic" ones), training for
potential leaders in the United States, and funding of university programs and
scholars.
Foundations also created Americas Watch, and similar organizations for other
parts of the world, all of which are premised on the notion that rebellions
occur in part because many governments do not respect human rights, perhaps
because of sloppiness, or ignorance, or corruption. Americas Watch then brings
individual violations to the attention of the media and international
organizations. It does not acknowledge that repression, torture, and
extermination may be government policy, or that technical assistance programs
may be transmitting the technology of torture.
In Eastern Europe and the former USSR, foundations long supported
dissidents, for example, through the Eastern European Cultural Foundation, and
ran exchange programs to influence scholars and government officials. With the
eclipse of the communist governments, the U.S. nonprofit sector has not only
funded individual nonprofits of all kinds, but has attempted to create an entire
world in its own image. It does this by sending specialists to write
constitutions, to revise civil law and university curricula, and to establish a
nonprofit sector in each nation to perform charitable, cultural, social, and
educational functions that were formerly government responsibilities. The
traditional funders have been joined by an array of foundations created by
George Soros for these purposes. Also, the U.S. government, modeling itself on
the foundations, has gotten into the act through the National Endowment for
Democracy, created by Congress in 1983 to channel funds to overseas political
organizations and do overtly what the CIA does covertly. This new addition to
the nonprofit sector has been attempting to mitigate the shock of marketization,
which has brought about not only unemployment and destitution, but also the
collapse of many important cultural and social institutions.
The environmental movement has also been a threat to "business as usual."
Especially when degradation is linked to corporate activity. The response from
the foundation world has been the creation and funding of many organizations,
think tanks, university institutes, and conferences on "sustainable
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Monthly Review, September, 1995
development," as well as the ideology itself of sustainable development.
Foundation influence was substantial in every aspect of the United Nations
Conference on the Environment and Development in Rio de Janeiro in June 1992.
Many of the nongovernmental organizations at the Global Forum, the grassroots
arena," were funded by foundations, if not their creations. Even official
governmental delegates were tutored by the foundation network, which "provided
technical assistance to developing-country governments that lacked the resources
to participate fully in the debate, and provided texts to governments that
didn't know the issues well enough to draft the subtle language needed for
compromise."
The foundation world's concern with "citizen participation" is now global.
Of course, as in previous leadership-training programs, people will be taught to
be effective, that is, to have pragmatic, reasonable goals. A new organization
has been created: "CIVICUS: World Alliance for Citizen Participation
members
consist of both donors and grantees--to accelerate citizen participation and
influence throughout the world
Its administrative office is currently housed
at the Independent Sector in Washington, D.C." (4)
This is only a small sample of the protective activities of the "third
sector." Much helpful and good work has been supported. Whether this is enough
to stave off planetary disaster in economic, environmental, social, and
political dimensions is another question. It often looks as though the energy to
devise, promote, and initiate radical alternatives to the present system has
been dissipated by the third sector's protective layer.
NOTES
(1.) Council on Foundations is an association of 1300 foundations operating
in the United States and abroad. Established in 1949, the Council assists
grantmakers through leadership and research programs. It recently contributed
nearly $ 6 billion to education, human services, science research, arts, And
urban development projects. Council on Foundations Factsheet, 1995 (2.) B. Howe,
"The Emergence of Scientific Philanthropy," in Arnove, R., ed., Philanthropy and
Cultural Imperialism (Boston: G.K.Hall, 1980), p. 29 (3.) J. Maughan, "The Road
from Rio, The Ford Foundation Report, Summer 1992, p. 16. (4.) "World
Alliance," Foundation News, September/October 1993, p. 10.
IAC-NUMBER: IAC 17338537
IAC-CLASS: Magazine; Trade & Industry
LANGUAGE: ENGLISH
LOAD-DATE: July 18, 1996
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7TH STORY of Level 1 printed in FULL format.
Copyright 1997 Information Access Company,
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Copyright 1997 Atlantic Monthly Company
The Atlantic Monthly
100. my contin
December, 1997
SECTION: No. 6, Vol. 280; Pg. 55; ISSN: 1072-7825
IAC-ACC-NO: 20054018
LENGTH: 10282 words
HEADLINE: Was democracy just a moment? governments of the future; The Future of
Democracy; Cover Story
BYLINE: Kaplan, Robert D.
BODY:
IN the fourth century A.D. Christianity's conquest of Europe and the
Mediterranean world gave rise to the belief that a peaceful era in world
politics was at hand, now that a consensus had formed around an ideology that
stressed the sanctity of the individual. But Christianity was, of course, not
static. It kept evolving, into rites, sects, and "heresies" that were in turn
influenced by the geography and cultures of the places where it took root.
Meanwhile, the church founded by Saint Peter became a ritualistic and
hierarchical organization guilty of long periods of violence and bigotry. This
is to say nothing of the evils perpetrated by the Orthodox churches in the East.
Christianity made the world not more peaceful or, in practice, more moral but
only more complex. Democracy, which is now overtaking the world as Christianity
once did, may do the same.
The collapse of communism from internal stresses says nothing about the
long-term viability of Western democracy. Marxism's natural death in Eastern
Europe is no quarantee that subtler tyrannies do not await us, here and abroad.
History has demonstrated that there is no final triumph of reason, whether it
goes by the name of Christianity, the Enlightenment, or, now, democracy. To
think that democracy as we know it will triumph-or is even here to stay-is
itself a form of determinism, driven by our own ethnocentricity. Indeed, those
who quote Alexis de Tocqueville in support of democracy's inevitability should
pay heed to his observation that Americans, because of their (comparative)
equality, exaggerate "the scope of human perfectibility. Despotism, Tocqueville
went on, "is more particularly to be feared in democratic ages " because it
thrives on the obsession with self and one's own security which equality
fosters
I submit that the democracy we are encouraging in many poor parts of the
world is an integral part of a transformation toward new forms of
authoritarianism; that democracy in the United States is at greater risk than
ever before, and from obscure sources; and that many future regimes, ours
especially, could resemble the oligarchies of ancient Athens and Sparta more
than they do the current government in Washington. History teaches that it is
exactly at such prosperous times as these that we need to maintain a sense of
the tragic, however unnecessary it may seem. The Greek historian Polybius, of
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The Atlantic Monthly December, 1997
the second century B.C., interpreted what we consider the Golden Age of Athens
as the beginning of its decline. To Thucydides, the very security and
satisfactory life that the Athenians enjoyed under Pericles blinded them to the
bleak forces of human nature that were gradually to be their undoing in the
Peloponnesian War.
My pessimism is, I hope, a foundation for prudence. America's Founders were
often dismal about the human condition. James Madison: "Had every Athenian
citizen been a Socrates, every Athenian assembly would still have been a mob.'
Thomas Paine: "Society is produced by our wants and government by our
wickedness. It was the "crude" and "reactionary" philosophy of Thomas Hobbes,
which placed security ahead of liberty in a system of enlightened despotism,
from which the Founders drew philosophical sustenance. Paul A. Rahe, a professor
of history at the University of Tulsa, shows in his superb three-volume
Republics Ancient and Modern (1992) how the Founders partly rejected the ancient
republics, which were based on virtue, for a utilitarian regime that channeled
man's selfish, materialistic instincts toward benign ends. Man, Benjamin
Franklin said in an apparent defense of Hobbesian determinism, is "a tool-making
animal."
Democracies Are Value-Neutral
HITLER and Mussolini each came to power through democracy Democracies do not
always make societies more civil-but they do always mercilessly expose the
health of the societies in which they operate.
In April of 1985 I found myself in the middle of a Sudanese crowd that had
just helped to overthrow a military regime and replace it with a new government,
which the following year held free and fair elections. Sudan's newly elected
democracy led immediately to anarchy, which in turn led to the most brutal
tyranny in Sudan's postcolonial history: a military regime that broadened the
scope of executions, persecuted women, starved non-Muslims to death, sold
kidnapped non-Muslim children back to their parents for $ 200, and made Khartoum
the terrorism capital of the Arab world, replacing Beirut. In Sudan only 27
percent of the population (and only 12 percent of the women) could read. If a
society is not in reasonable health, democracy can be not only risky but
disastrous: during the last phases of the post-First World War German and
Italian democracies, for example, the unemployment and inflation figures for
Germany and the amount of civil unrest in Italy were just as abysmal as Sudan's
literacy rates.
As an unemployed Tunisian student once told me, "In Tunisia we have a
twenty-five percent unemployment rate. If you hold elections in such
circumstances, the result will be a fundamentalist government and violence like
in Algeria. First create an economy, then worry about elections." There are many
differences between Tunisia and its neighbor Algeria, including the fact that
Tunisia has been peaceful without democracy and Algeria erupted in violence in
1992 after its first election went awry and the military canceled the second. In
Kurdistan and Afghanistan, two fragile tribal societies in which the United
States encouraged versions of democracy in the 1990s, the security vacuums that
followed the failed attempts at institutionalizing pluralism were filled by
Saddam Hussein for a time in Kurdistan and by Islamic tyranny in much of
Afghanistan. In Bosnia democracy legitimized the worst war crimes in Europe
since the Nazi era. In sub-Saharan Africa democracy has weakened institutions
and services in some states, and elections have been manipulated to restore
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The Atlantic Monthly December, 1997
dictatorship in others. In Sierra Leone and Congo-Brazzaville elections have led
to chaos. In Mali, which Africa-watchers have christened a democratic success
story, recent elections were boycotted by the opposition and were marred by
killings and riots. Voter turnout was less than 20 percent. Even in Latin
America, the Third World's most successful venue for democracy, the record is
murky. Venezuela has enjoyed elected civilian governments since 1959, whereas
for most of the 1970s and 1980s Chile was effectively under military rule. But
Venezuela is a society in turmoil, with periodic coup attempts, rampant crime,
and an elite that invests most of its savings outside the country; as a credit
risk Venezuela ranks behind only Russia and Mexico. Chile has become a stable
middle-class society whose economic growth rate compares to those of the Pacific
Rim. Democratic Colombia is a pageant of bloodletting, and many members of the
middle class are attempting to leave the country. Then there is Peru, where, all
the faults of the present regime notwithstanding, a measure of stability has
been achieved by a retreat from democracy into quasi-authoritarianism.
Throughout Latin America there is anxiety that unless the middle classes are
enlarged and institutions modernized, the wave of democratization will not be
consolidated. Even in an authentically democratic nation like Argentina,
institutions are weak and both corruption and unemployment are high. President
Carlos Menem's second term has raised questions about democracy's
sustainability-questions that the success of his first term seemed to have laid
to rest. In Brazil and other countries democracy faces a backlash from millions
of badly educated and newly urbanized dwellers in teeming slums, who see few
palpable benefits to Western parliamentary systems. Their discontent is a reason
for the multifold increases in crime in many Latin American cities over the past
decade.
Because both a middle class and civil institutions are required for
successful democracy, democratic Russia, which inherited neither from the Soviet
regime, remains violent, unstable, and miserably poor despite its 99 percent
literacy rate. Under its authoritarian system China has dramatically improved
the quality of life for hundreds of millions of its people. My point, hard as it
may be for Americans to accept, is that Russia may be failing in part because it
is a democracy and China may be succeeding in part because it is not. Having
traveled through much of western China, where Muslim Turkic Uighurs (who despise
the Chinese) often predominate, I find it hard to imagine a truly democratic
China without at least a partial breakup of the country. Such a breakup would
lead to chaos in western China, because the Uighurs are poorer and less educated
than most Chinese and have a terrible historical record of governing themselves.
Had the student demonstrations in 1989 in Tiananmen Square led to democracy,
would the astoundingly high economic growth rates of the 1990s still obtain? I
am not certain, because democracy in China would have ignited turmoil not just
in the Muslim west of the country but elsewhere, too; order would have decreased
but corruption would not have. The social and economic breakdowns under
democratic rule in Albania and Bulgaria, where the tradition of pre-communist
bourgeois life is weak or nonexistent (as in China), contrasted with
more-successful democratic venues like Hungary and the Czech Republic, which
have had well-established bourgeoisie, constitute further proof that our belief
in democracy regardless of local conditions amounts to cultural hubris.
Look at Haiti, a small country only ninety minutes by air from Miami, where
22,000 American soldiers were dispatched in 1994 to restore "democracy. " Five
percent of eligible Haitian voters participated in an election last April,
chronic instability continues, and famine threatens. Those who think that
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The Atlantic Monthly December, 1997
America can establish democracy the world over should heed the words of the late
American theologian and political philosopher Reinhold Niebuhr:
The same strength which has extended our power beyond a continent has also
brought us into a vast web of history in which other wills, running in
oblique or contrasting directions to our own, inevitably hinder or contradict
what we most fervently desire. We cannot simply have our way, not even when we
believe our way to have the "happiness of mankind" as its promise.
The lesson to draw is not that dictatorship is good and democracy bad but
that democracy emerges successfully only as a capstone to other social and
economic achievements, In his "Author's Introduction" to Democracy in America,
Tocqueville showed how democracy evolved in the West not through the kind of
moral fiat we are trying to impose throughout the world but as an organic
outgrowth of development. European society had reached a level of complexity and
sophistication at which the aristocracy, so as not to overburden itself, had to
confer a measure of equality upon other citizens and allocate some
responsibility to them: a structured division of the population into peacefully
competing interest groups was necessary if both tyranny and anarchy were to be
averted.
The very fact that we retreat to moral arguments-and often moral arguments
only-to justify democracy indicates that for many parts of the world the
historical and social arguments supporting democracy are just not there. Realism
has come not from us but from, for example, Uganda's President Yoweri Museveni,
an enlightened Hobbesian despot whose country has posted impressive annual
economic growth rates-10 percent recently-despite tribal struggles in the
country's north. In 1986 Museveni's army captured the Ugandan capital of Kampala
without looting a single shop; Museveni postponed elections and saw that they
took place in a manner that ensured his victory. "I happen to be one of those
people who do not believe in multi-party democracy," Museveni has written. "In
fact, I am totally opposed to it as far as Africa today is concerned
If
one forms a multi-party system in Uganda, a party cannot win elections unless it
finds a way of dividing the ninety-four percent of the electorate [that consists
of peasants), and this is where the main problem comes up: tribalism, religion,
or regionalism becomes the basis for intense partisanship.' In other words, in a
society that has not reached the level of development Toqueville described, a
multi-party system merely hardens and institutionalizes established ethnic and
regional divisions. Look at Armenia and Azerbaijan, where democratic processes
brought nationalists to power upon the demise of the Soviet Union: each leader
furthered his country's slide into war. A coup in Azerbaijan was necessary to
restore peace and, by developing Azerbaijan's enormous oil resources, foster
economic growth. Without the coup Western oil companies would not have gained
their current foothold, which has allowed the United States to increase pressure
on neighboring Iran at the same time that we attempt to normalize relations with
Iran "on our terms."
Certainly, moral arguments in support of democracy were aired at the 1787
Constitutional Convention in Philadelphia, but they were tempered by the kind of
historical and social analysis we now abjure. "The Constitution of the United
States was written by fifty-five men-and one ghost," writes retired Army
Lieutenant General Dave R. Palmer in 1794: America, Its Army, and the Birth of
the Nation (1994) The ghost was that of Oliver Cromwell, the archetypal man on
horseback who, in the course of defending Parliament against the monarchy in the
mid seventeenth century, devised a tyranny worse than any that had ever
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The Atlantic Monthly December, 1997
existed under the English Kings. The Founders were terrified of a badly educated
populace that could be duped by a Cromwell, and of a system that could allow too
much power to fall into one person's hands. That is why they constructed a
system that filtered the whims of the masses through an elected body and
dispersed power by dividing the government into three branches.
The ghosts of today we ignore-like the lesson offered by Rwanda, where the
parliamentary system the West promoted was a factor in the murder of hundreds of
thousands of Tutsis by Hutu militias. In 1992, responding partly to pressure
from Western governments, the Rwandan regime established a multi-party system
and transformed itself into a coalition government. The new political parties
became masks for ethnic groups that organized murderous militias, and the
coalition nature of the new government helped to prepare the context for-the
events that led to the genocide in 1994 Evil individuals were certainly
responsible for the mass murder. But they operated within a fatally flawed
system, which our own ethnocentric hubris helped to construct. Indeed, our often
moralistic attempts to impose Western parliamentary systems on other countries
are not dissimilar to the attempts of nineteenth-century Western
colonialists-many of whom were equally idealistic-to replace well-functioning
chieftaincy and tribal patronage systems with foreign administrative practices.
The demise of the Soviet Union was no reason for us to pressure Rwanda and
other countries to form political parties-though that is what our post-Cold War
foreign policy has been largely about, even in parts of the world that the Cold
War barely touched. The Eastern European countries liberated in 1989 already
had, in varying degrees, the historical and social preconditions for both
democracy and advanced industrial life: bourgeois traditions, exposure to the
Western Enlightenment, high literacy rates, low birth rates, and so on. The
post-Cold War effort to bring democracy to those countries has been reasonable.
What is less reasonable is to put a gun to the head of the peoples of the
developing world and say, in effect, "Behave as if you had experienced the
Western Enlightenment to the degree that Poland and the Czech Republic did.
Behave as if 95 percent of your population were literate. Behave as if you had
no bloody ethnic or regional disputes."
States have never been formed by elections. Geography, settlement patterns,
the rise of literate bourgeoisie, and, tragically, ethnic cleansing have formed
states. Greece, for instance, is a stable democracy partly because earlier in
the century it carried out a relatively benign form of ethnic cleansing-in the
form of refugee transfers-which created a monoethnic society. Nonetheless, it
took several decades of economic development for Greece finally to put its coups
behind it. Democracy often weakens states by necessitating ineffectual
compromises and fragile coalition governments in societies where bureaucratic
institutions never functioned well to begin with. Because democracy neither
forms states nor strengthens them initially, multi-party systems are best suited
to nations that already have efficient bureaucracies and a middle class that
pays income tax, and where primary issues such as borders and power-sharing have
already been resolved, leaving politicians free to bicker about the budget and
other secondary matters.
Social stability results from the establishment of a middle class Not
democracies but authoritarian systems, including monarchies, create middle
classes-which, having achieved a certain size and self-confidence, revolt
against the very dictators who generated their prosperity. This is the pattern
today in the Pacific Rim and the southern cone of South America, but not in
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other parts of Latin America, southern Asia, or sub-Saharan Africa. A place like
the Democratic Republic of Congo (formerly Zaire), where the per capita gross
national productis less than $ 200 a year and the average person is either a
rural peasant or an urban peasant; where there is little infrastructure of
roads, sewers, and so on; and where reliable bureaucratic institutions are
lacking, needs a leader like Bismarck or Jerry Rawlings-the Ghanaian ruler who
stabilized his country through dictatorship and then had himself elected
democratically-in place for years before he is safe from an undisciplined
soldiery.
Foreign correspondents in sub-Saharan Africa who equate democracy with
progress miss this point, ignoring both history and centuries of political
philosophy. They seem to think that the choice is between dictators and
democrats. But for many places the only choice is between bad dictators and
slightly better ones. To force elections on such places may give us some instant
gratification. But after a few months or years a bunch of soldiers with grenades
will get bored and greedy, and will easily topple their fledgling democracy. As
likely as not, the democratic government will be composed of corrupt, bickering,
ineffectual politicians whose weak rule never had an institutional base to start
with: modern bureaucracies generally require high literacy rates over several
generations. Even India, the great exception that proves the rule, has had a
mixed record of success as a democracy, with Bihar and other poverty-wracked
places remaining in semi-anarchy. Ross Munro, a noted Asia expert, has
documented how Chinese autocracy has better prepared China's population for the
economic rigors of the post-industrial age than Indian democracy has prepared
India's.
Of course, our post-Cold War mission to spread democracy is partly a pose. In
Egypt and Saudi Arabia, America's most important allies in the energy-rich
Muslim world, our worst nightmare would be free and fair elections, as it would
be elsewhere in the Middle East. The end of the Cold War has changed our
attitude toward those authoritarian regimes that are not crucial to our
interests-but not toward those that are. We praise democracy, and meanwhile we
are grateful for an autocrat like King Hussein, and for the fact that the
Turkish and Pakistani militaries have always been the real powers behind the
"democracies" in their countries. Obviously, democracy in the abstract
encompasses undeniably good things such as civil society and a respect for human
rights. But as a matter of public policy it has unfortunately come to focus on
elections. What is in fact happening in many places requires a circuitous
explanation.
The New Authoritarianism
THE battle between liberal and neoconservative moralists who are concerned
with human rights and tragic realists who are concerned with security,
balance-of-power politics, and economic matters (famously, Henry Kissinger) is a
variation of a classic dispute between two great English philosophers-the
twentieth-century liberal humanist Isaiah Berlin and the seventeenth-century
monarchist and translator of Thucydides, Thomas Hobbes.
In May of 1953, while the ashes of the Nazi Holocaust were still smoldering
and Stalin's grave was fresh, Isaiah Berlin delivered a spirited lecture against
"historical inevitability"-the whole range of belief, advocated by Hobbes and
others, according to which individuals and their societies are determined by
their past, their civilization, and even their biology and environment. Berlin
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argued that adherence to historical inevitability, so disdainful of the very
characteristics that make us human, led to Nazism and communism-both of them
extreme attempts to force a direction onto history. Hobbes is just one of many
famous philosophers Berlin castigated in his lecture, but it is Hobbes's bleak
and elemental philosophy that most conveniently sums up what Berlin and other
moralists so revile. Hobbes suggested that even if human beings are nobler than
apes, they are nevertheless governed by biology and environment. According to
Hobbes, our ability to reason is both a mask for and a slave to our passions,
our religions arise purely from fear, and theories about our divinity must be
subordinate to the reality of how we behave. Enlightened despotism is thus
preferable to democracy: the masses require protection from themselves. Hobbes,
who lived through the debacle of parliamentary rule under Cromwell, published
his translation of Thucydides in order, he said, to demonstrate how democracy,
among other factors, was responsible for Athens's decline. Reflecting on ancient
Athens, the philosopher James Harrington, a contemporary and follower of Hobbes,
remarked that he could think of "nothing more dangerous" than "debate in a
crowd."
Though the swing toward democracy following the Cold War was a triumph for
liberal philosophy, the pendulum will come to rest where it belongs-in the
middle, between the ideals of Berlin and the realities of Hobbes. Where a
political system leans too far in either direction, realignment or disaster
awaits.
In 1993 Pakistan briefly enjoyed the most successful period of governance in
its history. The government was neither democratic nor authoritarian but a cross
between the two. The unelected Prime Minister, Moin Qureshi, was chosen by the
President, who in turn was backed by the military. Because Qureshi had no voters
to please, he made bold moves that restored political stability and economic
growth. Before Qureshi there had been violence and instability under the elected
governments of Benazir Bhutto and Nawaz Sharif. Bhutto's government was
essentially an ethnic-Sindhi mafia based in the south; Sharif's was an
ethnic-Punjabi mafia from the geographic center. When Qureshi handed the country
back to "the people,' elections returned Bhutto to power, and chaos resumed.
Finally, in November of last year, Pakistan's military-backed President again
deposed Bhutto. The sigh of relief throughout the country was audible. Recent
elections brought Sharif, the Punjabi, back to power. He is governing better
than the first time, but communal violence has returned to Pakistan's largest
city, Karachi. Ibelieve that Pakistan must find its way back to a hybrid regime
like the one that worked so well in 1993; the other options are democratic
anarchy and military tyranny. (Anarchy and tyranny, of course, are closely
related: because power abhors a vacuum, the one necessarily leads to the other.
One day in 1996 Kabul, the Afghan capital, was ruled essentially by no one; the
next day it was ruled by Taliban, an austere religious movement.)
Turkey's situation is similar to Pakistan's. During the Cold War, Turkey's
military intervened when democracy threatened mass violence, about once every
decade. But Turkish coups are no longer tolerated by the West, so Turkey's
military has had to work behind the scenes to keep civilian governments from
acting too irrationally for our comfort and that of many secular Turks. As
elected governments in Turkey become increasingly circumscribed by the army, a
quieter military paternalism is likely to evolve in place of periodic coups. The
crucial element is not the name the system goes by but how the system actually
works.
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Peru offers another version of subtle authoritarianism. In 1990 Peruvian
voters elected Alberto Fujimori to dismantle parts of their democracy. He did,
and as a consequence he restored a measure of civil society to Peru. Fujimori
disbanded Congress and took power increasingly into his own hands, using it to
weaken the Shining Path guerrilla movement, reduce inflation from 7,500 percent
to 10 percent, and bring investment and jobs back to Peru. In 1995 Fujimori won
re-election with three times as many votes as his nearest challenger. Fujimori's
use of deception and corporate-style cost-benefit analyses allowed him to
finesse brilliantly the crisis caused by the terrorist seizure of the Japanese
embassy in Lima. The commando raid that killed the terrorists probably never
could have taken place amid the chaotic conditions of the preceding Peruvian
government. Despite the many problems Fujimori has had and still has, it is hard
to argue that Peru has not benefited from his rule.
In many of these countries Hobbesian realities-in particular, too many young,
violence-prone males without jobs-have necessitated radical action. In a York
University study published last year the scholars Christian G. Mesquida and Neil
I. Wiener demonstrate how countries with young populations (young poor males
especially) are subject to political violence. With Third World populations
growing dramatically (albeit at slowing rates) and becoming increasingly
urbanized, democrats must be increasingly ingenious and dictators increasingly
tyrannical in order to rule successfully. Surveillance, too, will become more
important on an urbanized planet; it is worth noting that the etymology of the
word "police"is polis, Greek for "city." Because tottering democracies and
despotic militaries frighten away the investors required to create jobs for
violence-prone youths, more hybrid regimes will perforce emerge. They will call
themselves democracies, and we may go along with the lie-but, as in Peru, the
regimes will be decisively autocratic. (Hobbes wrote that Thucydides "praiseth
the government of Athens, when
it was democratical in name, but in effect
monarchical under Pericles.' Polybius, too, recommended mixed regimes as the
only stable form of government.) Moreover, if a shortage of liquidity affects
world capital markets by 2000, as Klaus Schwab, the president of the World
Economic Forum, and other experts fear may happen, fiercer competition among
developing nations for scarcer investment money will accelerate the need for
efficient neo-authoritarian governments.
The current reality in Singapore and South Africa, for instance, shreds our
democratic certainties. Lee Kuan Yew's offensive neo-authoritarianism, in which
the state has evolved into a corporation that is paternalistic, meritocratic,
and decidedly undemocratic, has forged prosperity from abject poverty. A survey
of business executives and economists by the World Economic Forum ranked
Singapore No. 1 among the fifty-three most advanced countries appearing on an
index of global competitiveness. What is good for business executives is often
good for the average citizen: per capita wealth in Singapore is nearly equal to
that in Canada the nation that ranks No 1 in the world on the United Nations
Human Development Index. When Lee took over Singapore, more than thirty years
ago, it was a mosquito-ridden bog filled with slum quarters that frequently
lacked both plumbing and electricity. Doesn't liberation from filth and
privation count as a human right? Jeffrey Sachs, a professor of international
trade at Harvard, writes that "good government" means relative safety from
corruption, from breach of contract, from property expropriation, and from
bureaucratic inefficiency. Singapore's reputation in these regards is
unsurpassed. If Singapore's 2.8 million citizens ever demand democracy, they
will just prove the assertion that prosperous middle classes arise under
authoritarian regimes before gaining the confidence to dislodge their
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benefactors. Singapore's success is frightening, yet it must be acknowledged.
Democratic South Africa, meanwhile, has become one of the most violent places
on earth that are not war zones, according to the security firm Kroll
Associates, The murder rate is six times that in the United States, five times
that in Russia. There are ten private-security guards for every policeman. The
currency has substantially declined, educated people continue to flee, and
international drug cartels have made the country a new transshipment center.
Real unemployment is about 33 percent, and is probably much higher among youths.
Jobs cannot be created without the cooperation of foreign investors, but
assuaging their fear could require the kind of union-busting and police actions
that democracy will not permit. The South African military was the power behind
the regime in the last decade of apartheid. And it is the military that may yet
help to rule South Africa in the future. Like Pakistan but more so, South Africa
is destined for a hybrid regime if it is to succeed. The abundant coverage of
South Africa's impressive attempts at coming to terms with the crimes of
apartheid serves to obscure the country's growing problems. There is a sense of
fear in such celebratory, backward-looking coverage, as if writing too much
about difficulties in that racially symbolic country would expose the limits of
the liberal humanist enterprise worldwide.
Burma too, may be destined for a hybrid regime, despite the deification of
the opposition leader and Nobel Peace laureate Aung San Suu Kyi by Western
journalists While the United States calls for democracy in and economic
sanctions against Burma, those with more immediate clout-that is, Burma's Asian
neighbors, and especially corporate-oligarchic militaries like Thailand's-sho
no compunction about increasing trade links with Burma's junta. Aung San Suu Kyi
may one day bear the title of leader of Burma, but only with the tacit approval
of a co-governing military. Otherwise Burma will not be stable. A rule of thumb
is that governments are determined not by what liberal humanists wish but rather
by what business people and others require Various democratic revolutions
failed in Europe in 1848 because what the intellectuals wanted was not what the
emerging middle classes wanted. For quite a few parts of today's world, which
have at best only the beginnings of a middle class, the Europe of the mid
nineteenth century provides a closer comparison than the Europe of the late
twentieth century. In fact, for the poorest countries where we now recommend
democracy, Cromwell's England may provide the best comparison.
As with the Christian religion (whose values are generally different for
Americans than for Bosnian Serbs or for Lebanese Phalangists, to take only three
examples), the nominal system of a government is less significant than the
nature of the society in which it operates. And as democracy sinks into the
soils of various local cultures, it often leaves less-than-nourishing deposits.
"Democracy" in Cambodia, for instance, began evolving into something else almost
immediately after the UN-sponsored elections there, in 1993. Hun Sen, one of two
Prime Ministers in a fragile coalition, lived in a fortified bunker from which
he physically threatened journalists and awarded government contracts in return
for big bribes. His coup last summer, which toppled his co-Prime Minister and
ended the democratic experiment, should have come as no surprise.
"World Government"
AUTHORITARIAN or hybrid regimes, no matter how illiberal, will still be
)
treated as legitimate if they can provide security for their subjects and spark
economic growth. And they will easily find acceptance in a world driven
1
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The Atlantic Monthly December, 1997
increasingly by financial markets that know no borders.
A
For years idealists have dreamed of a "world government. Well, a world
government has been emerging-quietly and organically, the way vast developments
in history take place. I do not refer to the United Nations, the power of which,
almost by definition, affects only the poorest countries. After its peacekeeping
failures in Bosnia and Somalia-and its $ 2 billion failure to make Cambodia
democratic-the UNis on its way to becoming a supranational relief agency.
#
Rather, I refer to the increasingly dense ganglia of international corporations
and markets that are becoming the unseen arbiters of power in many countries. It
A
is much more important nowadays for the leader of a developing country to get a
hearing before corporate investors at the World Economic Forum than to speak
before the UN General Assembly. Amnesty International now briefs corporations,
&
just as it has always briefed national governments. Interpol officials have
spoken about sharing certain kinds of intelligence with corporations. The Prime
Minister of Malaysia, Mahathir Mohamad, is recognizing the real new world order
(at least in this case) by building a low-tax district he calls a "multimedia
super-corridor," with two new cities and a new airport designed specifically for
international corporations. The world's most efficient peacemaking force belongs
not to the UN or even to the great powers but to a South African corporate
mercenary force called Executive Outcomes, which restored relative stability to
Sierra Leone in late 1995. (This is reminiscent of the British East India
Company, which raised armies transparently for economic interests.) Not long
after Executive Outcomes left Sierra Leone, where only 20.7 percent of adults
can read, that country's so-called model democracy crumbled into military
anarchy, as Sudan's model democracy had done in the late 1980s.
Of the world's hundred largest economies, fifty-one are not countries but
corporations. While the 200 largest corporations employ less than three fourths
of one percent of the world's work force, they account for 28 percent of world
economic activity. The 500 largest corporations account for 70 percent of world
trade. Corporations are like the feudal domains that evolved into nation-states;
they are nothing less than the vanguard of a new Darwinian organization of
politics. Because they are in the forefront of real globalization while the
overwhelming majority of the world's inhabitants are still rooted in local
terrain, corporations will be free for a few decades to leave behind the social
and environmental wreckage they create-abruptly closing a factory here in order
to open an unsafe facility with a cheaper work force there. Ultimately, as
technological innovations continue to accelerate and the world's middle classes
come closer together, corporations may well become more responsible to the
cohering global community and less amoral in the course of their evolution
toward new political and cultural forms.
For instance, ABB Asea Brown Boveri Ltd. is a $ 36 billion-a-year
multinational corporation divided into 1,300 companies in 140 countries; no one
national group accounts for more than 20 percent of its employees. ABB's chief
executive officer, Percy Barnevik, recently told an interviewer that this
diversity is so that ABB can develop its own "global ABB culture-you might say
an umbrella culture." Barnevik explains that his best managers are moved around
periodically so that they and their families can develop "global personalities"
by living and growing up in different countries. ABB management teams, moreover,
are never composed of employees from any one country. Barnevik says that this
encourages a "cross-cultural glue." Unlike the multiculturalism of the left,
which masks individual deficiencies through collective-that is, ethnic or
racial-self-esteem, a multinational corporation like ABB has created a diverse
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multicultural environment in which individuals rise or fall completely on their
own merits. Like the hybrid regimes of the present and future, such an evolving
corporate community can bear an eerie resemblance to the oligarchies of the
ancient world. "Decentralization goes hand in hand with central monitoring,"
Barnevik says.
The level of social development required by democracy as it is known in the
West has existed in only a minority of places-and even there only during certain
periods of history. We are entering a troubling transition, and the irony is
that while we preach our version of democracy abroad, it slips away from us at
home.
The Shrinking Domain of "Politics"
I PUT special emphasis on corporations because of the true nature of
politics: who does and who doesn't have power. To categorize accurately the
political system of a given society, one must define the significant elements of
power within it. Supreme Court Justice Louis Brandeis knew this instinctively,
which is why he railed against corporate monopolies. Of course, the influence
that corporations wield over government and the economy is SO vast and obvious
that the point needs no elaboration. But there are other, more covert forms of
emerging corporate power.
The number of residential communities with defended perimeters that have been
built by corporations went from 1,000 in the early 1960s to more than 80,000 by
the mid-1980s, with continued dramatic increases in the 1990s. ("Gated
communities" are not an American invention. They are an import from Latin
America, where deep social divisions in places like Rio de Janeiro and Mexico
City make them necessary for the middle class.) Then there are malls, with their
own rules and security forces, as opposed to public streets; private health
clubs as opposed to public playgrounds; incorporated suburbs with strict zoning;
and other mundane aspects of daily existence in which-perhaps without realizing
it, because the changes have been so gradual-we opt out of the public sphere and
the "social contract" for the sake of a protected setting. Dennis Judd, an
urban-affairs expert at the University of Missouri at St. Louis, told me
recently, "It's nonsense to think that Americans are individualists. Deep down
we are a nation of herd animals: micelike conformists who will lay at our
doorstep many of our rights if someone tells us that we won't have to worry
about crime and our property values are secure. We have always put up with
restrictions inside a corporation which we would never put up with in the public
sphere. But what many do not realize is that life within some sort of
corporation is what the future will increasingly be about."
Indeed, a number of American cities are re-emerging as Singapores, with
corporate enclaves that are dedicated to global business and defended by private
security firms adjacent to heavily zoned suburbs. For instance, in my travels I
have looked for St. Louis and Atlanta and not found them. I found only hotels
and corporate offices with generic architecture, "nostalgic" tourist bubbles,
zoned suburbs, and bleak urban wastelands; there was nothing distinctive that I
could label "St. Louis" or "Atlanta." Last year's Olympics in Atlanta will most
likely be judged by future historians as the first of the postmodern era,
because of the use of social faades to obscure fragmentation. Peace and racial
harmony were continually proclaimed to be Olympic themes-even though whites and
blacks in Atlanta live in separate enclaves and the downtown is a fortress of
office blocks whose streets empty at dusk. During the games a virtual army was
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required to protect visitors from terrorism, as at previous Olympics, and also
from random crime. All this seems normal. It is both wonderful and frightening
how well we adapt.
Universities, too, are being redefined by corporations. I recently visited
Omaha, where the corporate community made it possible for the Omaha branch of
the University of Nebraska to build an engineering school-even after the Board
of Regents vetoed the project. Local corporations, particularly First Data
Resources, wanted the school, so they worked with the Omaha branch of the
university to finance what became less a school than a large information-science
and engineering complex. "This is the future," said the chancellor of the Omaha
campus, Del Weber. "Universities will have to become entrepreneurs, working with
corporations on curriculum [emphasis mine] and other matters, or they will die."
The California state university system, in particular the San Diego campus, is
perhaps the best example of corporate-academic synergy, in which a school rises
in prestige because its curriculum has practical applications for nearby
technology firms.
Corporations, which are anchored neither to nations nor to communities, have
created strip malls, edge cities, and Disneyesque tourist bubbles. Developments
are not necessarily bad: they provide low prices, convenience, efficient work
forces, and, in the case of tourist bubbles, safety. We need big corporations.
Our society has reached a level of social and technological complexity at which
goods and services must be produced for a price and to a standard that smaller
businesses cannot manage. We should also recognize, though, that the
architectural reconfiguration of our cities and towns has been an undemocratic
event-with decisions in effect handed down from above by an assembly of
corporate experts.
"The government of man will be replaced by the administration of things, " the
Enlightenment French philosopher Henri de Saint-Simon prophesied. We should
worry that experts will channel our very instincts and thereby control them to
some extent. For example, while the government fights drug abuse, often with
pathetic results, pharmaceutical corporations have worked through the government
and political parties to receive sanction for drugs such as stimulants and
anti-depressants, whose consciousness-altering effects, it could be argued, are
as great as those of outlawed drugs.
The more appliances that middle-class existence requires, the more influence
their producers have over the texture of our lives. Of course, the computer in
some ways enhances the power of the individual, but it also depletes our
individuality. A degree of space and isolation is required for a healthy sense
of self, which may be threatened by the constant stream of other people's
opinions on computer networks.
Democratic governance, at the federal, state, and local levels, goes on. But
its ability to affect our lives is limited. The growing piles of our material
possessions make personal life more complex and leave less time for communal
matters. And as communities become liberated from geography, as well as more
specialized culturally and electronically, they will increasingly. fall outside
the realm of traditional governance. Democracy loses meaning if both rulers and
ruled cease to be part of a community tied to a specific territory. In this
historical transition phase, lasting perhaps a century or more, in which
globalization has begun but is not complete and loyalties are highly confused,
civil society will be harder to maintain. How and when we vote during the next
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hundred years may be a minor detail for historians.
True, there are strong similarities between now and a century ago. In the
1880s and 1890s America experienced great social and economic upheaval. The
combination of industrialization and urbanization shook the roots of religious
and family life: sects sprouted, racist Populists ranted, and single women, like
Theodore Dreiser's Sister Carrie, went to work in filthy factories. Racial
tensions hardened as the Jim Crow system took hold across the South. "Gadgets"
like the light bulb and the automobile brought an array of new choices and
stresses. "The city was so big, now, that people disappeared into it unnoticed,"
Booth Tarkington lamented in The Magnificent Ambersons.
A hundred years ago millionaires' mansions arose beside slums. The crass
accumulation of wealth by a relatively small number of people gave the period
its name-the Gilded Age, after a satire by Mark Twain and Charles Dudley Warner
about financial and political malfeasance. Around the turn of the century 12
percent of all American households controlled about 86 percent of the country's
wealth.
But there is a difference, and not just one of magnitude. The fortunes made
from the 1870s through the 1890s by John D. Rockefeller, Andrew Carnegie, J. P.
Morgan, and others were American fortunes, anchored to a specific geographic
space. The Gilded Age millionaires financed an economy of scale to fit the vast
landscape that Abraham Lincoln had secured by unifying the nation in the 1860s.
These millionaires funded libraries and universities and founded symphony
orchestras and historical societies to consolidate their own civilization in the
making. Today's fortunes are being made in a global economic environment in
which an affluent global civilization and power structure are being forged even
as a large stratum of our society remains rooted in place. A few decades hence
it may be hard to define an "American" city.
Even J. P. Morgan was limited by the borders of the nation-state. But in the
future who, or what, will limit the likes of Disney chairman Michael Eisner? The
UN? Eisner and those like him are not just representatives of the "free" market.
Neither the Founders nor any of the early modern philosophers ever envisioned
that the free market would lead to the concentration of power and resources that
many corporate executives already embody. Whereas the liberal mistake is to
think that there is a program or policy to alleviate every problem in the world,
the conservative flaw is to be vigilant against concentrations of power in
government only-not in the private sector, where power can be wielded more
secretly and sometimes more dangerously.
Umpire Regimes
THIS rise of corporate power occurs more readily as the masses become more
indifferent and the elite less accountable. Material possessions not only focus
people toward private and away from communal life but also encourage docility.
The more possessions one has, the more compromises one will make to protect
them. The ancient Greeks said that the slave is someone who is intent on filling
his belly, which can also mean someone who is intent on safeguarding his
possessions. Aristophanes and Euripides, the late-eighteenth-century Scottish
philosopher Adam Ferguson, and Tocqueville in the nineteenth century all warned
that material prosperity would breed servility and withdrawal, turning people
into, in Tocqueville's words, "industrious sheep."
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In moderate doses, apathy is not necessarily harmful. I have lived and
traveled in countries with both high voter turnouts and unstable politics; the
low voter turnouts in the United States do not by themselves worry me. The
philosopher James Harrington observed that the very indifference of most people
allows for a calm and healthy political climate. Apathy, after all, often means
that the political situation is healthy enough to be ignored. The last thing
America needs is more voters-particularly badly educated and alienated ones-with
a passion for politics. But when voter turnout decreases to around 50 percent at
the same time that the middle class is spending astounding sums in gambling
casinos and state lotteries, joining private health clubs, and using large
amounts of stimulants and anti-depressants, one can legitimately be concerned
about the state of American society.
I recently went to a basketball game at the University of Arizona. It was
just a scrimmage, not even a varsity game. Yet the stadium was jammed, and three
groups of cheerleaders performed. Season tickets were almost impossible to
obtain, even before the team won the national championship. Donating $ 10,000 to
$ 15,000 to the university puts one in a good position to accumulate enough
points to be eligible for a season ticket, though someone could donate up to $
100,000 and still not qualify. I have heard that which spouse gets to keep
tickets can be a primary issue in Tucson divorce cases. I noticed that almost
everyone in the stands was white; almost everyone playing was black. Gladiators
in Rome were almost always of racial or ethnic groups different from the Romans.
"There may be so little holding these southwestern communities together that a
basketball team is all there is,' a Tucson newspaper editor told me. "It's a
sports team, a symphony orchestra, and a church rolled into one." Since neither
Tucson nor any other southwestern city with a big state university can find
enough talent locally, he pointed out, community self-esteem becomes a matter of
which city can find the largest number of talented blacks from far away to
represent it.
We have become voyeurs and escapists. Many of us don't play sports but love
watching great athletes with great physical attributes. The fact that basketball
and football and baseball have become big corporate business has only increased
the popularity of spectator sports. Basketball in particular-so fluid, and with
the players in revealing shorts and tank tops-provides the artificial excitement
that mass existence "against instinct," as the philosopher Bertrand Russell
labeled our lives, requires.
Take the new kind of professional fighting, called "extreme fighting," that
has been drawing sellout crowds across the country. Combining boxing, karate,
and wrestling, it has nothing fake about it-blood really flows. City and state
courts have tried, often unsuccessfully, to stop it. The spectators interviewed
in a CNN documentary on the new sport all appeared to be typical lower-middle
and middle-class people, many of whom brought young children to the fights.
Asked why they came, they said that they wanted to "see blood." The mood of the
Colosseum goes together with the age of the corporation, which offers
entertainment in place of values. The Nobel laureate Czeslaw Milosz provides the
definitive view on why Americans degrade themselves with mass culture: "Today
man believes that there is nothing in him, so he accepts anything, even if he
knows it to be bad, in order to find himself at one with others, in order not to
be alone." Of course, it is because people find so little in themselves that
they fill their world with celebrities. The masses avoid important national and
international news because much of it is tragic, even as they show an unlimited
appetite for the details of Princess Diana's death. This willingness to give
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up self and responsibility is the sine qua non for tyranny.
The classicist Sir Moses Finley ended his austere and penetrating work
Politics in the Ancient World (1983) with these words:
The ideology of a ruling class is of little use unless it is accepted by
those who are being ruled, and so it was to an extraordinary degree in Rome.
Then, when the ideology began to disintegrate within the elite itself, the
consequence was not to broaden the political liberty among the citizenry but, on
the contrary, to destroy it for everyone.
So what about our ruling class?
I was an expatriate for many years. Most expatriates I knew had utopian
liberal beliefs that meant little, since few of them had much of a real stake in
any nation. Their patriotism was purely nostalgic: a French friend would become
tearful when her national anthem was played, but whenever she returned to
France, she complained nonstop about the French. Increasingly, though, one can
be an expatriate without living abroad. One can have Oriental rugs, foreign
cuisines, eclectic tastes, exposure to foreign languages, friends overseas with
whom one's life increasingly intertwines, and special schools for the kids-all
at home. Resident expatriatism, or something resembling it, could become the new
secular religion of the upper-middle and upper classes, fostered by
communications technology. Just as religion was replaced by nationalism at the
end of the Middle Ages, at the end of modern times nationalism might gradually
be replaced by a combination of traditional religion, spiritualism, patriotism
directed toward the planet rather than a specific country, and assorted other
organized emotions. Resident expatriates might constitute an elite with limited
geographic loyalty beyond their local communities, which provide them with a
convenient and aesthetically pleasing environment.
An elite with little loyalty to the state and a mass society fond of
gladiator entertainments form a society in which corporate Leviathans rule and
democracy is hollow. James Madison in The Federalist considered a comparable
situation. Madison envisioned an enormously spread-out nation, but he never
envisioned a modern network of transportation that would allow us
psychologically to inhabit the same national community. Thus his vision of a
future United States was that of a vast geographic space with governance but
without patriotism, in which the state would be a mere "umpire," refereeing
among competing interests. Regional, religious, and communal self-concern would
bring about overall stability. This concept went untested, because a cohesive
American identity and culture did take root. But as Americans enter a global
community, and as class and racial divisions solidify, Madison's concept is
relevant anew.
There is something postmodern about this scenario, with its blend of hollow
governance and fragmentation, and something ancient, too. Because of
suburbanization, American communities will be increasingly segregated by race
and class. The tendency both toward compromise and toward trusting institutions
within a given community will be high, as in small and moderately sized European
countries today, or as in ancient Greek city-states. Furthermore, prosperous
suburban sprawls such as western St. Louis and western Omaha, and
high-technology regions such as the Tucson-Phoenix corridor, North Carolina's
Research Triangle, and the Portland-Seattle-Vancouver area will compete with one
another and with individual cities and states for overseas markets, as North
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The Atlantic Monthly December, 1997
America becomes a more peaceful and productive version of chaotic, warring
city-state Greece.
A continental regime must continue to function, because America's edge in
information warfare requires it, both to maintain and to lead a far-flung empire
of sorts, as the Athenians did during the Peloponnesian War. But trouble awaits
us, if only because the "triumph" of democracy in the developing world will
cause great upheavals before many places settle into more practical-and, it is
to be hoped, benign-hybrid regimes. In the Middle East, for instance, countries
like Syria, Iraq, and the Gulf sheikhdoms-with artificial borders, rising
populations, and rising numbers of working-age youths-will not instantly become
stable democracies once their absolute dictators and medieval ruling families
pass from the scene. As in the early centuries of Christianity, there will be a
mess.
Given the surging power of corporations, the gladiator culture of the masses,
and the ability of the well-off to be partly disengaged from their own
countries, what will democracy under an umpire regime be like?
The Return of Oligarchy?
SURPRISINGLY, the Founders admired the military regime of Sparta. Only in
this century has Sparta been seen as the forerunner of a totalitarian state. Why
shouldn't men like Madison and George Washington have admired Sparta? Its
division of power among two Kings, the elders, and the ephors ("overseers")
approximated the system of checks and balances that the Founders desired in
order to prevent the emergence of another Cromwell. Of course, Sparta, like
Athens, was a two-tiered system, with an oligarchic element that debated and
decided issues and a mass-helots ("serfs") in Sparta, and slaves and immigrants
in Athens-that had few or no rights. Whether Sparta was a monarchy, an
oligarchy, or a limited democracy-and whether Athens was oligarchic or
democratic-still depends on one's viewpoint. According to Aristotle, "Whether
the few or the many rule is accidental to oligarchy and democracy-the rich are
few everywhere, the poor many." The real difference, he wrote, is that
"oligarchy is to the advantage of the rich, democracy to the advantage of the
poor." By "poor" Aristotle meant laborers, landowning peasants, artisans, and so
on-essentially, the middle class and below.
Is it not conceivable that corporations will, like the rulers of both Sparta
and Athens, project power to the advantage of the well-off while satisfying the
twenty-first-century servile populace with the equivalent of bread and circuses?
In other words, the category of politics we live with may depend more on power
relationships and the demeanor of our society than on whether we continue to
hold elections. Just as Cambodia was never really democratic, despite what the
State Department and the UN told us, in the future we may not be democratic,
despite what the government and media increasingly dominated by corporations
tell us.
Indeed, the differences between oligarchy and democracy and between ancient
democracy and our own could be far subtler than we think. Modern democracy
exists within a thin band of social and economic conditions, which include
flexible hierarchies that allow people to move up and down the ladder. Instead
of clear-cut separations between classes there are many gray shades, with most
people bunched in the middle. Democracy is a fraud in many poor countries
outside this narrow band: Africans want a better life and instead have been
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The Atlantic Monthly December, 1997
given the right to vote. As new and intimidating forms of economic and social
stratification appear in a world based increasingly on the ability to handle and
analyze large quantities of information, a new politics might emerge for us,
too-less like the kind envisioned by progressive reformers and more like the
pragmatic hybrid regimes that are bringing prosperity to developing countries.
The classicist Sir Moses Finley has noted that what really separated the
rulers from the ruled in the ancient world was literacy: the illiterate masses
were subject to the elite's interpretation of documents. Analogous gulfs between
rulers and ruled may soon emerge, not only because of differing abilities to
process information and to master technology but also because of globalization
itself. Already, barely literate Mexicans on the U.S. border, working in
dangerous, Dickensian conditions to produce our VCRs, jeans, and toasters, earn
less than 50 cents an hour, with no rights or benefits. Is that Western
democracy or ancient-Greek-style oligarchy?
As the size of the U.S. population and the complexity of American life spill
beyond the traditional national community, creating a new world of city-states
and suburbs, the distance will grow between the citizens of the new city-states
and the bureaucratic class of overseers in Washington. Those overseers will
manage an elite volunteer military armed with information-age weapons, in a
world made chaotic by the spread of democracy and its attendant
neo-authoritarian heresies. We prevented the worst excesses of a
"military-industrial complex" by openly fearing it, as President Dwight
Eisenhower told us to do. It may be equally wise to fear a high-tech military
complex today.
Precisely because the technological future in North America will provide so
much market and individual freedom, this productive anarchy will require the
supervision of tyrannies-or else there will be no justice for anyone. Liberty,
after all, is inseparable from authority, as Henry Kissinger observed in A World
Restored: Metternich, Castlereagh, and the Problems of Peace 1812-1822 (1957) A
hybrid regime may await us all. The future of the Third World may finally be our
own.
And that brings us to a sober realization. If democracy, the crowning
political achievement of the West, is gradually being transfigured, in part
because of technology, then the West will suffer the same fate as earlier
civilizations. Just as Rome believed it was giving final expression to the
republican ideal of the Greeks, and just as medieval Kings believed they were
giving final expression to the Roman ideal, we believe, as the early Christians
did, that we are bringing freedom and a better life to the rest of humankind.
But as the nineteenth-century Russian liberal intellectual Alexander Herzen
wrote, "Modern Western thought will pass into history and be incorporated in it
just as our body will pass into the composition of grass, of sheep, of
cutlets, and of men." I do not mean to say that the United States is in decline.
On the contrary, at the end of the twentieth century we are the very essence of
creativity and dynamism. We are poised to transform ourselves into something
perhaps quite different from what we imagine.
GRAPHIC: Other; Illustration
LANGUAGE: ENGLISH
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15TH STORY of Level 1 printed in FULL format.
Copyright 1993 Information Access Company, a Thomson Corporation Company
ASAP
Copyright 1993 City News Publishing Company Inc.
Vital Speeches
October 1, 1993
SECTION: Vol. 59 ; No. 24 ; Pg. 745; ISSN: 0042-742X
LENGTH: 4647 words
HEADLINE: Defending civil society: Never concede to politicians and bureaucrats
the right to run our lives; Edward H. Crane speech; Transcript
BODY:
Thank you very much. It's a pleasure to be in Dallas today, although in all
candor, given my philosophical orientation, it's a pleasure to be about anywhere
other than where I work. The Cato Institute is something of an anomaly among
inside-the-Beltway institutions in that our purpose is not to spend the money
and run the lives of everyone who lives outside the Beltway. Quite the contrary,
we view our mission as protecting the interests and rights of those Americans
who do live outside the Beltway in what we now refer to as the "private sector.'
There was a time in this nation's history when people would have looked at
you quizzically if you had said you were from the "private sector." For the
first half of the great American Experiment, society and what we call the
private sector were pretty much the same thing. Government, or what we now call
the "public sector,' was viewed as a necessary evil - and therefore kept very
small. with its task being limited to protecting the rights to life, liberty,
and property of those individual human beings who constituted society.
But as everyone in this audience is keenly aware, things have changed. In
the early part of this century, government spending at the federal, state, and
local levels amounted to under 10 percent of national income. But by 1950 that
figure had risen dramatically to 26 percent. Today, spending at all levels of
government amounts to 43 percent of national income and is continuing to grow.
This, I submit, is something that should be of considerable concern to anyone
who values freedom and prosperity.
I agree with Milton Friedman, who says that the true level of taxation on
the American people is the level of government spending. That is, the burden on
those of us in the private sector is determined by the amount of resources
extracted by the public sector. Whether the extractions come in the form of
taxes, borrowing, or inflation is, from this point of view, less important than
the fact that resources are being removed from the private, productive,
job-creating part of society. So in this sense the deficit issue is bogus. The
government never has a deficit - it spends every penny it can get its greedy
little hands on. If you want to cut spending primarily to reduce the deficit,
that's fine with me, but from my perspective, I want to cut spending because to
do so increases the prosperity and freedom of the private sector.
And, of course, spending is only part of the burden the private sector
suffers at the behest of the public sector. Regulations alone cost the American
consumer an estimated $ 600 billion a year, according to Murray Weidenbaum at
the Center for the Study of American Business. In fact, when you talk about
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regulation, there's not a single element of your existence that some politician
or bureaucrat inside the Beltway doesn't feel completely justified in regulating
or controlling - if he's not already doing so.
You know, someone once said, and I'm certain this is true, if you took every
bureaucrat inside the Beltway and laid them end-to-end, that that would be a
good thing.
What I'd like to do today is make the case for what I call the civil society
over political society. Sometime back the famous jurist Oliver Wendell Holmes
wrote, "Taxes are what we pay for civilized society." I think Holmes got it
precisely wrong. In fact, I would argue that the level of taxation and of
government regulation is a measure of our failure to civilize our society.
Because there are basically only two ways to organize society: Coercively,
through government mandates, or voluntarily, through the private interaction of
individuals and associations. Take all the various political "isms" and they all
boil down to a single question. Fascism, communism, conservatism, liberalism,
neoconservatism - you name it - the bottom line of political philosophy and
therefore of the politics, itself, is "Who is going to make the decision about
this particular aspect of your life, you or somebody else?" There's an awful lot
of heavyweight philosophical debate that goes on, but don't let them fool you:
Politics is about the individual's relationship to the state, pure and simple.
Do you spend the money you earn or does some politician? Do you pick the school
your child goes to or does some bureaucrat? Can you buy products someone from
another nation made or does a politician say you can't have that choice? Can you
pick your own retirement plan, or are you forced to put so much money into a
mandated pay-as- you-go government plan, that you can't afford to choose for
yourself?
In a civil society you make the choices about your life. In a political
society someone else makes those choices. And because it is not the natural
order of things for someone other than you to make those decisions about your
life, the political society is of necessity based on coercion. None other than
George Washington warned us of this reality when he wrote,
"Government is not eloquence; it is not justice. It is force. Like fire, it
is a dangerous servant and a fearsome master."
Civil society, on the other hand, is based on voluntarism and predicated on
giving the widest possible latitude to the individual SO that he has sovereignty
over his own life, so long as he respects the equal rights of others in society.
It's a simple concept, really, but a radical one nevertheless. It's the concept
on which this great nation of ours was founded and which was so revolutionary
that it motivated tens of millions of people from around the globe to come here,
often giving up everything, just to live in the "land of the free." The
immigrants of the past did not - and they do not today - come to America for
food stamps, wheat subsidies, or Head Start programs. They come, and come, for
the right to live their own lives as they choose.
Here's an interesting thought experiment. Suppose we increased the level of
immigration, but the rule would be that immigrants and their descendants would
have no access to government social services, including welfare, social
security, health care, business subsidies, or the public schools. I would argue
first that there would be no lack of takers for that proposition. Second,
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within a generation, we would see these immigrants' children going to better and
far cheaper schools than the average citizen; there would be less poverty, a
better work ethic, and proportionately more entrepreneurs than in the rest of
U.S. society; and virtually everyone in this group would have high deductible
catastrophic health insurance, while the truly needy would be cared for by an
"immigrant culture" that gave proportionately more to charity. If my hypothesis
is true, and I believe it would be for virtually any immigrant group you could
name, it is something to think about, isn't it?
Today, the vision of liberty that drew immigrants to the United States in
the past, is inspiring freedom movements all around the globe. More than an arms
build-up, it was the ideas of the American Revolution that toppled communism in
Eastern Europe, and that is energizing freedom fighters in Asia, Africa, and
Latin America to set up societies in which the individual is more important than
the state. The tragedy is that, while all these wonderful movements for freedom
are going on, we seem to have forgotten the lessons of our forefathers here at
home. Rather than losing ground, government in the U.S. is steadily gaining
ground. The political society is winning at the expense of the civil society.
The last presidential campaign is a case in point. With all due respect to
the great state of Texas, that campaign was not one of the high points in the
history of political discourse. George Bush could not offer a satisfactory
reason why he broke his promise to the American people not to raise taxes, much
less explain why he wanted a second term. Ross Perot did allow us to express our
frustration with both the Republicans and Democrats, but in the process
temporarily dropped out of the campaign because, he said, the Republicans were
out to sabotage his daughter's wedding. And Bill Clinton, the erstwhile pal of
Gennifer Flowers, pretended he was a New Democrat while his wife Hillary baked
cookies and didn't let on for a minute that she planned to totally revamp
one-seventh of our GDP in the first hundred days of the new administration.
That campaign was in my view, and to put it mildly, unworthy of the American
people. We have an interest in politics precisely because it does deal with our
relationship to the state and all that that entails. Politics has a profound
impact on our lives and the lives of our loved ones. We deserve more than
platitudes, paranoia, and pratfalls in our presidential candidates. But the
great tragedy of the 1992 presidential campaign was not so much in the personal
weaknesses of the individual candidates as it was in its utter lack of
philosophical content. The Founders of this nation believed that government had
to be strictly limited, that there were vast areas of human society in which
government had no legitimate role to play at all. Messrs. Bush, Perot, and
Clinton did not and do not share that view. To them, there is no area of human
activity that government cannot be involved in, no social or economic problem
that government cannot solve. The only real debate between them, when you
analyze it, was over how much in the way of resources government has to deal
with these problems.
It does seem ironic that so many politicians in this country hold this
curiously benign view of government as some kind of giant nanny, that will make
everything okay if we just give it more money. Because as we enter the
twenty-first century, government activities beyond its legitimate function of
the protection of life, liberty, and property have pretty much been exposed as
one of the great failures of civilization. Coercive, political society simply
doesn't work very well. Most people, whether they're willing to admit it or not,
know that now. There is a reason why East Germany produced the smoke-belching
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bucket-of-bolts Trabant, and West Germany produced the Mercedes, the BMW, the
Porsche, the Audi, and the Volkswagen. Same people, same culture, different
political system. Civil society worked; political society didn't.
Yet politicians in America continue to give credence to the idea that the
political society can address our problems better than the institutions of the
civil society. As Milton Friedman has observed, we seem to be saying that we
know that socialism is a failure and that capitalism is a success, therefore we
need more socialism.
Ladies and gentlemen, the time has come for us to say that the Emperor has
no clothes. We've been too tolerant for too long of politicians and their court
intellectuals who smugly tell us that 30 years of declining SAT scores and
increasing expenditures means we must spend more on the public school monopoly;
that sluggish economic activity means we must take more money from the
productive sector to give to government bureaucrats; that protectionism saves
jobs when we know it costs many more than it saves; that we must sacrifice while
Congress votes itself a 30 percent pay raise; that escalating health care costs
means we need more government involvement in medicine, rather than less.
How much longer can we let this charade continue? Freedom isn't perfect. The
civil society will have its problems. But compared to the litigious,
contentious, corrupt political society? Can anyone seriously maintain that a
single major domestic government program has actually worked? That the private
sector isn't more responsive, innovative, cost-effective, and, indeed, humane,
than the public sector? I don't think SO.
Consider just a few examples of where the American government has assumed a
huge role in our society. In a civil society, people provide for their own
retirement by saving real money. Those savings go into savings accounts, stocks,
bonds, and other vehicles to provide the capital that creates jobs, productivity
and economic growth. In a political society where the government runs the
retirement system, there are no real savings because politicians would rather
spend the money now and pretend that it's in a trust fund, as they do with
social security. Did you know that according to the government's own figures the
combined payroll tax will reach 26 percent early in the next century - and
that's based on the eternally optimistic acturial assumptions of the Social
Security Administration? (Of course, their idea of optimistic is that we'll all
stop living longer.)
But there's going to be intergenerational warfare before we get a combined
payroll tax of 26 percent. The younger generation will not play the victim in
some babyboomer Ponzi scheme. There is a way out of this looming disaster that
the politicians pretend doesn't exist. It involves seriously cutting federal
spending and allowing young people, say those under 40, to opt out of a system
and invest instead in a tax-free Super IRA, thereby creating capital, economic
growth, and retirement security outside of the political society.
Or take government regulation of business, which is pervasive,
counterproductive, and harming America's international competitiveness. In a
civil society such regulation.as existed would be for the purpose of preventing
fraud, misrepresentation, and excess pollution (note I said excess pollution"
because any ecomomic activity creates waste - although capitalism produces much
less waste than socialism as witness the horribly polluted Eastern European
nations - and there are those in the Green Movement who are more interested in
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shutting down industry than they are in preventing pollution). But in a
political society business regulation takes on a life of its own, with
bureaucracies brimming with bureaucrats who make a living by throwing wrenches
into the machinery of the free market. That's why the so-called Clean Air Act
requires about $ 4 billion of expenditures to combat acid rain, when a ten-year
$ 500 million government study concluded that acid rain was a non-problem. Less
than one percent of American lakes are acidic and the majority of those are
acidic for natural reasons, unrelated to industrial waste. The great Nobel
laureate economist F. A. Hayek, who held the honorary title of Distinguished
Senior Fellow with the Cato Institute prior to his passing last year, used to
refer to attempts by bureaucrats and politicians to improve on the marketplace
through government regulations as the "fatal conceit." It's an apt phrase,
because what the bureaucrats and government planners never really comprehend is
that the market is a continuous discovery process. Regulation, by its nature,
blunts the discovery process by forcing businesses to act in a prescribed
manner, thereby limiting the options from which to discover better alternatives.
Let me give you an example of what I mean. When interstate trucking was
heavily regulated there wasn't much competition and a few big companies
dominated the industry. Many smart economists and even some bureaucrats believed
that if the market for interstate trucking was deregulated, competition would
increase, leading to lower shipping rates. They were right. But what they didn't
predict was that the deregulated market would generate much greater savings - on
the order of tens of billions of dollars - by discovering that greater
flexibility allowed for radical downsizing of inventories, the so-called
just-in-time-inventory phenomenon.
And this discovery process, which the political society stifles, applies in
any number of fields. I mentioned the high cost and low quality of much of our
government monopoly education system. In a civil society parents, not
bureaucrats, determine where their children go to school, and I should say, what
curriculum they study. The whole debate over prayer in school is a good example
of the inherent conflict that exists in political society. Private schools cost
much less and do a better job while affording parents the opportunity to have
their child pray or not, depending on their choice. The teachers unions and
public school bureaucracies fight the idea of school choice with a remarkable
passion, given their record of success.
But the truth is that the days of public school monopoly are numbered.
Parents are increasingly demanding their right to opt out of the political
educational system and join the civil educational system. I said the discovery
process works in education. It does so in a very simple but effective way. Take
our inner city schools, which in many instances are not much more than day care
prisons. Given a choice system, the parents of these kids who are being deprived
a fair start in life would immediately improve the quality of education in the
inner city. How? This is how: Mrs. Smith notices that Mrs. Jones kids tuck in
their shirts, say "yes, sir," and "yes, mam," and generally keep their noses out
of trouble. Mrs. Jones, which school did you say you're sending your kids to?
And don't buy the argument that there simply aren't enough schools to meet
the demand. Empowering parents with school choice vouchers will be incentive
enough for entrepreneurs like Chris Whittle and others to fill the void. One
final example of the superiority of the civil society over the political society
and then I'll offer two ideas that I think would go a long way toward rolling
back the encroachment of government. As you know, Hillary Rodham Clinton is
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determined to change our health care system in America. She's right that there
is something wrong with the system. She's wrong in believing that it suffers
from too little government involvement. Most Americans don't want the same
system that delivers the mail delivering our health care.
Over the past two decades health care expenditures have risen from about six
percent of GDP to about 14 percent. That's a huge increase that reflects
systemic problems. The roots of those problems go back to the government-imposed
wage and price controls of World War 11. With wages frozen companies competed
for employees by offering improved fringe benefits, most notably free health
insurance. By the time the IRS got around to realizing that health insurance was
in fact income to the worker, it had become such a popular benefit that their
attempt to tax it was overturned by Congress. Hence, we have today a third party
payment system that features very low deductibles - generally ranging from $ 100
to $ 300 - that makes health care appear to be almost a free good to the
consumer. Low deductibles for health care are like buying grocery insurance and
saying, lucky I have this grocery insurance because we're out of food again this
week.
Health care expenditures are a part of life and should be paid for by the
consumer, just like we pay for our groceries. Insurance should be limited to
catastrophic or high dollar coverage. The Cato Institute has developed a free
market aproach to health care called the Patient Power plan based on our book by
that name and which, incidentally, was authored by John Goodman of the
Dallas-based National Center for Policy Analysis. Here's how it would work: The
average company now pays $ 4500 for an employee's family health plan, all of
which is deductible for tax purposes. We propose having the company instead
purchase a $ 1500 catastrophic, $ 3000 deductible plan, giving the employee the
remaining $ 3000 to place in a Medical Savings Account, which would accumulate
earnings tax-free, like an IRA. The $ 3000 would not be taxable to the employee
but the government wouldn't be out any money because the whole $ 4500 was a
business expense for tax purposes in the first place.
At this point the employee now has first dollar responsibility for his or
her health care. Suddenly, the discovery process of the market kicks in as the
consumer - rather than state regulated, cost-plus third party insurance
companies - is controlling the health care dollar. Like Mrs. Smith and Mrs.
Jones, word gets around who charges what and we start to see some comparison
shopping. When patients do go to the doctor - and they don't go as frequently as
they used to because they get to keep whatever they don't spend of the $ 3000 in
their Medical Savings Account - they start asking if this procedure is really
necessary; do we really need another x-ray; and isn't there a generic drug that
does the same thing as this designer drug does for one-tenth the cost? Suddenly,
nurses will start being polite because when people are spending their own money,
that's what they expect.
In addition, we estimate that there will be over $ 30 billion in
administrative savings alone with this plan because insurance companies won't be
checking on the vast bulk of medical expenses they currently have to. Some 94
percent of Americans never exceed $ 3000 in medical expenses during the course
of the year, and it's only when they do that insurance companies come into play.
Another benefit of the Patient Power plan is that the savings that
ccumulate in the Medical Savings Account provide health care security between
obs. The funds there can be used to purchase individual insurance until the
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worker is under another company plan. You hear a lot about the estimated 37
million uninsured Americans, but what you don't hear is that fully half of them
are uninsured for four months or less, and some 70 percent of them are uninsured
for a year or less. We can deal with the remaining 11 million or so Americans
without driving the rest of us into some kind of government managed plan
complete with rationed care and higher costs. In fact, many of the remaining
unisured would take advantage of the tax feature of the Patient Power plan that
would allow them to set up their own Medical Savings Accounts independent of
their employer.
We estimate that the total savings from the Patient Power plan would be in
excess of $ 200 billion a year - all without mandates, taxes, or more government
involvement in health care delivery.
The list of major government failures goes on and on. Welfare dependency,
the savings and loan debacle, wetlands regulations - it's not an enviable
record, and given the history of governments around the world, we shouldn't
expect it to be. I hardly claim to know all the answers on how to reverse the
growth of government in America, but as I mentioned, I do have two proposals
that I believe can effect systemic change in the dynamics of that growth. The
first is radical tax reform. There is a growing grassroots movement - that is
gaining increased academic support - to simply get rid of our income tax system
and replace it with a federal retail sales tax.
Let me immediately point out that I am definitely not talking about a
value-added tax (VAT). The problem with a VAT is that it is far too easy to
increase. It's a hidden tax and the experience in Europe is that it just grows
'n' grows. A federal retail sales tax is something else. For one thing, you'd be
aware of it every time you bought something. For another, it's so simple and
easy to understand that it would be much easier to create some taxpayer
solidarity in trying to lower the level of federal taxes (which did not,
contrary to popular opinion, decline during the Reagan years). Instead of
grabbing your wallet when somebody mentioned tax reform, as is the case under
the current system, all you'd have to do is vote for the candidate who promises
to lower the federal sales tax.
According to a Cato Institute study by the noted Boston University economist
Laurence Kotlikoff, an initial federal sales tax of 17 percent would replace the
funds raised today by all the various income taxes - personal, corporate, and
capital gains. Because of the boost to the economy such a tax structure would
create through increased saving and, hence, productivity, the tax could
eventually be lowered to just 11 percent, according to Kotlikoff.
Furthermore, there is something to be said for the salutory effects of
Americans living in a country where it was none of the government's business how
much money they made. The civil liberties implications of not needing an IRS to
fund the federal government should by itself make the concept of a federal sales
tax - as a replacement, not an addition to the income taxes - worth considering.
The second systemic reform we need to implement as soon as possible is
legislative term limitation - at the local, state, and federal levels. To put it
bluntly, too many of our problems as a nation are a direct result of
professional politicians who suffer from Hayek's "fatal conceit. With the
system we have today, where, for instance, it takes an average of 19 years in
office for a congressman to become a committee chairman, a lot of good folks
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look at the prospect of running for Congress and decide not to because they'd
have to be there too long before they had any real influence. They don't want to
spend 10, 15, or 20 years as a politician. They'd rather live in the private
sector leading productive lives as doctors, businessmen, computer programmers,
or whatever.
The problem is, that is precisely the kind of person we need in Congress -
not the person who looks at running for Congress and thinks, Gee, I could stay
there the rest of my life! For democracy to work, it must be representative
democracy, which means our elected officials represent the private sector, not
the public sector. We know which sector career politicians identify with.
But even if we didn't have this adverse preselection process - even if the
men and women serving in Congress truly did represent a good cross-section of
the private sector - eventually even the best of them would be corrupted by what
I call the "culture of ruling" inside the Beltway. It is unnatural to wake up
every morning and have reporters pushing microphones in your face, asking you
your opinion on everything under the sun. Pretty soon you start thinking that
maybe your opinion is more important than it really is. Worse, you start
thinking that maybe you should codify your opinion on everything under the sun.
Indeed, the records kept by groups like the National Taxpayers Union demonstrate
that the vast majority of congressmen become bigger spenders and submit more and
more bills, the longer they're in office. I wonder, for instance, if an earlier
Phil Gramm would have volunteered to carry George Bush's water on the huge tax
increase that ultimately did in his administration?
In any case, we need to limit the terms these people serve in Congress for
their own sakes, if for nothing else. The national movement for term limits is
rapidly growing. It calls for a six year limit in the House and 12 years in the
Senate. If we're going to have a government of, by, and for the people, we're
going to have to have true citizen legislature and that means we're going to
have to have term limits.
Let me conclude by reminding you of America's heritage of freedom. The
Founders of this great nation thought they were creating a civil society. They
did, and for a century or more it worked magnificently. But just as the Founders
feared and tried to prevent, the political society has emerged again with a
vengeance in the Twentieth Century. We must not let the George Bush's and Bill
Clinton's of the world destroy the great American experiment in human liberty.
There is, it seems to me, a moral imperative for us to reclaim our heritage as a
free people and our right to live in a civil society. It can be done, if only we
take seriously our responsibilities as a free people, which means never
conceding to politicians and bureaucrats the right to run our lives. Thank you
very much.
IAC-NUMBER: IAC 14601805
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Copyright 1994 The Heritage Foundation
Policy Review
1994 Summer
SECTION: No. 69; Pg. 14
LENGTH: 4963 words
HEADLINE: SERFDOM USA;
How Far Have We Traveled Down Hayek's "Road"?
BYLINE: DICK ARMEY, MALCOLM S. FORBES JR., MILTON FRIEDMAN, PHIL GRAMM, VIRGINIA
POSTREL, JENNIFER ROBACK, JUDY SHELTON, FRED L. SMITH JR.
BODY:
The free world celebrates two special 50th anniversaries this year. One is
of D-Day, the beginning of the end of Nazi Germany's evil empire. The other is
the publication of The Road to Serfdom, by Friedrich Hayek, which warned that
Britain, America and other free nations that were expanding the welfare state
and adopting centralized economic controls were unintentionally traveling down
the same road to serfdom that led to fascism in Germany and communism in Russia.
Hayek's Road, and his later works such as The Constitution of Liberty and Law,
Legislation and Liberty, are among the most influential books in modern
conservatism. To mark its semicentennial, Policy Review asked some of America's
most thoughtful students of freedom to answer whether our country has moved
closer or further from serfdom in the 50 years since Hayek's prophecy.
DICK ARMEY
Certainly we've travelled further down the road to serfdom since 1944, but
that's really not the interesting question. The real issue is, in which
direction on that road are we heading now? I believe we have just made a
screeching U-turn aud are now heading back toward freedom -- but Washington
doesn't know it yet.
Ironically, things in this country began to go wrong at the precise moment
Hayek was writing. That's when our statists conceived income-tax withholding,
the scheme that made our modern leviathan possible. In the old days, when free
Americans paid their taxes out of their own wallets, there was a limit to how
much revenue our statists could raise without having a rebellion on their hands.
People could see how much they paid the government, and judge if the return was
worth it. But once World War II gave the statists an excuse to take our money
from our paychecks before we even touched it, the obscene growth of the
government became inexorable.
Today, we are staggering beneath a bloated government that spends over $
24,000 for each household in America, an amount equal to almost 40 percent of
the nation's economy. Every cent a typical American earns from New Year's Day
to May 5 he in effect surrenders to the government. Throw in the hidden cost of
government regulations -- a concealed tax of over a half-trillion dollars a year
-- and it is not until July 13 that he stops working for the political class and
begins working for himself. Young families with children suffer the cruelest
burden. gen millions of American couples need a second income, they need it not
to support their children, but to support the government. Yes, we are indeed
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Policy Review 1994 Summer
frighteningly close to serfdom.
But liberation is at hand. For all the gloom of the Clinton term, we must
remember that a paradigm-shattering revolution has just taken place. In the
signal events of the 1980s from the collapse of communism to the Reagan
economic boom to the rise of the computer -- the idea of economic freedom has
been overwhelming vindicated. The intellectual foundation of statism has turned
to dust. This revolution has been so sudden and sweeping that few in Washington
have yet grasped its full meaning-which is why the Clinton plan to nationalize
our health care is actually taken seriously. But when the true significance of
the 1980s freedom revolution sinks in, politics, culture -- indeed, the entire
human outlook -- will change.
Capitalism will lose its century-old connotation of materialism and greed,
and will at last be recognized as an unambiguous good, the only system
compatible with our creative human natures. The redistributionist pessimism of
today's elites will give way to a new populist optimism of growth and
opportunity. Policies that restrict economic freedom will suddenly seem
backwards and reactionary; those that expand it will be seen as enlightened and
progressive. And the Clinton administration will be remembered as an anomaly,
the last gasp of a cause that had already been lost.
Once this shift takes place by 1996, I predict we will then be able to
advance a true Hayekian agenda, including a fiat tax, radical spending cuts, the
end of the public school monopoly, a free market health-care system, and the
elimination of the family-destroying welfare dole. Unlike 1044, history is now
on the side of freedom.
DICK ARMEY represents the 26th District of Texas and is chairman of the House
Republican Conference.
MALCOLM S. FORBES JR.
The road to serfdom has changed direction to the road to freedom. The
combination of high technology and the failure of socialism has given
traditional liberalism a new lease on life.
Industrialization was once seen by many observers as the enemy of the
individual. Mass production meant monotonous assembly lines. Factories meant
uprooting people from traditional rural societies to rootless, impersonal urban
environments. An industrial economy meant more complex, more remote
hierarchies. On the land, the peasant or the small farmer personally knew, or
at least was familiar with, the landlord and members of the gentry. An auto
worker, by contrast, rarely, if ever, saw the chairman of General Motors.
Non-Marxist intellectuals viewed industrialization as a Faustian bargain
where people sacrificed their humanity to enjoy a better material life.
Marxists saw workers being impoverished as well as dehumanized.
Thus socialism was seen by many supposedly thoughtful people as a means of
bringing fellowship and unselfish, uncoerced cooperation among workers in the
workplace as well as enriching their standard of living.
Three catastrophes the two world wars and the Great Depression made
some sort of collectivism seem the wave of the future.
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Policy Review 1994 Summer
World War I, with its totally unexpected, seemingly pointless battlefield
slaughter of an unimagined, horrific scale shattered the faith of many in the
beliefs and institutions of Western civilization. The individualism glorified
in the 19th century seemed hopelessly quaint after the First World War. The war
was a catalyst for massive government penetration into and domination of society
on a scale utterly inconceivable before the conflict.
The Great Depression discredited American-style laissez-faire economics.
Given this catastrophic contraction, economists concluded, free markets could
not be left to themselves. The notion of a mixed, peacetime economy was born.
Politically, the Depression discredited Parliamentary democracy. After World
War I most European countries either had or established democratic governmeats.
By the mid-1930s, all but a handful had collapsed. Parliamentary democracy was
seen as weak, corrupt, incompetent. By contrast, fascism and Nazism seemed more
modern, brisk, efficient.
It took a world war to defeat Nazi-style totalitarianism. But this war also
gave for a while anyway enormous prestige to the totalitarian Soviet
Union. After the experiences of the inter-war years, even Western Europe saw
some measure of socialism, or "social democracy," as an antidote to unemployment
and as an agent for a humane society.
This was the environment in which Hayek wrote his book. Most politicos,
writers, academics and "generally informed" people believed in some variation of
what came to be called the welfare state.
How different the environment is today. Even socialists have to disguise
their agendas with free market rhetoric * la Bill Clinton, or in the garb of Al
Gore's apocalyptic environmentalism, or with European-style protectionism. The
administration's attempt to de facto nationalize health care is the last great
offensive of the collectivists.
Technology is now an agent of individualism. The microchip, which is
expanding the reach of the human brain the way machines expanded the reach of
the human muscle in the last century, is flattening hierarchies the way
electricity physically flattened factories when it replaced steam power in the
early part of this century. We simply don't need as many layers of management
to process information as we did before. The corporate sector has been
undergoing this process for years; the public sector will soon be hit with it,
too.
The microchip is the enemy of the tyrant. Not so long ago, money had to be
transported physically by, say, putting bars of gold in ship bottoms or in
wagons. Governments could literally prohibit their citizens from moving their
wealth outside of their jurisdictions. Today the blip of a computer can
transport hundreds of billions of dollars in less than a second.
Dictators can enslave the body, but they can no longer capture the true
source of wealth, the human mind.
Wealth is less and less being measured by material resources. Resource-rich
Brazil remains mired in an economic morass. Resourceless Hong Kong, which has
to import its drinking water, is one of the richest and most densely populated
specks of real estate on the earth today.
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Policy Review 1994 Summer
Now that the Cold War is over, the United States is paying serious attention
to its extraordinary surge of violent crime and to soaring rates of
illegitimacy. What was somewhat tolerated when we faced an external threat, has
become intolerable now that the threat has been removed. We are seeing the
stirrings of a number of reform movements, especially spiritual ones. A
harbinger: Bill Bennett's best-selling, The Book of Virtues.
People today want to improve their lives, not only materially, but in quality
as well. We may soon be experiencing a modern version of the Great Awakening
that SO profoundly influenced pre-Revolutionary America in the mid-18th century.
MALCOLM S. FORBES JR. is editor-in-chief of Forbes magazine.
MILTON FRIEDMAN
The fall of the Berlin Wall, the collapse of communism behind the Iron
Curtain, and the changing character of China have reduced the defenders of a
Marxian-type collectivism to a small hardy band concentrated in Western
universities. Today there is wide agreement that socialism is a failure, and
capitalism a success. Yet this apparent conversion of the intellectual
community to what might be called a Hayekian view is deceptive.
While the talk is about free markets and private property, and it is more
respectable than it was a few decades ago to defend near-complete laissez-faire,
the bulk of the intellectual community almost automatically favors any expansion
of government power so long as it is advertised as a way to protect individuals
from big, bad corporations, relieve poverty, protect the environment, or promote
"equality."
The present discussion of a national program of health care provides a
striking example. The intellectuals may have learned the words but they do not
yet have the tune.
The message of The Road to Serfdom is even more relevant to the United States
today than half a century ago. Intellectual opinion then was far more hostile
to the book's theme than it appears to be now, but practice conformed to it far
more than today. Post-World War II government was smaller and less intrusive
than it is today. Lyndon Johnson's Great Society programs, including Medicare
and Medicaid, and George Bush's Clean Air and Americans with Disability acts
were all still ahead, let alone the numerous other extensions of government that
Ronald Reagan was only able to slow down, not reverse in his eight years in
office. Total government spending -- federal, state, and local -- in the United
States has gone from 26 percent of national income in 1950 to nearly 45 percent
in 1993.
Much the same has been true in Britain, in one sense more dramatically. The
Labour Party, formerly openly socialist, now defends free private markets; and
the Conservative Party, once content to administer Labour's socialist policies,
has tried to reverse and to some extent under Margaret Thatcher succeeded in
reversing -- the extent of government ownership and operation. But Margaret
Thatcher was unable to call on anything like the reservoir of popular support
for liberal values that led to the withdrawal of the "control of engagements"
order shortly after World War II. And while there has been a considerable
amount of "privatization" there as here, government today spends a larger
fraction of the national income and is more intrusive than it was in 1950.
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Policy Review 1994 Summer
On both sides of the Atlantic, it is only a little overstated to say that we
preach individualism and competitive capitalism, and practice socialism.
MILTON FRIEDMAN is a senior research fellow at the Hoover Institution. Excerted
from the foreward to The Road to Serfdom, Fiftieth Anniversry Edition, by F. A.
Hayek, to be published Sepetember, 1994 by the University of Chicago Press. (c)
1944, 1994 by the University of Chicago. All Rights Reserved.
PHIL GRAMM
The Road to Serfdom didn't predict that greater government control over the
economy would lead to totalitarianism overnight. Rather, Hayek argued that "the
most important change which extensive government control produces is a
psychological change, an alteration in the character of the people. He sensed
that people would gradually lose their spirit of self-reliance and independence,
would gradually surrender their freedom for the promise of greater security. He
feared that serfdom would arrive with a whimper, not a bang.
I think some of the demoralization Hayek predicted has unquestionably taken
place, even in America. The latest example is that in the last few months,
three different pollsters have found that when Americans are asked, "Do you feel
your children are going to do better than you have done?" by almost a 2-to-1
margin, they say, "No."
This loss of faith in the American dream is a direct consequence of the
growth of intrusive, burdensome and initiative-smothering government.
As a measure of this growth, consider the following: In 1950, the average
American family making the median income with 2 children sent $ 1 out of every $
50 it earned to Washington. Today, the average American family sends $ 1 out of
every $ 4 it earns to Washington.
Such a massive transfer of resources has had a remarkable effect. By taking
income and decision-making power from families and small businesses, politicians
have encouraged people to believe that they are no longer in charge of their own
destinies, that their salvation lies in Washington. For Americans misled by
politicians who "feel your pain, the American dream of success through hard
work, sturdy self-reliance, and personal responsibility seems increasingly
stale. It could not be otherwise for those who embrace the notion that success
lies in defining themselves as victims.
If that trend gathers momentum, the entire shape of our social and political
landscape will change for the worse. As government expands and the American
dream fades, social mobility will become the exception rather than the rule.
America will increasingly come to be divided along class lines, and the politics
of resentment will replace the politics of hope and opportunity. Such a climate
is hardly conducive to the success of liberty.
All of this stops well short of saying that Hayek's prediction is on the cusp
of coming true. Socialism as well as totalitarianism failed and were rejected
in Eastern Europe. In my heart, I know that America's destiny is, and always
will be, freedom -- provided we mend our ways.
In Dickens's A Christmas Carol, a chastened Ebenezer Scrooge, horrified by
his glimpse of the future that seemingly awaits him, asks the Ghost of
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Policy Review 1994 Summer
Christmas Yet To Come, "Are these the shadows of things that will be, or are
these the shadows of the things that may be, only?" Every child knows the answer
to Scrooge's question: By altering his behavior, he alters his destiny.
So can we. If we want to get off The Road to Serfdom, we must make the
relentless pursuit of freedom our purpose, the empowerment of every American
family our goal. The battle for individual freedom will not be decided in
Eastern Europe or in the Third World. It will be won or lost not in the Kremlin
but in the Capitol. If the road to serfdom is to be the road not taken, liberty
must be reaffirmed here in America. That was Hayek's mission when he charted
The Road to Serfdom, and it should be ours now.
PHIL GRAMM is the senior senator from Texas and is chairman of the National
Republican Senatorial Committee.
VIRGINIA POSTREL
When The Road to Sefdom was published, Americans were putting up with
government actions they would never tolerate today rationing, wage and price
controls, draconian export restrictions, the imprisonment of innocent
Japanese-Americans and the confiscation of their property, the draft not only
because wartime seemed to justify such measures but because the reigning
ideology deemed them fair and efficient. At least in our attitudes, we have
come a long way from serfdom.
When Hayek laments "the increasing veneration for the state, the admiration
of power, and of bigness for bigness" sake, the enthusiasm for "organization" of
everything
and that "inability to leave anything to the simple power of
organic growth, we see his times, not ours. That veneration of government,
that love of bigness, vanished with the Great Society and Watergate, the
Organization Man and the Feminine Mystique, gas lines and stagflation.
The self-centered politics of the older baby boomers, despite their dangerous
excesses, weakened the notion that government should subordinate individual
happiness to the social good. And the cynicism of younger Americans mocks the
old boomers' remaining faith in activist government. Somehow, too, we avoided
the "piling-up of restrictions on the movement of men and goods" that full-blown
serfdom requires. World trade busted the monopolies Hayek feared as both the
effect of and the justification of regulation; today we're actually beginning to
see competition in electricity.
In 1944, technology and science appeared to side with serfdom, with mass
production and monopoly, and with social engineering. Today, these very
disciplines tradercut the arguments for uniformity and control. Emergent
behavior, chaos theory, complexity, genetic algorithms, and evolutionary systems
all encourage dynamic, Hayekian world views.
The personal computer demonstrates that revolutionary inventions can come
from unknown misfits, weakening the argument for "rational planning. No
bureaucrat would have forseen Apple or backed Bill Gates. The cheap
biotechnology of the next generation makes forecasting even less predictable.
Hayek feared that young people would choose security over independence.
Today, we are struggling to figure out how to live again in a world of
independence. Reconstructing the virtues that Hayek cherished
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Policy Review 1994 Summer
"independence, self-reliance, and the willingness to voluntary co-operation with
one's neighbors" is the difficult task ahead.
The Road to Serfdom is in disrepair. But we have not yet escaped it. Most
of the regulations remain, despite the changed Zietgeist, and Hayek never
envisioned the controls environmentalism would bring. The Clinton
administration still celebrates German security and order, learning nothing from
Hayek's day. Its healthcare scheme, with its destruction of individual plans
and its contempt for innovation, is a blueprint for serfdom. The Food and Drug
Administration is running amok. A twisted version of feminism is bringing
government into ever more intimate areas of life.
Perhaps, like the children of Israel, we must wait for the old serfs to die.
Perhaps even that vail not surface. But we are better off than we were 50 years
ago. Back then people really believed in planning, uniformity, and bigness.
Now most Americans would find such notions laughable or threatening. And
changing minds is the prerequisite for changing policies.
VIRGINIA POSTREL is editor of Reason.
JENNIFER ROBACK
Without question, the poor and working-class of America are closer to serfdom,
now than they were 50 years ago. For the political process has systematically
closed every market in which they can compete without assistance. The poor now
exist at the sufferance of other people. They are indeed serfs.
The jobs that people of modest means can perform have been drastically
limited, by a variety of regulations, the minimum wage being only the best-known
example. But the restrictions include health and safety regulations, as well as
a panoply of mandated benefits, such as family leave policies. The result is a
two-tiered labor market, in which the privileged few have very good jobs, and
large numbers of people have either no job at all, or part-time, part-year jobs,
for which the mandated benefits are not required.
Poor and working-class people can no longer provide or purchase for
themselves a variety of services. The research of David Beito shows that the
poor used to be able to purchase lowpriced and low-quality housing. As the
family accumulated more money, they would place their old dwelling onto rollers,
and roll it into the back lot, and build themselves a nicer home. They would
rent out the older house, often to elderly family members, or to young family
members just beginning their own families. In this way, the poor provided not
only housing, but capital and community, for themselves. Outlawing the "backlot
tenement" was one of the first objectives of progressive reformers. Through
fraternal societies, the working class provided health care, life insurance,
disability insurance, and recreation. Members of fraternal societies often
received the services of a "lodge practice doctor," as part of their annual
dues. The doctor made house calls, and provided services to the lodge member
and his entire family. Outlawing the lodge practice doctors was one of the
principal objectives of medical reformers.
The knowledge of how to create a life without the state is dying off with the
last generation of working-class people who actually lived that life. My father
was a founding member of his " parish. The school my siblings and I attended
charged no tuition and was completely supported by the parish. My father was
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Policy Review 1994 Summer
a founding member of his local chapter of the Catholic Order of Foresters, a
fraternal society that provided, among other things, life insurance. We buried
our father this fall. I do not know if our generation will have the knowledge
and the character to recreate the world of voluntary cooperation of which he was
a part.
JENNIFER ROBACK is associate professor of economics at George Mason University.
JUDY SHELTON
In terms of monetary integrity, we are closer to serfdom today, for reasons
that might seem counterintuitive.
As we contemplate Hayek's warning 50 years ago about the incremental loss of
individual freedom trader the encroachment of socialist planning, we should
remember that 1994 also marks the 50th anniversary of the Bretton Woods
conference. For all the grandiose notions of its architects, John Maynard
Keynes and Harry Dexter White, and their shared penchant for creating
supranational agencies to manage economic and financial affairs, the Bretton
Woods agreement hammered out in July 1944 set the stage for a generation of
unprecedented global trade and prosperity in the decades following World War II.
One of the unintended consequences of the Bretton Woods system was to place
restrictions on the ability of the U.S. government to depreciate the value of
currency as a means of absorbing fiscal indulgences. By imposing the obligation
of having to convert dollars into gold at a fixed rate of $ 35 per ounce when so
requested by a foreign central bank, the system laid the responsibility for
maintaining international monetary stability squarely at the feet of the United
States.
That the U.S. government would ultimately disavow that responsibility
deeming it a burden rather than a privilege after engaging in accommodative
monetary expansion during the 1960s calls into question the inherent flaws of
the Bretton Woods approach, but not its basic purpose: To provide a sound
international monetary regime to facilitate the optimum use of trade and capital
flows around the world.
Should the golden era of Bretton Woods be judged in Hayekian terms as an
example of "the fatal conceit" of ambitious social engineering? Or would
Hayek's conviction that the exercise of individual economic choice serves as a
primary guarantor of personal liberty suggest a more appreciative
interpretation?
Hayek tells us: "Economic control is not merely control of a sector of human
life which can be separated from the rest; it is the control of the means for
all our ends. And whoever has sole control of the means must also determine
which ends are to be served, which values are to be rated higher and which lower
-in short, what men should believe and strive for."
What could be more controlling than to permit government to alter the value
of money which serves to define economic activity and provides the essential
instrument for exerting individual choice in free markets? By relinquishing
authority over the money supply to the discretionary, inclinations of powerful
men versus the automatic discipline of gold convertability, we undermine the
integrity of the basic building block of democratic capitalism.
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Policy Review 1994 Summer
Hayek observed that "money is the greatest instrument of freedom ever
invented by men. But when government has the power to distort economic choice
by carrying out inflationary policies and by manipulating currencies in foreign
exchange markets, government maintains a choke-hold on individual freedom.
Today, the value of the money held by Americans is a function of the decency
of central bankers and government finance officials; it is a far cry from the
international rule of law, not men, which Hayek deemed necessary to safeguard
the interests of individuals against the tyranny of the state.
JUDY SHELTON is a senior research fellow at the Hoover Institution.
FRED L. SMITH JR.
As a despairing optimist, I am of two minds. As an optimist, I am elated
that the forces of collectivism have suffered great setbacks during the last 50
years. The Evil Empire has collapsed. America's progressive-era economic
regulatory structure has gradually been dismantled. Perhaps, most importantly,
Hayek's embattled band of Mont Pelerin classical liberals has blossomed into a
world-wide free market movement.
Yet, as a realist, I fear that freedom in America at least -- continues
to retreat. Fifty years ago, the Constitution and American culture still
restricted the scope of government. Those promoting the federal government's
higher education and highway construction programs felt it necessary to
rationalize such programs on "national defense" grounds. Today the
constitutional legitimacy of, say, politically managed health care is not even
debated or questioned. Taxes have increased in severity. Government credit and
insurance schemes are more intrusive and create more mischief than in 1044.
Federal welfare programs have done as much harm to minority families as anything
since slavery.
Too often conservatives have focused only on one threat at a time -- national
defense, economic deregulation, constitutional restraints on spending while
statist forces have found other routes to their goals. As one statist rationale
has been destroyed, they've quickly advanced another. American statists were
very creative, inventing the modern regulatory state which retains the
appearance of "private" enterprise while destroying the reality. Outright
government ownership would be most honest, after all. Government agencies
say the Postal Service are held somewhat responsible for their performance,
while regulatory agencies exercise vast power but evade such accountability.
America has moved steadily down the road toward ever-greater regulatory
controls. The gains of economic deregulation were real but they have been more
than offset by the losses associated with social, health, and environmental
regulations. Such regulatory programs entail vague goals, universal scope, and
massive delegations of authority to bureaucrats.
Environmental issues are a prime example. As the economic rationale for
statism faded, arguments that we must regulate the economy to protect our planet
have advanced. The results have been disastrous. A nation that once went to
war to protest the uncompensated "quartering" of troops in private homes now
meekly submits to federal regulators "taking" private property to host
"endangered" wildlife. Other bureaucrats impose costly unfunded mandates on
small businesses and municipalities. The EPA has become the most powerful
economic regulator in America's history. The intellectual and moral
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Policy Review 1994 Summer
counter-attack has barely begun.
Hayek's metaphor of a road is somewhat misleading, as Hayek certainly
realized. The war for freedom has many fronts, and friends of freedom must be
careful to think strategically -- not to allow themselves to be deluded that
victory on one front is decisive or that victory is ever permanent. Today, the
main road to serfdom is paved with green bricks rather than the red bricks of
yesterday. No one, however, should be confused; all statist roads lead to the
same dreary totalitarian end-state -- and we are fast approaching the point of
no return.
FRED L. SMITH JR. is president of the Competitive Enterprise Institute.
Nothing written here is to be construed as necessarily reflecting the views
of The Heritage Foundation or as an attempt to aid or hinder the passage of any
bill before Congress.
GRAPHIC: Picture 1, Friedrich Hayek; Pictures 2 through 4, no caption,
UPI/Betmann, Archive; Diagram, BILL CLINTON'S HEALTH-CARE PLAN, JUST WHAT THE
DOCTOR ORDERED.
BIG GOVERNMENT, courtesy office of Sen. Arlen Specter;
Pictures 5 and 6, no caption, UPI/Betmann, Folio
LANGUAGE: ENGLISH
LOAD-DATE: August 12, 1994
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Vital Speeches
January 1, 1995
SECTION: Vol. 61 ; No. 6 i Pg. 183; ISSN: 0042-742X
LENGTH: 3472 words
HEADLINE: Adam Smith's free-market capitalism; speech delivered by visiting
Flagler College business Administration instructor Joseph Nolan at Flagler
Forum, St. Augustine, Florida, Nov. 17, 1994; Transcript
BODY:
ECONOMICS, THEN AND NOW
By JOSEPH NOLAN, Visiting Instructor, Business Administration, Flagler
College
Delivered at Flagler Forum, St. Augustine, Florida, November 17, 1994
AN economist finds it a refreshing change to be invited to peruse the past,
because we are usually asked to fathom the present and forecast the future. The
distinguished British banker, Lord Rothschild, put his finger on the difficulty
of economic forecasting when he was asked by a young lady what was likely to
happen to the world economy in the year ahead.
"My dear," he replied, "there are only two people in the whole world who
could answer that. One is a junior bureaucrat in the Treasury Department in
Washington, and the other is a very junior associate in the Bank of England.
Unfortunately, they disagree."
There is little disagreement among economists today, however, that Adam Smith
is a towering figure in economic history, and that his seminal book "The Wealth
of Nations," even after 200 years, is still the most widely known title of an
economics work. By telling us why a market economy is best able to accommodate
the economic needs of consumers, and how to think about the role of government
in a market system, Smith provided the most lucid explanation and the most
compelling defense of capitalism. As economist Robert Heilbroner said,
"His vision became the prescription for the spectacles of subsequent
generations."
Far more than a historical figure, Adam Smith probably enjoys a greater
measure of popularity today than ever before -- known to more people with a
higher approval rating. Random House recently published a new Modern Library
edition of his book. Disciples proudly wear the Adam Smith necktie, with the
bewigged head of capitalism's founding father, as a sign that they are CPC
Conservatively Politically Correct. This is a practice begun during the Reagan
administration when young White House aides sported the tie to signify that they
were "true believers" in Reaganomics.
PAGE
17
Vital Speeches, January 1, 1995
What I'd like to do this morning is to look with you first at the man
himself, then at his book, and finally at Adam Smith's significance in our
contemporary world where people of widely differing views invoke his name in
support of their cause.
Adam Smith, The Man
The patron saint of the market system was a shy, mild-mannered lad who grew
up in Kircaldy, Scotland, a small port town just across the Firth of Forth from
Edinburgh. At the age of four, he was kidnapped by a band of gypsies who held
him for a while and then abandoned him by the roadside. One biographer later
ventured the opinion that "he would have made, I fear, a very poor gypsy."
Be that as it may, he did make an outstandingly fine student, first at the
University of Glasgow and later at Oxford where he won a scholarship. Like many
college students, he complained about his professors. It even happens
occasionally here at Flagler.
"In the University of Oxford,' he wrote, "the greater part of the professors
have for these many years given up altogether even the pretense of teaching."
Universities he said, had become "sanctuaries in which exploded systems and
obsolete prejudices found shelter and protection after they had been hunted out
of every other corner of the world. The universities, he went on, produced
students "completely ignorant of everything which is the common subject of
conversation among gentlemen of the world."
Despite his low opinion of professors or perhaps in an effort to improve
the breed Smith himself eventually became one. He joined the faculty of the
University of Glasgow where he taught Moral Philosophy which, in those days,
covered Natural Theology, Ethics, Jurisprudence and Political Economy which we
now call Economics.
In fact, Adam Smith may have been the original absent-minded professor. One
day while conducting a government dignitary through a local tanning factory, he
became so engrossed in his explanation of how the process worked that he strode
right into a huge, odoriferous tanning pit, and had to be rescued by three
workmen.
On another occasion, he climbed out of bed and went for a walk in the middle
of the night. Many miles later, the clang of church bells aroused him from
sleep, and he hustled back home with nightshirt flapping in the breeze. He once
brewed himself a beverage of bread and butter, and pronounced it positively the
worst cup of tea he ever tasted. A French woman novelist, who got to know him
while he was visiting Paris, said, "He's a most absent-minded creature, but one
of the most lovable."
His personal quirks did not seem to interfere in the least with his
wide-ranging intellectual capabilities. He was a highly popular teacher,
according to one of his students, James Boswell, whose biography of Dr. Samuel
Johnson later became a classic in its own right.
After sixteen years on the campus, Smith accepted a more lucrative position
as traveling tutor of the young Duke of Buccleuch. The duke was a stepson of
Charles Townsend who later gained a measure of notoriety as author of the
British tea tax which occasioned the historic Boston Tea Party. The tutoring
PAGE
18
Vital Speeches, January 1, 1995
job involved touring Europe, helping the young duke to develop a proper polish,
attending lavish balls, and accepting a stipend and pension that were roughly
double his academic income.
The first and most boring stop on the Grand Tour was Toulouse in the south of
France where they stayed for a year and a half. To ease the boredom and "to pass
away the time," Smith confided to his philosopher-friend David Hume, "I have
begun to write a book. That book, of course, was "The Wealth of Nations. In
Geneva and later in Paris, he tested his ideas on a number of intellectuals
including Voltaire and Francois Quesnay. Quesnay had formed the first group that
can be identified as a "school" of economic thought. The group was known as the
Physiocrats, and their attempt to quantify the output of the system resulted in
an economic model based on rudimentary national income accounting. The
Physiocrats' ideas strongly influenced Smith and, in his hands, their "natural
order" was spelled out in the form of the market mechanism.
In 1766, Smith returned to his beloved Scotland and for the next ten years
worked diligently on his book. He obviously would never have made it in today's
publishing world where prosperous authors are expected to turn out at least one
book a year.
The Book
"The Wealth of Nations" was published in 1776, the same year as the
Declaration of Independence, and economists insist that it was fully as
important to their field as its companion was to government and political
science. Smith's book was an instant hit despite Hume's gloomy prediction that
it might take the reading public some time to warm up to his friend's ideas. The
first edition sold out in a few months. Thomas Jefferson called it the best book
available on political economy.
In Smith's 900 pages were powerful concepts, clearly expressed and often
strikingly illustrated. What's more, it didn't take an economist to understand
his message. The prime source of the wealth of nations, in Smith's view, was not
gold or silver as many believed at the time, but what some people actually got
for their money. The welfare of a nation depended decisively on its production.
In his book, Adam Smith emphasized four main topics: the self-regulating
market; specialization and the division of labor; the limited role of government
in the economy; and the advantages of free trade. Let's take them up one at a
time, and examine what he had to say.
Smith's great insight was that private self-interest could be a public
virtue. As one economist explained, Adam Smith liked to think there was a little
Scotsman inside each one of us. The unusual aspect of the wealth produced by a
market economy, as he saw it, was that it did not emerge from any organized
plan. Instead, it was the unintended result of the actions of many people, each
pursuing the incentives offered by the market, with his or her own interests in
mind. In Smith's words:
"It is not from the benevolence of the butcher, the brewer or the baker that
we expect our dinner, but from their regard to their own interest
Every
individual is continually exerting himself to find out the most advantageous
employment for whatever capital he can command
By directing that industry
in such a manner as its produce may be of the greatest value, he intends only
PAGE
19
Vital Speeches, January 1, 1995
his own gain, and he is, in this as in many other cases, led by an invisible
hand to promote an end which was no part of his intention."
Smith believed that the efficient working of the market was the key to a
comfortable standard of living. He showed that the price system was a
self-adjusting mechanism which led to resources being used in a way that
maximized the value of their contribution to production. Competition would
result in the provision of those goods that society wanted, in quantities that
society desired, at prices that society would be willing to pay. His description
of the self-regulating market mechanism was an important first word that would
be the point of departure for much of our subsequent economic analysis.
In Smith's scenario, the major propellant of the accumulation process was the
division of labor. In the early pages of "The Wealth of Nations," he introduces
us to a small pin factory where ten men, "indifferently equipped" with
machinery, were able to produce forty-eight thousand pins a day. By contrast,
each man, if he had "wrought separately and independently
certainly could
not
have made twenty, perhaps not one pin in a day.
What attracted Smith's attention was not the machinery, but the way the job
was divided so that each worker became an expert on his part of the task.
"One man draws out the wire," he wrote, "another straights it, a third cuts
it, a fourth points it, a fifth grinds it at the top for receiving the head; to
make the head requires two or three distinct operations; to put it on is a
peculiar business, to whiten the pins is another; it is even a trade by itself
to put them into the paper."
Specialization and division of labor increase productivity, according to
Smith, because they allow for the development and refinement of skills,
eliminate the time-wasting en-tailed in going from one job to another, and
simplify tasks SO as to permit the introduction of labor-saving machines.
Adam Smith himself did not use the term "laissez faire," which has since
become the watchword and motto of capitalism. The origin of that expression
dates back to the late 17th century when Louis XIV reigned as King of France.
His Finance Minister, Jean Baptiste Colbert, asked a group of merchants how the
government might be helpful to business.
A spokesman for the group replied, "Laissez nous faire" (Leave us alone) In
modern parlance, "Get off our backs!" And over the years, that sentiment has
resonated through the business community like a train-caller's chant.
Smith saw government as having three principal duties: national defense, the
administration of justice, and the construction of public works. The first, he
said, was to protect society from "the violence and invasion of other
independent societies." The second was to develop an institutional structure
through which justice could be administered to protect everyone's rights. The
third was to establish appropriate public institutions and public works such as
roads, bridges, canals and the like. Smith's framework was shaped by his
strongly negative reaction to the elaborate apparatus of controls which he saw
the British government imposing on individuals.
Bear in mind that Adam Smith was writing at the beginning of a new era in
which the vested interests of the past were hanging on for dear life. It was
PAGE
20
Vital Speeches, January 1, 1995
against these vested interests notably the Mercantilists that he wrote.
The Mercantilists promoted and supported an enormous array of economic controls,
designed to produce an export surplus. The only way for a nation to prosper,
they believed, was to sell as many goods as possible to other countries and
amass a huge fortune in gold and silver, while importing as little as possible.
Prevailing opinion at the time was that in a market exchange, one party can
profit only at the expense of the other. However, Smith reasoned that if both
parties enter into an exchange voluntarily, and each gives up something of
value, then both can come out ahead.
Indeed, he was the father of the Law of Absolute Advantage which provides the
theoretical underpinning for our international trade today. He believed that all
nations would be better off if each one concentrated on producing those goods it
could produce most efficiently, and traded for those it could not turn out as
well. He wrote:
"It is the maxim of every prudent master of a family never to attempt to make
at home what it will cost him more to make than to buy
What is prudence in
the conduct of every private family can scarce be folly in that of a great
kingdom
We trust with perfect security that the freedom of trade without any
attention of government will always supply us with the wine which we have
occasion for; and we may trust with equal security that it will always supply us
with all the gold and silver which we can afford to employ, either in
circulating our commodities or in other uses."
Smith was steadfastly opposed to tariffs, quotas and other protectionist
barriers to trade, and much of "The Wealth of Nations" was a spirited argument
for expanding free trade.
Was Adam Smith always right in his insights? Certainly not. For example, he
could never figure out why diamonds should be far more expensive than water. He
reasoned that the total utility of water is much greater than the utility of
diamonds because everyone needs water but nobody really needs diamonds.
Of course, Smith, a lifelong bachelor, had never heard the popular song,
"Diamonds Are A Girl's Best Friend."
It was not until a century later that the so-called Marginalist School of
Economists resolved this diamond-water paradox. They explained that it was not a
product's total utility that made the difference, but rather its marginal
utility -- that is, the satisfaction we get from one more unit of a good. The
marginal utility of water is ordinarily low because it is readily available to
us. The more we have, the less we crave one more glass. But the marginal utility
of diamonds is relatively high because their availability is extremely limited.
The less we have of something, the more we care about one more unit of it.
However, what is surprising about Adam Smith after two centuries is not how
mistaken he was on some specific points, but how clairvoyant he was in observing
the entire economic landscape.
Significance of Adam Smith Today
We owe to "The Wealth of Nations" much of our understanding of what markets
can and cannot do, and how buyers and sellers are led by an "invisible hand"
PAGE
21
Vital Speeches, January 1, 1995
to promote an end which was no part of their original intention. Smith's book
gave economics its present-day shape. The topics he dealt with and the approach
he used are reflected in economics texts as they are taught today. There were
economists before Smith's time, but he summed up their work so effectively that
few scholars have thought it worthwhile to go back beyond him. After "The Wealth
of Nations," people began to see the world around them with fresh eyes, noting
how the tasks they performed fit into the work of society as a whole and helped
to achieve its objectives.
Today, unfortunately, the dominant image of Adam Smith is that of an advocate
of unhampered self-interest, a staunch opponent of all government intervention,
and a foe of virtually any kind of humanitarian legislation. A reading of "The
Wealth of Nations" suggests that many of those who describe themselves as
disciples of Adam Smith substitute what they believe him to have said for what
he actually did say. As historian Jerry Muller of Catholic University points
out, Smith needs to be rescued from some of those who claim him as their
intellectual progenitor, just as he was rescued as a youngster from that band of
gypsies in Scotland.
He was not as strongly opposed, as his present day admirers make him out to
be, to all government actions that seek to promote the general welfare. What he
was against was the destructive meddling of government with the market
mechanism. He was as much opposed to barriers to imports and bounties on exports
as he was to government actions that sheltered industry from competition.
He was certainly no dedicated apologist for the business community. In fact,
his book is filled with biting remarks about the "mean and rapacious" ways of
the manufacturing class of his time.
"People of the same trade," he wrote, "seldom meet together, even for
merriment and diversion, but the conversation ends in a conspiracy to raise
prices.' He was also skeptical about joint stock companies the forerunners of
our modern corporations.
"The directors of such companies," he said, "being managers rather of other
people's money than of their own, it cannot well be expected that they should
watch over it with the same anxious vigilance with which the partners of a
private copartnery frequently watch over their own
Negligence and profusion,
therefore, must always prevail, more or less, in the management of the affairs
of such a company."
On the other hand, Adam Smith's name has been invoked in support of the
European Community, the North Atlantic Free Trade Agreement (NAFTA), and the
latest GATT trade accord that has touched off noisy controversy. And chances are
that he would have strongly favored all three because he was a passionate
pioneer of free trade. If he were alive today, we would probably see him on the
Larry King Show, debating the merits of NAFTA and GATT with the likes of Ross
Perot.
In "The Wealth of Nations,' Smith inveighed against the Mercantilists of his
time whose short-sighted doctrine was that nations would be better off exporting
as much and importing as little as possible. Our modern Mercantilists, of
course, are the Japanese who seem to thrive on exporting to the United States
and the rest of the world, while being highly selective on what imports they
will admit.
of the social world reinforce
Linear causal questions must not crowd out equilibrium analysis. In
nd exploitation become in-
this context, the culture-vs.-structure, chicken-and-egg debate is ulti-
e more slowly than formal
mately fruitless. More important is to understand how history smooths
so that the external imposi-
some paths and closes others off. Douglass North summarizes the chal-
cad to widely divergent out-
lenges ahead:
nt with the deep continuities
Path dependence means that history matters. We cannot understand today's
one question and ended with
choices (and define them in the modeling of economic performance) without
he new regional institutions
tracing the incremental evolution of institutions. But we are just beginning
.h "How successful was each
the serious task of exploring the implications of path dependence
Infor-
ed that question, leading us
mal constraints matter. We need to know much more about culturally derived
sacidenty
ore successful than others?"
norms of behavior and how they interact with formal rules to get better an-
by Moleins
= to differences in civic en-
swers to such issues. We are just beginning the serious study of institutions. 86
n, "Where did those differ-
Slayn Basnin
traced those differences to
leve a.450-
early a thousand years, pos-
LESSONS FROM THE ITALIAN REGIONAL EXPERIMENT
es have proved so stable?"
tuous circles that have led to
The twentieth century is ending, as it began, with high aspirations for
200lds
extending the benefits of democratic self-government to ever larger num-
ses starkly yet another ques-
bers of men and women. What factors will affect whether these hopes
S
ed on such divergent paths in
will be realized? Our study has explored both the power of institutional
wall
man regime in the South is
reform as a strategy for political change and the constraints on institu-
: of conquest by an unusually
tional performance posed by the social context. Twenty years after the
re problematical and poten-
establishment of regional government in Italy, what have we learned from
ommunal republics. How did
this experiment in building new institutions of democracy?
ne to seek collaborative solu-
For at least ten centuries, the North and the South have followed con-
ponse to that question must
trasting approaches to the dilemmas of collective action that afflict all
orians report that the answer
societies. In the North, norms of reciprocity and networks of civic en-
Our interpretation, however,
gagement have been embodied in tower societies, guilds, mutual aid soci-
**
pierce those mists.
eties, cooperatives, unions, and even soccer clubs and literary societies.
auses what-culture or struc-
These horizontal civic bonds have undergirded levels of economic and
ate concerns the complicated
resizental
institutional performance generally much higher than in the South, where
ttitudes and the social struc-
social and political relations have been vertically structured. Although we
the civic community. Quite
are accustomed to thinking of the state and the market as alternative mech-
vertical
tructure," however, this de-
anisms for solving social problems, this history suggests that both states
hate commentators recognize
and markets operate more efficiently in civic settings.
utually reinforcing equilib-
This civic equilibrium has shown remarkable stability, as we saw in
tworks of civic engagement,
Chapter 5, although its effects have been disrupted from time to time by
forcing. Effective collabora-
exogenous forces like pestilence, war, and world trade shifts. The con-
nd trust, but those skills and
trasting, Hobbesian equilibrium in the South has been even more stable,
by organized collaboration.
though less fruitful. Mutual distrust and defection, vertical dependence
contribute to economic pros-
and exploitation, isolation and disorder, criminality and backwardness
perity.
have reinforced one another in the interminable vicious circles traced in
Putnam: "Making Democracy
Work"
182 CHAPTERSIX
this chapter and the previous one. People in Bologna and Bari, in
road you'll do something
Florence and Palermo, have followed contrasting logics of communal life
pins collaboration.
for a millennium or more.
The harmonies of a ch
When the regional reform was introduced in 1970, therefore, the new
tion can create value that
institutions were implanted in very different social contexts. As we
how wily, could produce
learned in Chapter 4, civic regions were characterized by a dense network
liferate, memberships o
of local associations, by active engagement in community affairs, by
arenas of community life
egalitarian patterns of politics, by trust and law-abidingness. In less civic
oration in the civic comn
regions, political and social participation was organized vertically, not
violating it is not penal, t
horizontally. Mutual suspicion and corruption were regarded as normal.
cooperation. Norms and €
Involvement in civic associations was scanty. Lawlessness was expected.
son, Ellis, and Wildavsky
People in these communities felt powerless and exploited. They were
fying certain behaviors as
right.
even unthinkable. A C(
These contrasting social contexts plainly affected how the new institu-
social
zen, coupled with a com:
tions worked. As we saw in Chapter 3, objective measures of effective-
ment of the civic commun
centext
ness and subjective measures of citizen satisfaction concur in ranking
Where norms and netu
after must who
some regional governments consistently more successful than others. Vir-
look for collective action
tually without exception, the more civic the context, the better the govern-
object lesson for the Thire
ment. In the late twentieth century, as in the early twelfth century, collec-
of Eurasia tomorrow, mo
tive institutions work better in the civic community. By the 1980s, the
"always defect" social eq
North has also attained great advantages in physical and human capital,
the world where social ca
but those advantages are accentuated and in part explained by its long-
bility, for government eff
standing edge in social capital.
cial capital may be even
This is one lesson gleaned from our research: Social context and history
Many of the formerly Co
profoundly condition the effectiveness of institutions. Where the regional
fore the advent of Comn
soil is fertile, the regions draw sustenance from regional traditions, but
limited stock of social cap
where the soil is poor, the new institutions are stunted. Effective and re-
of civic engagement, the
sponsive institutions depend, in the language of civic humanism, on re-
amoral familism, clienteli
publican virtues and practices. Tocqueville was right: Democratic gov-
economic stagnation-see
ernment is strengthened, not weakened, when it faces a vigorous civil
economic development. P:
society.
The civic community h
On the demand side, citizens in civic communities expect better gov-
observation for those who
ernment and (in part through their own efforts), they get it. They demand
ical change. The president
more effective public service, and they are prepared to act collectively to
Emilia, and the prime min
achieve their shared goals. Their counterparts in less civic regions more
the Baltic. "A theory of ch
commonly assume the role of alienated and cynical supplicants.
tunate consequences
On the supply side, the performance of representative government is
because people are believ
facilitated by the social infrastructure of civic communities and by the
More than one Italian regi
democratic values of both officials and citizens. Most fundamental to the
results might unintentiona
civic community is the social ability to collaborate for shared interests.
One able reformist regio
Generalized reciprocity (not "I'll do this for you, because you are more
when he heard our concl
powerful than I," nor even "I'll do this for you now, if you do that for me
telling me that nothing I (
now," but "I'll do this for you now, knowing that somewhere down the
The fate of the reform was
'eople in Bologna and Bari, in
road you'll do something for me") generates high social capital and under-
ontrasting logics of communal life
pins collaboration.
The harmonies of a choral society illustrate how voluntary collabora-
luced in 1970, therefore, the new
tion can create value that no individual, no matter how wealthy, no matter
lifferent social contexts. As we
how wily, could produce alone. In the civic community associations pro-
characterized by a dense network
liferate, memberships overlap, and participation spills into multiple
ement in community affairs, by
arenas of community life. The social contract that sustains such collab-
and law-abidingness. In less civic
oration in the civic community is not legal but moral. The sanction for
on was organized vertically, not
violating it is not penal, but exclusion from the network of solidarity and
ruption were regarded as normal.
cooperation. Norms and expectations play an important role. As Thomp-
canty. Lawlessness was expected.
son, Ellis, and Wildavsky put it, "Ways of life are made viable by classi-
erless and exploited. They were
fying certain behaviors as worthy of praise and others as undesirable, or
even unthinkable A conception of one's role and obligations as a citi-
inly affected how the new institu-
zen, coupled with a commitment to political equality, is the cultural ce-
objective measures of effective-
ment of the civic community.
en satisfaction concur in ranking
Where norms and networks of civic engagement are lacking, the out-
more successful than others. Vir-
look for collective action appears bleak. The fate of the Mezzogiorno is an
the context, the better the govern-
object lesson for the Third World today and the former Communist lands
a the early twelfth century, collec-
of Eurasia tomorrow, moving uncertainly toward self-government. The
ic community. By the 1980s, the
"always defect" social equilibrium may represent the future of much of
es in physical and human capital,
the world where social capital is limited or nonexistent. For political sta-
and in part explained by its long-
bility, for government effectiveness, and even for economic progress so-
cial capital may be even more important than physical or human capital.
esearch: Social context and history
Many of the formerly Communist societies had weak civic traditions be-
of institutions. Where the regional
fore the advent of Communism, and totalitarian rule abused even that
ance from regional traditions, but
limited stock of social capital. Without norms of reciprocity and networks
ons are stunted. Effective and re-
of civic engagement, the Hobbesian outcome of the Mezzogiorno-
iguage of civic humanism, on re-
amoral familism, clientelism, lawlessness, ineffective government, and
ville was right: Democratic gov-
economic stagnation-seems likelier than successful democratization and
1, when it faces a vigorous civil
economic development. Palermo may represent the future of Moscow.
The civic community has deep historical roots. This is a depressing
c communities expect better gov-
observation for those who view institutional reform as a strategy for polit-
efforts), they get it. They demand
ical change. The president of Basilicata cannot move his government to
are prepared to act collectively to
Emilia, and the prime minister of Azerbaijan cannot move his country to
erparts in less civic regions more
the Baltic. "A theory of change that gives priority to ethos can have unfor-
and cynical supplicants.
tunate consequences.
It may lead to minimizing efforts at change
: of representative government is
because people are believed to be hopelessly enmeshed in an ethos. ..89
of civic communities and by the
More than one Italian regionalist told us privately that publicity about our
citizens. Most fundamental to the
results might unintentionally undermine the regional reform movement.
) collaborate for shared interests.
One able reformist regional president in an uncivic region exclaimed
is for you, because you are more
when he heard our conclusions: "This is a counsel of despair! You're
for you now, if you do that for me
telling me that nothing I can do will improve our prospects for success.
nowing that somewhere down the
The fate of the reform was sealed centuries ago.""⁰⁰
184 CHAPTER SIX
The full results of the regional reform, however, are far from an invita-
Two decades are time e
tion to quietism. On the contrary, a second lesson of the regional experi-
on political behavior, b
ment is (as Chapter 2 demonstrates) that changing formal institutions can
culture and social struct
change political practice. The reform had measurable and mostly benefi-
Those concerned with
cial consequences for regional political life. As institutionalists would
be building a more civi
predict, institutional changes were (gradually) reflected in changing iden-
yond instant results. W
tities, changing values, changing power, and changing strategies. These
nomic historian Vera Z
trends transpired in the South no less than the North. In both South and
structures rather than rel
North, the new institution nurtured a more moderate, pragmatic, tolerant
elite political culture. In both South and North, the reform altered old
It is a dangerous illusio
from outside despite it
patterns of power and produced more genuine subnational autonomy than
unified Italy had ever known. In both South and North, the reform itself
Beyond any doubt, the t
cultural revolution is lor
generated pressures, both inside and outside the government, in support
far, with the results it ha
of further decentralization. In both South and North, the regional govern-
ment is generally regarded by community leaders and ordinary voters as
Building social capital и
an improvement over the institutions it replaced-certainly more accessi-
racy work.
ble and probably more effective. The regional reform allowed social
learning, "learning by doing." Formal change induced informal change
and became self-sustaining.
The new institution has not yet lived up to the highest expectations of
its optimistic advocates. Factionalism and gridlock, inefficiency and sim-
ple incompetence, still plague many regions. This is especially so in the
South, which was much less well positioned than the North to take advan-
tage of the new powers. Both North and South have made progress in the
last twenty years, but compared to the North, the southern regions are no
better off today than they were in 1970. Compared to where the South
would be today without the regional reform, however, the South is much
better off. That is the view of most southerners.
Has the reform also begun to reverse the vicious uncivic circles that
have trapped the Mezzogiorno in backwardness for a millennium? We
cannot say, for the final lesson from this research is that most institutional
history moves slowly. Where institution building (and not mere constitu-
tion writing) is concerned, time is measured in decades. This was true of
the German Länder, it has been true of the Italian regions and of the com-
munal republics before them, and it will be true of the ex-Communist
states of Eurasia, even in the most optimistic scenarios.
History probably moves even more slowly when erecting norms of re-
ciprocity and networks of civic engagement, although we lack the bench-
marks to be sure. For convenience's sake, we might date the founding of
the communal republics and the Norman kingdom, and thus the start of
Italy's civic split between North and South, in (say) the year 1100. But it
seems highly unlikely that surveys of nobles, peasants, and townspeople
in 1120 would have detected the initial stages of the North-South division.
SOCIAL CAPITAL 103
er, are far from an invita-
Two decades are time enough to detect the impact of institutional reform
on of the regional experi-
on political behavior, but not to trace its effects on deeper patterns of
ng formal institutions can
culture and social structure.
urable and mostly benefi-
Those concerned with democracy and development in the South should
As institutionalists would
be building a more civic community, but they should lift their sights be-
effected in changing iden-
yond instant results. We agree with the prescription of the Italian eco-
changing strategies. These
nomic historian Vera Zamagni, who urges local transformation of local
North. In both South and
structures rather than reliance upon national initiatives:
lerate, pragmatic, tolerant
h, the reform altered old
It is a dangerous illusion to believe that the Mezzogiorno can be changed
ubnational autonomy than
from outside despite its existing political-economic-social structure.
d North, the reform itself
Beyond any doubt, the temporal perspective required for such a political and
cultural revolution is long. But it does not seem to us that the path taken so
e government, in support
North, the regional govern-
far, with the results it has produced, has been any shorter.⁹²
ers and ordinary voters as
Building social capital will not be easy, but it is the key to making democ-
1-certainly more accessi-
racy work.
al reform allowed social
: induced informal change
the highest expectations of
lock, inefficiency and sim-
This is especially so in the
an the North to take advan-
have made progress in the
the southern regions are no
pared to where the South
owever, the South is much
vicious uncivic circles that
ess for a millennium? We
ch is that most institutional
ng (and not mere constitu-
I decades. This was true of
an regions and of the com-
true of the ex-Communist
cenarios.
when erecting norms of re-
Ithough we lack the bench-
might date the founding of
gdom, and thus the start of
1 (say) the year 1100. But it
peasants, and townspeople
of the North-South division.
PAGE
17
25TH STORY of Level 1 printed in FULL format.
Copyright 1997 Information Access Company,
a Thomson Corporation Company;
ASAP
Copyright 1997 Atlantic Monthly Company
The Atlantic Monthly
February, 1997
SECTION: No. 2, Vol. 279; Pg. 45; ISSN: 1072-7825
IAC-ACC-NO: 19095197
LENGTH: 6478 words
HEADLINE: The capitalist threat; Cover Story
BYLINE: Soros, George
BODY:
In The Philosophy of History, Hegel discerned a disturbing historical
pattern-the crack and fall of civilizations owing to a morbid intensification of
their own first principles. Although I have made a fortune in the financial
markets, I now fear that the untrammeled intensification of laissez-faire
capitalism and the spread of market values into all areas of life is endangering
our open and democratic society. The main enemy of the open society, I believe,
is no longer the communist but the capitalist threat.
The term "open society" was coined by Henri Bergson, in his book The Two
Sources of Morality and Religion (1932), and given greater currency by the
Austrian philosopher Karl Popper, in his book The Open Society and Its Enemies
(1945) Popper showed that totalitarian ideologies like communism and Nazism
have a common element: they claim to be in possession of the ultimate truth.
Since the ultimate truth is beyond the reach of humankind, these ideologies have
to resort to oppression in order to impose their vision on society. Popper
juxtaposed with these totalitarian ideologies another view of society, which
recognizes that nobody has a monopoly on the truth; different people have
different views and different interests, and there is a need for institutions
that allow them to live together in peace. These institutions protect the rights
of citizens and ensure freedom of choice and freedom of speech. Popper called
this form of social organization the "open society. " Totalitarian ideologies
were its enemies.
Written during the Second World War, The Open Society and Its Enemies
explained what the Western democracies stood for and fought for. The explanation
was highly abstract and philosophical, and the term "open society" never gained
wide recognition. Nevertheless, Popper's analysis was penetrating, and when I
read it as a student in the late 1940s, having experienced at first hand both
Nazi and Communist rule in Hungary, it struck me with the force of revelation.
I was driven to delve deeper into Karl Popper's philosophy, and to ask, Why
does nobody have access to the ultimate truth? The answer became clear: We live
in the same universe that we are trying to understand, and our perceptions can
influence the events in which we participate. If our thoughts belonged to one
universe and their subject matter to another, the truth might be within our
grasp: we could formulate statements corresponding to the facts, and the facts
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The Atlantic Monthly February, 1997
would serve as reliable criteria for deciding whether the statements were true.
There is a realm where these conditions prevail: natural science. But in
other areas of human endeavor the relationship between statements and facts is
less clear-cut. In social and political affairs the participants' perceptions
help to determine reality. In these situations facts do not necessarily
constitute reliable criteria for judging the truth of statements. There is a
two-way connection-a feedback mechanism-between thinking and events, which I
have called "reflexivity." I have used it to develop a theory of history.
Whether the theory is valid or not, it has turned out to be very helpful to
me in the financial markets. When I had made more money than I needed, I decided
to set up a foundation. I reflected on what it was I really cared about. Having
lived through both Nazi persecution and Communist oppression, I came to the
conclusion that what was paramount for me was an open society. So I called the
foundation the Open Society Fund, and I defined its objectives as opening up
closed societies, making open societies more viable, and promoting a critical
mode of thinking. That was in 1979. 7
My first major undertaking was in South Africa, but it was not successful.
The apartheid system was so pervasive that whatever I tried to do made me part
of the system rather than helping to change it. Then I turned my attention to
Central Europe. Here I was much more successful. I started supporting the
Charter 77 movement in Czechoslovakia in 1980 and Solidarity in Poland in 1981.
I established separate foundations in my native country, Hungary, in 1984, in
China in 1986, in the Soviet Union in 1987, and in Poland in 1988. My engagement
accelerated with the collapse of the Soviet system. By now I have established a
network of foundations that extends across more than twenty-five countries (not
including China, where we shut down in 1989).
Operating under Communist regimes, I never felt the need to explain what
"open society" meant; those who supported the objectives of the foundations
understood it better than I did, even if they were not familiar with the
expression. The goal of my foundation in Hungary, for example, was to support
alternative activities. I knew that the prevailing Communist dogma was false
exactly because it was a dogma, and that it would become unsustainable if it was
exposed to alternatives. The approach proved effective. The foundation became
the main source of support for civil society in Hungary, and as civil society
flourished, so the Communist regime waned.
After the collapse of communism, the mission of the foundation network
changed. Recognizing that an open society is a more advanced, more sophisticated
form of social organization than a closed society (because in a closed society
there is only one blueprint, which is imposed on society, whereas in an open
society each citizen is not only allowed but required to think for himself), the
foundations shifted from a subversive task to a constructive one-not an easy
thing to do when the believers in an open society are accustomed to subversive
activity. Most of my foundations did a good job, but unfortunately, they did not
have much company. The open societies of the West did not feel a strong urge to
promote open societies in the former Soviet empire. On the contrary, the
prevailing view was that people ought to be left to look after their own
affairs. The end of the Cold War brought a response very different from that at
the end of the Second World War. The idea of a new Marshall Plan could not even
be mooted. When I proposed such an idea at a conference in Potsdam (in what was
then still East Germany), in the spring of 1989, I was literally laughed at.
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The Atlantic Monthly February, 1997
The collapse of communism laid the groundwork for a universal open society,
but the Western democracies failed to rise to the occasion. The new regimes that
are emerging in the former Soviet Union and the former Yugoslavia bear little
resemblance to open societies. The Western alliance seems to have lost its sense
of purpose, because it cannot define itself in terms of a Communist menace. It
has shown little inclination to come to the aid of those who have defended the
idea of an open society in Bosnia or anywhere else. As for the people living in
formerly Communist countries, they might have aspired to an open society when
they suffered from repression, but now that the Communist system has collapsed,
they are preoccupied with the problems of survival. After the failure of
communism there came a general disillusionment with universal concepts, and the
open society is a universal concept.
These considerations have forced me to re-examine my belief in the open
society. For five or six years following the fall of the Berlin Wall, I devoted
practically all of my energies to the transformation of the formerly Communist
world. More recently I have redirected my attention to our own society. The
network of foundations I created continues to do good work; nevertheless, I felt
an urgent need to reconsider the conceptual framework that had guided me in
establishing them. This reassessment has led me to the conclusion that the
concept of the open society has not lost its relevance. On the contrary, it may
be even more useful in understanding the present moment in history and in
providing a practical guide to political action than it was at the time Karl
Popper wrote his book-but it needs to be thoroughly rethought and reformulated.
If the open society is to serve as an ideal worth striving for, it can no longer
be defined in terms of the Communist menace. It must be given a more positive
content.
The New Enemy
Popper showed that fascism and communism had much in common, even though one
constituted the extreme right and the other the extreme left, because both
relied on the power of the state to repress the freedom of the individual. I
want to extend his argument. I contend that an open society may also be
threatened from the opposite direction-from excessive individualism. Too much
competition and too little cooperation can cause intolerable inequities and
instability.
Insofar as there is a dominant belief in our society today, it is a belief in
the magic of the marketplace. The doctrine of laissez-faire capitalism holds
that the common good is best served by the uninhibited pursuit of self-interest.
Unless it is tempered by the recognition of a common interest that ought to take'
precedence over particular interests, our present system-which, however
imperfect, qualifies as an open society-is liable to break down.
I want to emphasize, however, that I am not putting laissez-faire
capitalism in the same category as Nazism or communism. Totalitarian ideologies
deliberately seek to destroy the open society; laissez-faire policies may
endanger it, but only inadvertently. Friedrich Hayek, one of the apostles of
laissez-faire, was also a passionate proponent of the open society.
Nevertheless, because communism and even socialism have been thoroughly
discredited, I consider the threat from the laissez-faire side more potent today
than the threat from totalitarian ideologies. We are enjoying a truly global
market economy in which goods, services, capital, and even people move around
quite freely, but we fail to recognize the need to sustain the values and
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The Atlantic Monthly February, 1997
institutions of an open society.
The present situation is comparable to that at the turn of the past century.
It was a golden age of capitalism, characterized by the principle of
laissez-faire; SO is the present. The earlier period was in some ways more
stable. There was an imperial power, England, that was prepared to dispatch
gunboats to faraway places because as the main beneficiary of the system it had
a vested interest in maintaining that system. Today the United States does not
want to be the policeman of the world. The earlier period had the gold standard;
today the main currencies float and crush against each other like continental
plates. Yet the free-market regime that prevailed a hundred years ago was
destroyed by the First World War. Totalitarian ideologies came to the fore, and
by the end of the Second World War there was practically no movement of capital
between countries. How much more likely the present regime is to break down
unless we learn from experience!
Although laissez-faire doctrines do not contradict the principles of the open
society the way Marxism-Leninism or Nazi ideas of racial purity did, all these
doctrines have an important feature in common: they all try to justify their
claim to ultimate truth with an appeal to science. In the case of totalitarian
doctrines, that appeal could easily be dismissed. One of Popper's
accomplishments was to show that a theory like Marxism does not qualify as
science. In the case of laissez-faire the claim is more difficult to dispute,
because it is based on economic theory, and economics is the most reputable of
the social sciences. One cannot simply equate market economics with Marxist
economics. Yet laissez-faire ideology, I contend, is just as much a perversion
of supposedly scientific verities as Marxism-Leninism is.
The main scientific underpinning of the laissez-faire ideology is the theory
that free and competitive markets bring supply and demand into equilibrium and
thereby ensure the best allocation of resources. This is widely accepted as an
eternal verity, and in a sense it is one. Economic theory is an axiomatic
system: as long as the basic assumptions hold, the conclusions follow. But when
we examine the assumptions closely, we find that they do not apply to the real
world. As originally formulated, the theory of perfect competition-of the
natural equilibrium of supply and demand-assumed perfect knowledge, homogeneous
and easily divisible products, and a large enough number of market participants
that no single participant could influence the market price. The assumption of
perfect knowledge proved unsustainable, so it was replaced by an ingenious
device. Supply and demand were taken as independently given. This condition was
presented as a methodological requirement rather than an assumption. It was
argued that economic theory studies the relationship between supply and demand;
therefore it must take both of them as given.
As I have shown elsewhere, the condition that supply and demand are
independently given cannot be reconciled with reality, at least as far as the
financial markets are concerned -and financial markets play a crucial role in⁻
the allocation of resources. Buyers and sellers in financial markets seek to
discount a future that depends on their own decisions. The shape of the supply
and demand curves cannot be taken as given because both of them incorporate
expectations about events that are shaped by those expectations. There is a
two-way feedback mechanism between the market participants' thinking and the
situation they think about-"reflexivity. It accounts for both the imperfect
understanding of the participants (recognition of which is the basis of the
concept of the open society) and the indeterminacy of the process in which
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The Atlantic Monthly February, 1997
they participate.
If the supply and demand curves are not independently given, how are market
prices determined? If we look at the behavior of financial markets, we find that
instead of tending toward equilibrium, prices continue to fluctuate relative to
the expectations of buyers and sellers. There are prolonged periods when prices
are moving away from any theoretical equilibrium. Even if they eventually show a
tendency to return, the equilibrium is not the same as it would have been
without the intervening period. Yet the concept of equilibrium endures. It is
easy to see why: without it, economics could not say how prices are determined!
In the absence of equilibrium, the contention that free markets lead to the
optimum allocation of resources loses its justification. The supposedly
scientific theory that has been used to validate it turns out to be an axiomatic
structure whose conclusions are contained in its assumptions and are not
necessarily supported by the empirical evidence. The resemblance to Marxism,
which also claimed scientific status for its tenets, is too close for comfort.
I do not mean to imply that economic theory has deliberately distorted
reality for political purposes. But in trying to imitate the accomplishments
(and win for itself the prestige) of natural science, economic theory attempted
the impossible. The theories of social science relate to their subject matter in
a reflexive manner. That is to say, they can influence events in a way that the
theories of natural science cannot. Heisenberg's famous uncertainty principle
implies that the act of observation may interfere with the behavior of quantum
particles; but it is the observation that creates the effect, not the
uncertainty principle itself. In the social sphere, theories have the capacity
to alter the subject matter to which they relate. Economic theory has
deliberately excluded reflexivity from consideration. In doing so, it has
distorted its subject matter and laid itself open to exploitation by
laissez-faire ideology.
What allows economic theory to be converted into an ideology hostile to the
open society is the assumption of perfect knowledge-at first openly stated and
then disguised in the form of a methodological device. There is a powerful case
for the market mechanism, but it is not that markets are perfect; it is that in
a world dominated by imperfect understanding, markets provide an efficient
feedback mechanism for evaluating the results of one's decisions and correcting
mistakes.
Whatever its form, the assertion of perfect knowledge stands in contradiction
to the concept of the open society (which recognizes that our understanding of
our situation is inherently imperfect). Since this point is abstract, I need to
describe specific ways in which laissez-faire ideas can pose a threat to the
open society. I shall focus on three issues: economic stability, social justice,
and international relations.
Economic Stability
Economic theory has managed to create an artificial world in which the
participants' preferences and the opportunities confronting participants are
independent of each other, and prices tend toward an equilibrium that brings the
two forces into balance. But in financial markets prices are not merely the
passive reflection of independently given demand and supply; they also play an
active role in shaping those preferences and opportunities. This reflexive
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The Atlantic Monthly February, 1997
interaction renders financial markets inherently unstable. Laissez-faire
ideology denies the instability and opposes any form of government intervention
aimed at preserving stability. History has shown that financial markets do break
down, causing economic depression and social unrest. The breakdowns have led to
the evolution of central banking and other forms of regulation. Laissez-faire
ideologues like to argue that the breakdowns were caused by faulty regulations,
not by unstable markets. There is some validity in their argument, because if
our understanding is inherently imperfect, regulations are bound to be
defective. But their argument rings hollow, because it fails to explain why the
regulations were imposed in the first place. It sidesteps the issue by using a
different argument, which goes like this: since regulations are faulty,
unregulated markets are perfect.
The argument rests on the assumption of perfect knowledge: if a solution is
wrong, its opposite must be right. In the absence of perfect knowledge, however,
both free markets and regulations are flawed. Stability can be preserved only if
a deliberate effort is made to preserve it. Even then breakdowns will occur,
because public policy is often faulty. If they are severe enough, breakdowns may
give rise to totalitarian regimes.
Instability extends well beyond financial markets: it affects the values that
guide people in their actions. Economic theory takes values as given. At the
time economic theory was born, in the age of Adam Smith, David Ricardo, and
Alfred Marshall, this was a reasonable assumption, because people did, in fact,
have firmly established values. Adam Smith himself combined a moral philosophy
with his economic theory. Beneath the individual preferences that found
expression in market behavior, people were guided by a set of moral principles
that found expression in behavior outside the scope of the market mechanism.
Deeply rooted in tradition, religion, and culture, these principles were not
necessarily rational in the sense of representing conscious choices among
available alternatives. Indeed, they often could not hold their own when
alternatives became available. Market values served to undermine traditional
values.
There has been an ongoing conflict between market values and other, more
traditional value systems, which has aroused strong passions and antagonisms. As
the market mechanism has extended its sway, the fiction that people act on the
basis of a given set of nonmarket values has become progressively more difficult
to maintain. Advertising, marketing, even packaging, aim at shaping people's
preferences rather than, as laissez-faire theory holds, merely responding to
them. Unsure of what they stand for, people increasingly rely on money as the
criterion of value. What is more expensive is considered better. The value of a
work of art can be judged by the price it fetches. People deserve respect and
admiration because they are rich. What used to be a medium of exchange has
usurped the place of fundamental values, reversing the relationship postulated
by economic theory. What used to be professions have turned into businesses. The
cult of success has replaced a belief in principles. Society has lost its
anchor.
F
Social Darwinism
By taking the conditions of supply and demand as given and declaring
government intervention the ultimate evil, laissez-faire ideology has
effectively banished income or wealth redistribution. I can agree that all
attempts at redistribution interfere with the efficiency of the market, but it
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The Atlantic Monthly February, 1997
does not follow that no attempt should be made. The laissez-faire argument
relies on the same tacit appeal to perfection as does communism. It claims that
if redistribution causes inefficiencies and distortions, the problems can be
solved by eliminating redistribution-just as the Communists claimed that the
duplication involved in competition is wasteful, and therefore we should have a
centrally planned economy. But perfection is unattainable. Wealth does
accumulate in the hands of its owners, and if there is no mechanism for
redistribution, the inequities can become intolerable. "Money is like muck, not
good except it be spread.' Francis Bacon was a profound economist.
The laissez-faire argument against income redistribution invokes the doctrine
of the survival of the fittest. The argument is undercut by the fact that wealth
is passed on by inheritance, and the second generation is rarely as fit as the
first.
In any case, there is something wrong with making the survival of the fittest
a guiding principle of civilized society. This social Darwinism is based on an
outmoded theory of evolution, just as the equilibrium theory in economics is
taking its cue from Newtonian physics. The principle that guides the evolution
of species is mutation, and mutation works in a much more sophisticated way.
Species and their environment are interactive, and one species serves as part of
the environment for the others. There is a feedback mechanism similar to
reflexivity in history, with the difference being that in history the mechanism
is driven not by mutation but by misconceptions. I mention this because social
Darwinism is one of the misconceptions driving human affairs today. The main
point I want to make is that cooperation is as much a part of the system as
competition, and the slogan "survival of the fittest" distorts this fact.
International Relations
Laissez-faire ideology shares some of the deficiencies of another spurious
science, geopolitics. States have no principles, only interests, geopoliticians
argue, and those interests are determined by geographic location and other
fundamentals. This deterministic approach is rooted in an outdated
nineteenth-century view of scientific method, and it suffers from at least two
glaring defects that do not apply with the same force to the economic doctrines
of laissez-faire. One is that it treats the state as the indivisible unit of
analysis, just as economics treats the individual. There is something
contradictory in banishing the state from the economy while at the same time
enshrining it as the ultimate source of authority in international relations.
But let that pass. There is a more pressing practical aspect of the problem.
What happens when a state disintegrates? Geopolitical realists find themselves
totally unprepared. That is what happened when the Soviet Union and Yugoslavia
disintegrated. The other defect of geopolitics is that it does not recognize a
common interest beyond the national interest.
With the demise of communism, the present state of affairs, however
imperfect, can be described as a global open society. It is not threatened from
the outside, from some totalitarian ideology seeking world supremacy. The threat
comes from the inside, from local tyrants seeking to establish internal
dominance through external conflicts. It may also come from democratic but
sovereign states pursuing their self-interest to the detriment of the common
interest. The international open society may be its own worst enemy.
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The Atlantic Monthly February, 1997
The Cold War was an extremely stable arrangement. Two power blocs,
representing opposing concepts of social organization, were struggling for
supremacy, but they had to respect each other's vital interests, because each
side was capable of destroying the other in an all-out war. This put a firm
limit on the extent of the conflict; all local conflicts were, in turn,
contained by the larger conflict. This extremely stable world order has come to
an end as the result of the internal disintegration of one superpower. No new
wor d order has taken its place. We have entered a period of disorder.
Laissez-faire ideology does not prepare us to cope with this challenge. It
does not recognize the need for a world order. An order is supposed to emerge
from states' pursuit of their self-interest. But, guided by the principle of the
survival of the fittest, states are increasingly preoccupied with their
competitiveness and unwilling to make any sacrifices for the common good.
There is no need to make any dire predictions about the eventual breakdown of
our global trading system in order to show that a laissez-faire ideology is
incompatible with the concept of the open society. It is enough to consider the
free world's failure to extend a helping hand after the collapse of communism.
The system of robber capitalism that has taken hold in Russia is so iniquitous
that people may well turn to a charismatic leader promising national revival at
the cost of civil liberties.
= If there is any lesson to be learned, it is that the collapse of a repressive
regime does not automatically lead to the establishment of an open society. An
open society is not merely the absence of government intervention and
oppression. It is a complicated, sophisticated structure, and deliberate effort
is required to bring it into existence. Since it is more sophisticated than the
system it replaces, a speedy transition requires outside assistance! But the
combination of laissez-faire ideas, social Darwinism, and geopolitical realism
that prevailed in the United States and the United Kingdom stood in the way of
any hope for an open society in Russia. If the leaders of these countries had
had a different view of the world, they could have established firm foundations
for a global open society.
At the time of the Soviet collapse there was an opportunity to make the UN
function as it was originally designed to. Mikhail Gorbachev visited the United
Nations in 1988 and outlined his vision of the two superpowers cooperating to
bring peace and security to the world. Since then the opportunity has faded. The
UN has been thoroughly discredited as a peacekeeping institution. Bosnia is
doing to the UN what Abyssinia did to the League of Nations in 1936.
Our global open society lacks the institutions and mechanisms necessary for
its preservation, but there is no political will to bring them into existence. I
blame the prevailing attitude, which holds that the unhampered pursuit of
self-interest will bring about an eventual international equilibrium. I believe
this confidence is misplaced. I believe that the concept of the open society,
which needs institutions to protect it, may provide a better guide to action. As
things stand, it does not take very much imagination to realize that the global
open society that prevails at present is likely to prove a temporary phenomenon.
The Promise of Fallibility
It is easier to identify the enemies of the open society than to give the
concept a positive meaning. Yet without such a positive meaning the open
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The Atlantic Monthly February, 1997
society is bound to fall prey to its enemies. There has to be a common interest
to hold a community together, but the open society is not a community in the'
traditional sense of the word. It is an abstract idea, a universal concept.
Admittedly, there is such a thing as a global community; there are common
interests on a global level, such as the preservation of the environment and the
prevention of war. But these interests are relatively weak in comparison with
special interests. They do not have much of a constituency in a world composed
of sovereign states. Moreover, the open society as a universal concept
transcends all boundaries. Societies derive their cohesion from shared values.
These values are rooted in culture, religion, history, and tradition. When a
society does not have boundaries, where are the shared values to be found? I
believe there is only one possible source: the concept of the open society
itself:
To fulfill this role, the concept of the open society needs to be redefined.
Instead of there being a dichotomy between open and closed, I see the open
society as occupying a middle ground, where the rights of the individual are
safeguarded but where there are some shared values that hold society together.
This middle ground is threatened from all sides. At one extreme, communist and
nationalist doctrines would lead to state domination. At the other extreme,
laissez-faire capitalism would lead to great instability and eventual breakdown.
There are other variants. Lee Kuan Yew, of Singapore, proposes a so-called Asian
model that combines a market economy with a repressive state. In many parts of
the world control of the state is so closely associated with the creation of
private wealth that one might speak of robber capitalism, or the "gangster
state,' as a new threat to the open society.
I envisage the open society as a society open to improvement. We start with
the recognition of our own fallibility, which extends not only to our mental
constructs but also to our institutions. What is imperfect can be improved, by a
process of trial and error. The open society not only allows this process but
actually encourages it, by insisting on freedom of expression and protecting
dissent. The open society offers a vista of limitless progress. In this respect
it has an affinity with the scientific method. But science has at its disposal
objective criteria-namely the facts by which the process may be judged.
Unfortunately, in human affairs the facts do not provide reliable criteria of
truth, yet we need some generally agreed-upon standards by which the process of
trial and error can be judged. All cultures and religions offer such standards;
the open society cannot do without them. The innovation in an open society is
that whereas most cultures and religions regard their own values as absolute, an
open society, which is aware of many cultures and religions, must regard its own
shared values as a matter of debate and choice. To make the debate possible,
there must be general agreement on at least one point: that the open society is
a desirable form of social organization. People must be free to think and act,
subject only to limits imposed by the common interests. Where the limits are
must also be determined by trial and error.
The Declaration of Independence may be taken as a pretty good approximation
of the principles of an open society, but instead of claiming that those
principles are self-evident, we ought to say that they are consistent with our
fallibility Could the recognition of our imperfect understanding serve to
establish the open society as a desirable form of social organization? I believe
it could, although there are formidable difficulties in the way. We must promote
a belief in our own fallibility to the status that we normally confer on a
belief in ultimate truth. But if ultimate truth is not attainable, how can we
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accept our fallibility as ultimate truth?
This is an apparent paradox, but it can be resolved. The first proposition,
that our understanding is imperfect, is consistent with a second proposition:
that we must accept the first proposition as an article of faith. The need for
articles of faith arises exactly because our understanding is imperfect. If we
enjoyed perfect knowledge, there would be no need for beliefs. But to accept
this line of reasoning requires a profound change in the role that we accord our
beliefs.
Historically, beliefs have served to justify specific rules of conduct.
Fallibility ought to foster a different attitude. Beliefs ought to serve to
shape our lives, not to make us abide by a given set of rules. If we recognize
that our beliefs are expressions of our choices, not of ultimate truth, we are
more likely to tolerate other beliefs and to revise our own in the light of our
experiences. But that is not how most people treat their beliefs. They tend to
identify their beliefs with ultimate truth. Indeed, that identification often
serves to define their own identity. If their experience of living in an open
society obliges them to give up their claim to the ultimate truth, they feel a
sense of loss.
The idea that we somehow embody the ultimate truth is deeply ingrained in our
thinking. We may be endowed with critical faculties, but we are inseparably tied
to ourselves. We may have discovered truth and morality, but, above all, we must
represent our interests and our selves. Therefore, if there are such things as
truth and justice-and we have come to believe that there are-then we want to be
in possession of them. We demand truth from religion and, recently, from
science. A belief in our fallibility is a poor substitute. It is a highly
sophisticated concept, much more difficult to work with than more primitive
beliefs, such as my country (or my company or my family), right or wrong.
If the idea of our fallibility is so hard to take, what makes it appealing?
The most powerful argument in its favor is to be found in the results it
produces. Open societies tend to be more prosperous, more innovative, more
stimulating, than closed ones. But there is a danger in proposing success as the
sole basis for holding a belief, because if my theory of reflexivity is valid,
being successful is not identical with being right. In natural science, theories
have to be right (in the sense that the predictions and explanations they
produce correspond to the facts) for them to work (in the sense of producing
useful predictions and explanations). But in the social sphere what is effective
is not necessarily identical with what is right, because of the reflexive
connection between thinking and reality. As I hinted earlier, the cult of
success can become a source of instability in an open society, because it can
undermine our sense of right and wrong. That is what is happening in our society
today. Our sense of right and wrong is endangered by our preoccupation with
success, as measured by money. Anything goes, as long as you can get away with
it.
If success were the only criterion, the open society would lose out against
totalitarian ideologies-as indeed it did on many occasions. It is much easier to
argue for my own interest than to go through the whole rigmarole of abstract
reasoning from fallibility to the concept of the open society.
The concept of the open society needs to be more firmly grounded. There has
to be a commitment to the open society because it is the right form of social
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The Atlantic Monthly February, 1997
organization. Such a commitment is hard to come by.
I believe in the open society because it allows us to develop our potential
better than a social system that claims to be in possession of ultimate truth.
Accepting the unattainable character of truth offers a better prospect for
freedom and prosperity than denying it. But I recognize a problem here: I am
sufficiently committed to the pursuit of truth to find the case for the open
society convincing, but I am not sure that other people will share my point of
view. Given the reflexive connection between thinking and reality, truth is not
indispensable for success. It may be possible to attain specific objectives by
twisting or denying the truth, and people may be more interested in attaining
their specific objectives than in attaining the truth. Only at the highest level
of abstraction, when we consider the meaning of life, does truth take on
paramount importance. Even then, deception may be preferable to the truth,
because life entails death and death is difficult to accept. Indeed, one could
argue that the open society is the best form of social organization for making
the most of life, whereas the closed society is the form best suited to the
acceptance of death. In the ultimate analysis a belief in the open society is a
matter of choice, not of logical necessity.
That is not all. Even if the concept of the open society were universally
accepted, that would not be sufficient to ensure that freedom and prosperity
would prevail. The open society merely provides a framework within which
different views about social and political issues can be reconciled; it does not
offer a firm view on social goals. If it did, it would not be an open society.
This means that people must hold other beliefs in addition to their belief in
the open society. Only in a closed society does the concept of the open society
provide a sufficient basis for political action; in an open society it is not
enough to be a democrat; one must be a liberal democrat or a social democrat or
a Christian democrat or some other kind of democrat. A shared belief in the open
society is a necessary but not a sufficient condition for freedom and prosperity
and all the good things that the open society is supposed to bring.
It can be seen that the concept of the open society is a seemingly
inexhaustible source of difficulties. That is to be expected. After all, the
open society is based on the recognition of our fallibility. Indeed, it stands
to reason that our ideal of the open society is unattainable. To have a
blueprint for it would be self-contradictory, That does not mean that we should
not strive toward it. In science also, ultimate truth is unattainable. Yet look
at the progress we have made in pursuing it. Similarly, the open society can be
approximated to a greater or lesser extent.
To derive a political and social agenda from a philosophical, epistemological
argument seems like a hopeless undertaking. Yet it can be done. There is
historical precedent. The Enlightenment was a celebration of the power of
reason, and it provided the inspiration for the Declaration of Independence and
the Bill of Rights. The belief in reason was carried to excess in the French
Revolution, with unpleasant side effects; nevertheless, it was the beginning of
modernity. We have now had 200 years of experience with the Age of Reason, and
as reasonable people we ought to recognize that reason has its limitations. The
time is ripe for developing a conceptual framework based on our fallibility.
Where reason has failed, fallibility may yet succeed.
GRAPHIC: Illustration; Cartoon