Jihad vs. McWorld

by Benjamin Barber

  Public relations aside, the World Bank, for example, is less concerned to create a sustainable environment or forge sustainable national economies in the debtor nations it services than to assure an open (though by no means level) playing field for international business. Its loans often bankrupt its clients: Poland’s total debt in 1993 was over 60 percent of its annual GDP, while Hungary’s approached 80 percent of its GNP;14 Uganda owes 62 percent of its foreign debt to the bank while Guatemala’s controversial World Bank—financed Chixoy Dam accounts for 40 percent of its external debt. The bank has also been known to impose population resettlement on peoples who have had no part in deciding on the irrigation or transportation projects being undertaken in the name of “their” development.15

  Those who believe in the continuing vitality of the nation-state may not worry. Robert Kuttner, for example, still thinks that although “the global intelligentsia may think of itself as stateless, and global capital may see nation-states as anachronistic encumbrances … the state remains the locus of the polity” that “remains the structure best suited for counterbalancing the excesses of the market.”16 The state is certainly “best suited” to balance wild capitalism, but the question is whether it is any longer capable of doing so or willing to try. The reality seems to be, as Stanford University economist Paul Krugman has noticed, that “governments have consented to a regime that allows markets to boss them around.”17 The new government of the Czech Republic boasts that it wants to create “a level playing field for investors, both domestic and foreign” and is actively “preaching minimum government interference.”18 Those new states that, “as civil society has been progressively colonized by organized crime,” have been led slowly to discover the “positive uses of power,” must contend both with the old state-hating victims of imperious communism and their new state-hating laissez-faire advisors who urge them to turn the very state institutions by which they might control rapacious markets into their primary adversary.19

  Even where states weigh in on behalf of civil society, there is no surrogate for the polity in the international domain—certainly not the state’s weak supranational imitators—that has the clout to countervail multinational corporations and the markets in which they operate. Business leader Walter B. Wriston observes that governments no longer can even “measure” capital formation because so much new capital is intellectual.20 How then can they regulate or control such capital? As he wryly suggests, a computer wizard with a bold new program in his mind can walk across a border untithed and untariffed, carrying more capital assets with him in his head than might be contained in a thousand cargo ships. As we saw earlier (in Part I), the new goods are virtual rather than durable, and their producers—Robert Reich’s “symbolic analyst professionals”—represent a new transnational class pretty well beyond the purview of particular national sovereignties. The Senate banking committee can look over the shoulder of the nation’s banks (if not very wisely or very well), but who has the power (or the vision) to look over the shoulders of international bankers and currency dealers? Or of the programmers and analysts who make banking and currency markets function? Currency markets trade up to a trillion dollars a day: no national bank, no collection of national banks, can have much of an impact on them. When in the summer of 1994, seventeen of the world’s largest central banks (including America’s Federal Reserve) tried to prop up the dollar, they could come up with only $5 billion. Their effort had (in Thomas Friedman’s charming image) all the impact of “a zoo keeper trying to calm a starved gorilla by offering it a raisin for lunch.”21

  Free-market advocates like Wriston boast about the failure of the Bretton Woods Treaty (by which sovereign nations tried to govern the international currency exchange after World War II)—proof that “Big Brother” (his caricature of all states, democratic as well as autocratic) has been forced out of business. Unfortunately, Big Brother’s role as a guardian of social justice has also been superseded and the many junior siblings who have displaced him turn out to be both more intimidating and far less accountable. National regulatory commissions can curtail in-country labor exploitation with minimum wage laws, unemployment insurance, and safety regulations, but who can set and enforce such standards for the global market where unrooted companies can chase low-wage labor from country to country as they please? Far more today than in the nineteenth century, the workers of the world need to unite to offset the exploitative consequences of monopoly capital on a global scale. Yet never has there been less likelihood that they could do so.

  Multinationals cannot be blamed for promoting high profits at the price of high unemployment or sacrificing the local environment to the economic benefits of free trade. It is the job of civil society and democratic government and not of the market to look after common interests and make sure that those who profit from the common planet pay its common proprietors their fair share. When governments abdicate in favor of markets, they are declaring nolo contendere in an arena in which they are supposed to be primary challengers, bartering away the rights of their people along the way.

  Markets simply are not designed to do the things democratic polities do.22 They enjoin private rather than public modes of discourse, allowing us as consumers to speak via our currencies of consumption to producers of material goods, but ignoring us as citizens speaking to one another about such things as the social consequences of our private market choices (too much materialism? too little social justice? too many monopolies? too few jobs? what do we want?). They advance individualistic rather than social goals, permitting us to say, one by one, “I want a pair of running shoes” or “I need a new VCR” or “buy yen and sell D-Marks!” but deterring us from saying, in a voice made common by interaction and deliberation, “our inner city community needs new athletic facilities” or “there is too much violence on TV and in the movies” or “we should rein in the World Bank and democratize the IMF!” Markets preclude “we” thinking and “we” action of any kind at all, trusting in the power of aggregated individual choices (the invisible hand) to somehow secure the common good. Consumers speak the elementary rhetoric of “me,” citizens invent the common language of “we.”

  Markets are contractual rather than communitarian, which means they stroke our solitary egos but leave unsatisfied our yearning for community, offering durable goods and fleeting dreams but not a common identity or a collective membership—something the blood communities spawned by Jihad, reinforced by the thinness of market relations, do rather too well. Cybernetic and automatic rather than deliberative and genuinely voluntary, markets produce collective consequences that cannot be foreseen in the simple feedback loops established by consumers making individual choices and markets responding to them. What Ludwig von Mises blithely called the “daily plebiscite in which every penny” gives consumers the right to “determine who should own and run the plants, shops and farms” is a charming fraud; for the self-interested motives on the basis of which consumers spend their pennies have nothing to do with who runs anything, let alone with the kind of civil society these same consumers hope to live in or the civic objectives they forge together as citizens in democratic political arenas in order to control the public and political consequences of their private consumer choices.23 Recall Felix Rohatyn’s warning that markets entail “a brutal Darwinian logic … They are nervous and greedy (and) … what they reward is not always our preferred form of democracy.”24

  Democracies prefer markets but markets do not prefer democracies. Having created the conditions that make markets possible, democracy must also do all the things that markets undo or cannot do. It must educate citizens so that they can use their markets wisely and contain market abuses well; it must support values and a common culture in which the market has no interest and does not try to reward; it must deploy mechanisms that prevent the market from self-destructing via anarchy or via monopoly; and it must secure an alternative form of choice that permits common choosing as a remedy to the inadvertent social consequences
of individual choosing.

  Take the transportation debate raised earlier. When I choose to buy a car, I choose to get from here to there efficiently and perhaps pleasantly; however, among the consequences of my choice may be air pollution, resource depletion, the disadvantaging of public transportation, pressure on hospital facilities, and the despoilation of the natural environment by a highway system. As a consumer, the only way I can avoid these consequences is to refuse to buy a car—an irrational act from the narrow economical perspective and one that throws a wrench into the market economy. So I play the consumer and buy the car. Capitalism is served and so am I—as a consumer. But in a democratic society, I am not just a consumer, I am a citizen. And as a citizen, I can act in common with others to modify the untoward public consequences of my private choice. As a citizen I can join with others and redress the ill effects of my car purchase: we can outlaw leaded gas, fund electric engine research, subsidize public transportation, mandate hospital insurance for drivers, and limit highway construction in scenic regions. These civic activities do not curb our market freedom, they facilitate it. Democracy makes markets work by allowing us the freedom of our consumer choices in the knowledge that we can counteract their accompanying vices. To do so, however, we must have alternative nonmarket institutions, and in the international arena such democratic tools are entirely absent.

  Even within nation-states, we are eschewing the tools we have. The dogmas of laissez-faire capitalism that have suffused the politics of America and Europe in the last few decades have been reinforced by the resentments of an alienated electorate that has lost confidence in its own democratic institutions; together, they have persuaded us that our democratic governments neither belong to us nor function usefully either to limit markets or to help them work. The expiration of Marxist and command economy dogmas has breathed new life into free market and laissez-faire dogmas and forced us back into Friedman’s choice of radical collectivism or radical individualism. We condemn politicians as if they were not chosen both by us and from among us, and turn on governments as if we still lived under the absolute monarchs of the eighteenth century—as if constitution building were aimed exclusively at curtailing tyranny and not also at facilitating common democratic action. Citizens abjure the common “we” and allow it to be identified exclusively with corrupt politicians or totalitarian despots. Democratic authority and the abuse of democratic authority become synonymous.

  When peoples emerging from communism become frustrated by wild capitalism, they turn not to discredited parliamentary institutions but back to the tougher party apparatchiks who have survived the passing of the very Communist regimes whose legacy has delegitimized parliamentarianism.25 These developments have meant that democracy has had an increasingly hard time inside nation-states afflicted with radical market ideology. Western analysts have pushed so hard for the liberation of markets that they have “thrown out the state-controlled baby with the bath water.”26

  If laissez-faire ideology has made it this difficult to conjure up a noncollectivist democracy, how can a transnational democratic polity ever be imagined? Even if we could overcome our political diffidence, which mechanisms might afford us the chance as citizens to undo the inadvertent evils of global markets? The eclipse of the national “we” in the shadows of both Jihad and McWorld is trouble enough. Now we face their consequences in the absence of any global civic “we,” prepared to act beyond national boundaries. When the only transnational “we” available has to be drawn from anarchic congeries of greedy “me’s,” the market ultimately fails on its own terms. We get the goods but not the lives we want; prosperity for some, but despair for many and dignity for none. McWorld’s twenty-six thousand or more international nongovernmental associations are no match for its Fortune’s top five hundred multinational corporations. Cartels show little hospitality to citizens. McWorld is not and cannot be self-regulating. Nor is it likely to produce the kinds of democratic civic bodies it needs to stay in business. This is McWorld’s paradox. It cannot survive the world it inevitably tends to create if not countered by civic and democratic forces it inevitably tends to undermine.

  Now these defects may not be defects at all by the standard of macroeconomics.27 They are only defects by the standards of politics. They become the defects of markets, however, when macroeconomics and markets are allowed to usurp the role of politics. The disastrous consequences that follow from patterning political reforms on macroeconomic theories are patently visible in countries throughout Latin America and Africa where “as the private sphere flourishes … the public sphere crumbles.” To Guillermo O’Donnell, a leading Latin American political scientist, the matter is simple: “privatization is not democratization.”28 Period.

  I cannot begin to do justice to the havoc wrought by the attempt to impose an economic solution to the problems of democracy on the world’s developing regions, but I do want to offer brief portraits of two post-Communist lands where—in confounding privatization with democratization—wild capitalism has become the primary arbiter of civic values for the last five years and where as a consequence an older democracy (in the newly unified Germany) and a new would-be democracy (in old Russia) are each facing hard challenges to their democratic aspirations.

  17

  Capitalism vs. Democracy in Russia

  THERE IS AMPLE empirical evidence to justify the shrill criticism by observers like Solzhenitsyn of Russia’s experiment with overnight democratization via capitalism-in-a-hurry. There are few participants in the process who are not today deeply worried about the impact of “shock therapy” capitalism both on Russia’s constitution—“a document of very limited legitimacy, and thus authority”1—as well as on the future of Russian democracy, “which has never been more uncertain.”2 John H. Fairbanks, Jr., believes that “many of the preconditions of fascism are now or will soon be present in Russia: hyperinflation, mass unemployment, seething status resentments, disillusion with democracy, a society that is ‘De-Christianized’ but still craves ‘spirituality,’ bitter border conflicts, constant fighting waged not by state armies but by freikorps-like volunteer groups and residual socialist and nationalist feelings.”3 Not every observer is so dramatic, but even sober economists such as Padma Desai have concluded that the shock strategy “hasn’t worked—and won’t.”4 He estimated a decline in Russian GNP of 19 percent and a further fall of 11 percent in 1993, along with inflation of 2,500 percent in 1992 and a continuing inflation thereafter of 25 percent a month. Elsewhere in Eastern Europe, even the economies that have been advertised as “successful” have nonetheless sustained a radical decline in industrial output (over 50 percent in Hungary, the Czech Republic, and Slovakia [similar to Russia], and more than 75 percent in Bulgaria), and a costly surge in retail prices, continuing inflation, and unemployment between 10 and 20 percent in nations that had none.

  In Russia itself where advisors including the conservative Hoover Institution, investment bankers like Goldman, Sachs and Company, and radical free-market economists such as Jeffrey Sachs have been pushing shock tactics, in the first two quarters of 1994 industrial production fell a further 25 percent per quarter (faster than during the Great Depression in America), with agricultural production stalled at a thirty-year low.5 Some estimates classify a full one-quarter of the Russian population as impoverished with an additional 40 percent living below the subsistence line.6 While the rich buy cellular phones, Maine lobster, and illegal drugs, the average industrial wage remains somewhere between $40 and $70 a month, just a little more than what it takes to rent a car at a good hotel for an hour.7 Stretch limousines at $150,000 and $30,000 Cartier watches sell out in what are usually all-cash transactions in boutiques that once targeted foreigners but now cater primarily to Russians—about a million of whom (from a population of 150 million) can afford luxury goods. By the end of 1993, nearly forty thousand foreign-make cars had been registered in Moscow.8 At the Exhibition of Economic Achievement fairgrounds that once paid tribute to the wish
ed-for wonders of Soviet industry and science there stands today a massive shopping arcade: a tribute to McWorld, where “Muscovites cart off newly bought Sony and Panasonic Televisions so fast it looks like a looting spree” and where a Russian visitor exclaims: “I am in shock, I am in shock, I think we have become the 51st state of America.”9 Naglost (a term meaning “anything goes” with particularly brazen and insolent undertones) has replaced glasnost as the working cry of the new capitalism, where pyramid schemes pass as investment opportunities, gut-burning moonshine is sold in Chivas Regal bottles, and protection money and security guards have become the ante of playing in any business at all.