The myth of illiberal capitalism

Issue 16 - Jul 2008

Dhruva Jaishankar

America’s unipolar moment was indeed that. A moment. Giddy with a sense of triumph following the dissolution of the Soviet Union in 1991, Americans quickly realised that they had a window of opportunity when their global power would go unchallenged. The period that followed saw robust American economic growth riding on the high-tech revolution; successful military or diplomatic interventions in Bosnia, Haiti, Kosovo and Northern Ireland; unfinished endeavours in Palestine, Korea and Afghanistan; and a severe setback in Iraq. Today, not even twenty years after the fall of the Berlin Wall, the evolution of a new kind of multi-polar order appears imminent. The American strategic community finds itself unsure about where its next big challenge will lie.

Mr Kagan wrote his latest treatise in conscious refutation of Francis Fukuyama’s ‘end of history’ prediction made almost twenty years ago. Inspired by Hegel, Marx and the French thinker Alexandre Kojeve, Mr Fukuyama argued not that events would stop, but that the triumph of liberal democracy with the end of the cold war would mark the “end point of man’s ideological evolution”. His thesis, tempered by caveats, was expectedly controversial at the time of its publication in 1989. Following the September 11, 2001 attacks and the hysteria surrounding Islamic extremism, it was widely dismissed in favour of other theories, such as Samuel Huntington’s ‘clash of civilisations’ thesis.

Yet for all its flaws, and its author’s subsequent amendments, Mr Fukuyama’s contention reads truer today than it did twenty years ago. Certainly, there remain potent outliers to the global norm of free-market liberal democracy. But what few have recognised is that there will always be those exceptions, frequently resource-rich states that feed off the larger globally integrated market. Newsweek International editor Fareed Zakaria is among those to have noted this phenomenon. “[C]ertain countries—those endowed with natural resources, especially petroleum and natural gas—are getting free rides,” he writes in his recent book The Post-American World. “They are surfing the wave of global growth, getting rich without having to play by most of the rules that govern the global economy. This phenomenon is the strange but inevitable outgrowth of the success of everyone else. These countries are the non-market parasites on a market world.”

Americans should therefore not be worried about the Return of History. Other than perhaps its size and speed, China has quite closely followed the growth pattern of several other Asian states such as South Korea, Taiwan, and Japan, which were based initially on comparative advantages in manufacturing and an emphasis on infrastructure.

It appears plausible that China may also evolve along a similar path politically, with glasnost following perestroika. Energy-rich Russia, in contrast, could evolve in the opposite direction, with state-controlled energy companies enriching the centre and the people at the expense of political freedom. Russia, in short, may end up one of the parasites, although certainly not to the degree of Saudi Arabia or the emirates.

The new neo-conservative agenda, should it take hold in US foreign policy circles, will adversely impact the United States’ relationships with Russia and China. But of equal concern, it may threaten relationships with other proudly democratic states, like India, that do not necessarily share America’s reading of history.