World On Fire

Amy Chua “World on Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability”  Doubleday, 2003, 288 pp.

It’s hard to believe this book was written ten years ago and its analysis is every bit as pertinent today; its premises continue to be validated daily. I highly recommend this book.  While reading it, keep the current activities in Egypt in mind.  

The author convincingly maintains that the prevailing view among globalization’s supporters is that markets and democracy are a kind of universal prescription for the multiple ills of underdevelopment.  Market capitalism is the most efficient economic system the world has ever known.  Democracy is the fairest political system the world has ever known and the one most respectful of individual liberty.  Working hand in hand, markets and democracy will gradually transform the world into a community of prosperous, war-shunning nations, and individuals into liberal, civic-minded citizens and consumers.  In the process, ethnic hatred, religious zealotry, and other “backward” aspects of underdevelopment will be swept away. (P. 8).  Thomas Friedman is a strong proponent of this position in his best selling book The Lexus and the Olive Tree. Friedman should remember that ballot boxes brought Hitler to power in Germany, Mugabe to power in Zimbabwe, and Milosevic to power in Serbia.

By contrast, the thesis of this book, “World On Fire”  is that the global spread of markets and democracy is a principal aggravating cause of group hatred and ethnic violence throughout the non-Western world.  In the numerous societies around the world that have a market dominant minority, markets and democracy are not mutually reinforcing.  Because markets and democracy benefit different ethnic groups in such societies, the pursuit of free market democracy produces highly unstable and combustible conditions.  Markets concentrate enormous wealth in the hands of an “outsider” minority, creating ethnic envy and hatred among often chronically poor majorities.  (P. 9).

My Notes:

Pg. 6:  Market dominant minorities are the Achilles heel of free market democracy.  In societies with a market dominant ethnic minority, markets and democracy favor not just different people, or different classes, but different ethnic groups. Markets concentrate wealth, often spectacular wealth in the hands of the market-dominant minority, while democracy increases the political power of the impoverished majority.  In these circumstances the pursuit of free market democracy becomes an engine of potentially catastrophic ethnonationalism, putting a frustrated “indigenous” majority, easily aroused by opportunistic vote-seeking politicians, against resented, wealthy ethnic minority.  This confrontation is being played out today in country after country from Indonesia to Sierra Leone, from Zimbabwe to Venezuela, from Russia to the Middle East, (and, may I add, all the Arab Spring countries).

Pg. 10:  When free market democracy is pursued in the presence of a market-dominant minority, the almost invariable result is backlash.  This backlash typically takes one of three forms: against markets, targeting the market-dominant minority’s wealth (think Zimbabwe); against democracy by forces favorable to the market-dominant minority (Marcos in the Philippines); violence, sometimes genocidal, directed against the market-dominant minority itself (cleansing of Croats in the former Yugoslavia and the mass slaughter of Tutsi in Rwanda).

Pg. 16:  Contrary to what its proponents assume, free markets outside the West do not spread wealth evenly and enrich entire developing societies.  Instead they tend to concentrate glaring wealth in the hands of an “outsider” minority, generating ethnic envy and hatred among frustrated impoverished majorities.

Pg. 38:  In all the countries of Southeast Asia, free markets have produced countless rags-to-riches success stories among the ethnic Chinese, but remarkably few among the region’s indigenous majorities. 

Pg. 65:  In virtually all of the Latin American countries, latifundios—large agricultural estates owned by a handful of Spanish-blooded families—control an increasingly demoralized, expropriated rural proletariat.  Today, Bolivia, Mexico, and Peru are the major exceptions in Latin America.  Because of extensive agrarian reforms, these countries (along with Cuba) have largely dismantled their latifundios system.  Pro-globalization reforms have so far only exacerbated the problem in those other countries.  Export-oriented plantations of over one thousand hectares (2,470 acres) represent just 1.5 percent of all farms in Latin America yet account for 65 percent of the region’s total farm acreage.

Pg. 82:  During the 1990s, seven cutthroat entrepreneurs, six of them Jewish, came to control the overwhelming part of Russia’s newly privatized economy.  They became billionaires by playing the game more effectively and ruthlessly than anybody else during Russia’s free-for-all transition to capitalism.  Russia’s economy operated in practically a legal vacuum at the time, with no laws prohibiting insider trading or other forms of self-dealing. Russia was robbed in broad daylight, by businessmen who broke no laws, assisted by the West’s best friends in the Kremlin.

Pg. 123:  In the last twenty years democratization has been a central, massively funded pillar of American foreign policy.  As of 2000, an estimated 63 percent of the world’s population, in 120 countries, lived under democratic rule, a vast increase from even a decade ago.  The global spread of democratization reflects the powerful assumption in Western policy and intellectual circles that markets and democracy go hand in hand.  But in the numerous countries around the world with a market-dominant minority, just the opposite has proved true.  Adding democracy to markets has been a recipe for instability, upheaval, and ethnic conflagration.  As markets enrich the market-dominant minority, democratization increases the political voice and power of the frustrated majority.  The competition for votes fosters the emergence of demagogues who scapegoat the resented minority and insist that the nation’s wealth be reclaimed by its true owners.

Pg. 158:  Crony capitalism typically involves a corrupt arrangement between an indigenous autocrat and a market dominant minority.  In some cases, a market-dominant minority itself seizes power (e.g. South Africa and Rawanda).

Pg. 175:  By 1997 the four southern states of the former Yugoslavia (Bosina, Macedonia, Montenegro, and Serbia) per capita income ($1,403) was only 25 percent of the north’s (Slovenia and Croatia).  The result of market liberalization and democratic elections was not prosperity and political freedom, but rather economic devastation, hatemongering, populist manipulation, and civilian conducted mass murder.

Pg. 192:  That democratic politics proved compatible with capitalism in the West, that the electoral power of numbers did not overwhelm the power of property is one of the great surprises of modern history.  Why didn’t democracy result in confiscation.?  Redistribution is one reason.  All the Western nations today have enormous tax-and-transfer programs: progressive taxation, social security, minimum wage laws, worker safety regulation, antitrust laws, and other items.    

However, there are also other important reasons.  For instance, in the early stages of capitalism in all the Western nations—and precisely because the wealthy were afraid that their property might be confiscated and redistributed—the poor were expressly disenfranchised.  The U.S. Federal Convention of 1787 used property qualifications.  Meanwhile, in at least fourteen states, recipients of poor relief were deprived of the franchise as late as 1934.  Throughout Europe, the details differ but the basic story is the same.  However repugnant, these political exclusions were arguably important to the success of the Western nations in establishing stable free market democracies. 

Pg. 201:  Americans generally have not had to deal with the problem of sudden democratization in the face of pervasive poverty and a deeply resented, market-dominant minority.  But several post-Civil War Southern states did face this precise problem and responded to the prospect of black majority rule by mass disenfranchisement.

Pg. 227:  Given the current realities, the principal forces of modernization—markets and majoritarian politics—are fuel to the fires of ethnic conflict in the Middle East.  The simultaneous pursuit today of laissez-faire markets and immediate majority rule would almost certainly produce even more government sponsored bloodshed and ethnic warfare. 

Pg. 251:  With the fall of the Soviet Union in 1989, many imagined that the pressures for nationalization in the developing world would evaporate.  But this prediction was based on the erroneous assumption that nationalization in the developing world was motivated principally by socialist or Communist ideals.  In reality, with a few exceptions (China, Cuba, Vietnam), nationalization in developing countries was never so much an expression of socialism as it was of intense nationalism and ethnonationalism, directed at both Western and internal market-dominant minorities.

Addenda:

In the Philippines the Chinese Filipino is 1% of the population but controls 60% of the economy, with the result being envy and bitterness on the part of the majority against the Chinese minority.   Similarly, in Indonesia the Chinese Indonesians are 3% of the population but control 70% of the economy. There is a similar pattern in other Southeast Asia nations.

Americans can also be seen as a global market-dominant minority, in particularly when combined with using military might and flaunting political domination, this causes resentment.