What’s a Neoliberal to Do?

What’s a Neoliberal to Do?

In the 1960s it seemed as if the Third World was in flames, fueled by anti-imperialist struggles from Cuba to Vietnam, Bolivia to Algeria.


In the 1960s it seemed as if the Third World was in flames, fueled by anti-imperialist struggles from Cuba to Vietnam, Bolivia to Algeria. For New Left intellectuals and activists, these wars were not only the Achilles’ heel of Western domination but also an answer to the alienation of modern life, a chance to forge a new humanism. To spark “two, three, many Vietnams” was a political tactic–and a Hegelian imperative. Taking up arms against the colonialists and their collaborators would make the subjugated aware of themselves as moral beings; revolutionary violence would lead not only to national but to human liberation. The historical mission of anticolonial movements, Frantz Fanon wrote at the dawn of that decade, must not be the substitution of “one barbarism” for “another barbarism,” “one crushing of man” with “another crushing of man.” Instead, it should free both the colonized and the colonizer, ushering in a society free of exploitation.

Four decades later, the Third World, according to the voluminous commentary since September 11, is still burning, yet the smoke carries whiffs not of emancipation but of degradation, not of redemption but of apocalypse. Today’s opinion-makers do not look at Asia, Africa, the Middle East and Latin America as the Enlightenment’s proving ground. Instead, it is a shadowy world ruled by passions that call to be tamed. In the face of genocide, social rot, corruption and failed states, it is the West’s mission, moral obligation even, to finish the task initiated by the old imperialism, a task that national liberation movements were not up to completing. “Empire,” as Michael Ignatieff recently put it in his somewhat reluctant endorsement of war with Iraq, is now “the last hope for democracy and stability alike.”

This gloom has not weakened the Washington Consensus, which holds that open markets combined with constitutional rule will produce a peaceful, prosperous world. But it has changed its tenor. Once preached with evangelical optimism by the Clinton White House, the idea of free-market democracy is now pure fire and brimstone, baldly linked to martial power. As the Bush Administration’s 2002 National Security Strategy pre-emptively puts it, in case anyone begins to think differently, there is only one “single sustainable model for national success: freedom, democracy, and free enterprise.”

Doubt, however, is rising. In World on Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability, Amy Chua adds her voice to the dissenters, chief among them economist Joseph Stiglitz, who are questioning the sanity, not to mention morality, of free-market fundamentalism. Like Stiglitz, who worked for the World Bank and the Clinton Administration, Chua has an insider’s authority. A Yale law professor who helped privatize Mexico’s telecommunications industry, she confesses that “back in the early nineties, I believed that the proceeds of privatization” would go to roads, hospitals, schools and the poor. But confronted with evidence suggesting otherwise, she now agrees with a Mexican newspaper report that the “booty of privatization has made multimillionaires of 13 families, while the rest of the population–some 80 million Mexicans–has been subjected to the same gradual impoverishment as though they had suffered through a war.”

Judging from the deprivation, corruption and violence that Chua and others have chronicled, that war has been as merciless and massive as any in human history. While globalization may have bolstered general economic indicators in many countries–wages up a few pennies a day, absolute poverty down–these advances are offset by the rise of basic food prices, the drowning of local industries in a flood of cheap imports, the whiplash caused by unregulated hot-money speculation and government cutbacks in education, welfare and healthcare. Chua vividly describes the anarchic, lawless quality of the first phase of privatization. Gangsters, oligarchs, dictators, international corporations and bureaucrats preside over a staggering upward transfer of wealth, one that arguably rivals the accumulation that took place during the heyday of industrialization and colonialism. Meanwhile, more than a billion people live on less than a dollar a day, and half the world’s population survives on less than two.

Market democracy is not, according to Chua, a “universal prescription for the multiple ills of underdevelopment.” Free trade, financial liberalization and privatization have concentrated enormous wealth in the hands of “market-dominant minorities”–the Chinese in Southeast Asia, whites in Latin America and Southern Africa, Jews in post-Communist Russia, Indians in Kenya, the Ibo in Nigeria and so on. These policies have also generated dislocation, insecurity, anger and destitution among indigenous majorities, who can now vote as a result of Washington’s campaign to extend constitutional rule throughout the world.

The result, according to Chua, is invariably one of three backlashes:

§ against economic liberalization, whereby new voters elect populist governments promising to halt or reverse market reforms;

§ against democracy, whereby an imperiled, market-dominant minority blocks or limits majority will (Chua argued in a recent New York Times Op-Ed that this was what was occurring with Venezuela’s elite-driven oil strike against Hugo Chávez);

§ and finally, against affluent ethnic minorities who are subjected to violent spasms of “ethnonationalist” rage stirred up by demagogic politicians, as happened during Indonesia’s 1998 anti-Chinese rampage, Russia’s anti-Semitic assaults and even the Rwandan and Yugoslav genocides.

Chua is right to underscore the extreme ethnic stratification of the world economy, which since at least the age of colonialism has been both experienced and administered along racial lines. Yet by placing so much explanatory weight on ethnic passions, she ducks a more thorough investigation into the mutually dependent relationship between neoliberalism and global violence.

World on Fire conjures the specter of race retribution everywhere. Zimbabwe’s Robert Mugabe, who has garnered the world media’s attention by inciting his supporters to seize white-owned plantations, seems to be a particular bête noire. Even South Africa fuels Chua’s fear, for danger there, she says, lurks just below the surface of the African National Congress’s anti-racialism. How does she know? Because a drunken ANC official once reportedly said that when “Mandela dies, we will kill you whites like flies.”

Taking a page from an earlier generation of liberal cold war social scientists, who interpreted the Third World’s social problems, including racism and violence, as obdurate remains of a primeval past–to be remedied with a healthy dose of Western modernity–Chua argues that free-market globalization merely inflames an already existing atavistic rage, a rage that springs from the “darkest recesses of history.” The original problem is not capitalism–Chua repetitively chants that “on balance,” liberalization is a good thing–but “long suppressed ethnic hatreds,” which, with a more enlightened, guided application of market reform, can be tamed and defanged.

But is the world really singed by ethnic terror? Violence is executed on a daily basis, but not, as Chua describes, by resentful, dark-skinned masses against a well-heeled minority. Rather it is of the kind that does not grab the headlines. Untold numbers of peasants are driven off their land every year by cheap agricultural imports or by the extension of large-scale commercial crop production. Yet they merit little notice compared with the 3,000 white farmers terrorized by Mugabe. Crime, disease and malnutrition directly linked to neoliberal restructuring kill far more than the epic clash of civilizations now purportedly under way.

Moreover, as Ted Fishman reports in a recent issue of Harper’s, the central axis of carnage outside the West is not racial hatred but property rights. In Burma, Sudan and Cambodia desperately poor soldiers armed with ever-more affordable weapons (four of the five permanent members of the UN Security Council, led by the United States, account for 83 percent of global arms exports) fight for control of one or two commodities. In Liberia and the Democratic Republic of the Congo, competing factions sell diamonds, minerals and timber (or privatize whole industries) to international corporations or foreign governments; the proceeds make such conflicts not only profitable but interminable. War financing also comes from global capital markets. In Sudan, where the civil war has cost 2 million lives and has driven an equal number from their homes, US capital funds the European, Canadian and Asian oil interests, which in turn bankroll the Sudanese government’s counterinsurgency. When Congress tried in 2001 to ban companies trading with Sudan from having access to US capital, the Bush Administration, encouraged by Wall Street, blocked the effort, arguing that US markets would lose out to Tokyo and London competitors. Meanwhile, financial deregulation has made it easy for blood money from wars, dictators and contraband–up to $1 trillion a year–to be miraculously transformed into re-spectable capital, with much of it entering the United States.

Instability is not just an unfortunate effect of liberalization but one of its constitutive elements. Rather than “aggravating” ancient hatreds, economic crisis creates ethnonationalist conflict. Until recently, for example, the Ivory Coast was renowned for open borders and prosperity made possible by cocoa export. Yet throughout the 1990s, international competition from new producers, which by all standards is a vital component of the new economic order, drove cocoa prices downward. With declining revenues and pressure from the World Bank, the state privatized the industry (much of it going to Archer Daniels Midland). Economic crisis bred political crisis, and today the nation is on the brink of violence that some say could match what occurred in Rwanda a decade ago. Yet the xenophobia peddled by the government is aimed not against a prosperous few, as Chua’s analysis would suggest, but largely at migrant plantation workers from neighboring states.

As a reformer, Chua tentatively endorses an array of mechanisms–education, healthcare, redistributive tax policies, some form of affirmative action–that could mitigate the worst effects of “capitalism in the raw.” But her need to find race blood everywhere prevents her from understanding the importance of political mobilization in bringing about such ameliorative measures.

Chua deploys such a spongy definition of ethnicity that it absorbs and wipes away complex histories of political struggles, commitments and protests. By describing the United States, for instance, as a global “market-dominant minority,” she can characterize the nationalizations of its interests in Mexico, Argentina and Chile, along with similar expropriations throughout the Third World, as “ethnically targeted confiscations” driven by the “wild enthusiasm” of the “indigenous majority.” Chua downplays the fact that the popular movements cheering these actions were as equally anti-imperialist and anticapitalist as they were nativist and nationalist; she gives no indication that nationalizations, some supported by the UN and, at times, even the United States, were often designed to bring about the kind of modern welfare state Chua claims to advocate (she also neglects to mention that government industrial expropriations were essential to the post-World War II reconstruction of Western Europe).

No justice is done to contemporary indigenous or African-American rights movements in Bolivia, Ecuador, Chile, Venezuela or Brazil: Chua interprets them as embryonic pogroms and their leaders as charismatic demagogues. The racial dimensions of rule and resistance in Latin America are deep. Popular resentment and elite fear drive much of politics. Yet the continent’s cultural rights activism emerges from and remains connected to a long tradition of humanist, egalitarian left politics. This mobilization makes up Latin America’s loosely knit contribution to the worldwide movement–recently gathered at the World Social Forum in Brazil’s Porto Alegre–demanding a more humane globalization. But Chua, who reassures us that she is no “anti-globalist,” dispatches such naïvetés early on. “Given the ethnic dynamics of the developing world,” she writes, calls by the likes of Noam Chomsky for more democracy are “dangerous.”

Chua is also blind to how the inequities of the world economy she so graphically captures are enforced by those who benefit the most from them. She describes it as “ironical” that the United States insists on open markets abroad while maintaining tariffs and subsidies at home. But she ignores how in many countries now under supposed free-market democratic reconstruction, the US-waged cold war was one sustained, massive assault on the very forces that were trying create a fairer society. To suggest that in its wake the United States is promoting some kind of unrestrained democracy is simply wrong. In Latin America, during the recent restoration of constitutional rule that followed prolonged dictatorships, the United States dissuaded political parties from mobilizing their supporters and encouraged them to adopt a more “modern” political style based on passive representation and elite negotiations. Likewise, Washington has crafted a number of antidemocratic measures–such as international treaties that limit the ability of local states to implement regulations, and the establishment of independent central banks that remove monetary policy from public debate–restricting popular will.

It is by now a left cliché to dismiss works such as Chua’s as not seriously engaging with history or political economy, but the emptiness of World on Fire reveals contemporary liberalism’s deeper bankruptcy. Chua offers her work as an incursion into public debates, positioning herself as a more sober Thomas Friedman, a less critical Joseph Stiglitz. She advises governments and businesses on the effects of globalization, and one easily sees her in the next Democratic administration. World on Fire evokes other well-timed interventions by liberal social scientists during moments of crisis, for instance, John Maynard Keynes’s 1919 The Economic Consequences of the Peace and Walt Whitman Rostow’s 1960 Stages of Economic Growth: A Non-Communist Manifesto. Yet where such work called for robust responses to political problems–including an extension of democracy, social welfare and coherent, if problematic, development strategies–Chua offers bread and circuses.

World on Fire argues that the best antidote to poverty and violence “lies with market-dominant minorities themselves” who should “voluntarily take steps to foster the reality and the perception that they are vital, public-spirited contributors to the national interest.” These should include not only increased US aid and individual and corporate philanthropy but the patronage of public spectacles. “Given the extraordinary needs and deficits of developing societies,” she writes,

the opportunities for building interethnic goodwill are plentiful, and there is considerable room for creativity. For example, many have observed the tremendous unifying power of sports all over the world, across both class and ethnic lines. In the United States, nothing has improved race relations more over the last two decades than the idolization of such figures as Michael Jordan, Sammy Sosa, and Tiger Woods…. In Indonesia, where anti-Chinese sentiment is about as fierce and entrenched as it can get, ordinary pribumi [indigenous] citizens openly adore Susi Susanit and Alan Kusuma, ethnic Chinese badminton stars.

What accounts for this pale liberalism, insipid in diagnosis and remedy? Part of the problem is the nature of the neoliberal economic regime itself, which, unlike Keynesianism, does not lend itself to coherent development strategies. But another reason is the defeat of alternatives, which were vanquished as part of that massive backlash against democracy, to use Chua’s own phrasing, otherwise known as the cold war. Both Keynes and Rostow, for example, wrote in response to formidable political and theoretical challenges–working-class, Marxist, anti-imperialist–which forced them to add substance to their analysis. Without these pressures, the syncretic richness of liberalism, along with its ability to extend its protections, has been drained, leaving us in an impoverished landscape.

The contradiction between democracy and capitalism has been charted many times before. In 1944, for instance, Karl Polanyi argued in The Great Transformation that the central political conflict of capitalism was between ideologues pushing utopian visions of unfettered markets to the brink of catastrophe and social movements demanding more government intervention, regulation and redistribution. Today, those countervailing forces lack sufficient traction to counterthrust and, if World on Fire is any indication, little theoretical reinforcement from their would-be intellectual allies. In the midst of an economic crisis caused by intense speculation and unparalleled accumulation, we reward the rich with tax breaks and punish the poor with social-service cutbacks. After a decade of dislocation caused by privatization and financial liberalization, we have a foreign policy insisting on more of the same.

Along with neoliberalism, we have a neo-civilizing mission. The West will deliver free-market democracy, one way or another, to the rest of the world, either through the proper mix of technology, markets, constitutions, consumer goods or out of the barrel of a smart weapon. Despite its warnings against a too-quick and potent injection of free-market democracy, World on Fire, by obsessively focusing on “dark” ethnic hatreds, by ignoring the deeper links between capitalism and violence, by dismissing the importance of Third World democratic movements to the achievement of reform and by failing to provide a serious alternative to free-market fundamentalism, ultimately serves to legitimize the new imperial enterprise. Those market ideologues whom Polanyi warned us about are driving us beyond the precipice. But this time liberals such as Chua and Ignatieff are pointing the way.

Today, many dismiss New Left intellectuals and activists for their uncritical celebration of national liberation movements and their dangerous sympathy for revolutionary violence, an opinion confirmed by the uninspiring reality of states like Zimbabwe, Cuba, Iraq and Algeria. Yet no matter how defeated their optimism, they taught us that the world was connected, that the cruelty that afflicts much of the globe is not a residue from some premodern past but a dynamic condition of the present. The New Left offered a notion of progress based not on technology diffusion, commerce and consumerism but on equality and justice, and a belief that the achievement of a just world was a political, not a managerial, problem–that it would take sustained struggle against entrenched national and international interests and privileges.

In his introduction to Fanon’s Wretched of the Earth, Jean-Paul Sartre wrote of a colonial system that produced and profited from inequality, slavery and racism. That system, though, held the “carrot” of the Enlightenment in front of the nose of the colonized as means of enticing them to “gallop” along. If, however, the Enlightenment were to be truly implemented, Sartre insisted, the colonized would have to destroy the very colonial order that sponsored it. Invoking the German philosopher who first described the relationship between slavery’s abolition and the Enlightenment’s fulfillment, he mordantly concluded, “colonial administrators are not paid to read Hegel.” Neither, apparently, are Yale law professors.

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Katrina vanden Heuvel
Editorial Director and Publisher, The Nation

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