The Great Democracy

by Ganesh Sitaraman

  The second problem is that international institutions are not necessarily good for democracy. If international institutions are designed badly or pursue policies that undermine economic equality, social solidarity, and political responsiveness, they can contribute to the collapse of democracy. Indeed, there is a good case that some international economic institutions—especially the IMF—have had precisely this effect. By pushing countries to deregulate, liberalize, privatize, and impose austerity, the IMF led them into a future of economic crises, rising inequality, and backlash to democracy. China’s entry into the WTO had somewhat similar effects in the United States. As we have seen, economists have shown that the Asian country’s admission to the trading body led to a China Shock that disproportionately affected some American communities. Even a decade later, these communities had not bounced back or adapted.

  Finally, entanglement theory was not attentive to the threat that comes from becoming more economically interdependent with countries that do not share core democratic values. Nationalist oligarchies are not designing their policies to fit the theories of Adam Smith or the Chicago School economists. Their central, defining feature is the fusion of economic and political power. What that means is that economic integration gives the state the ability to wield political power and exercise leverage through the economic channels opened from integration. China, for example, has not shied away from using economic power for geopolitical purposes. For example, to punish Norway for the 2010 Nobel Peace Prize going to Chinese dissident Liu Xiaobo, China banned imports of Norwegian salmon. China also prevented the importation of Filipino bananas in 2012 to gain leverage during a maritime dispute. Integration raises other security concerns as well. According to a Bloomberg News report, which companies have denied, Chinese manufacturers secretly placed microchips on motherboards destined for the American market, in the process creating a backdoor entrance into networks that use those chips. A more common complaint is that American companies operating in China are forced to turn over trade secrets and technology and partner with Chinese companies in order to gain access to the market. This benefits not only the Chinese companies but also the Chinese government, as many of these partner companies are state-owned or state-supported enterprises.10

  Call this reverse entanglement: while liberal democracies were trying to entangle the Chinese through economic integration, they themselves became ensnared. Economic power has always been one of the foundations of global power, and the ability to have economic leverage over a country has always been important for pursuing geopolitical goals. Because politics and economics are intertwined in China, as China’s economic power grows and it becomes more globally integrated into the economy, other countries will increasingly find themselves at the mercy of the Chinese government. These dynamics apply to nationalist oligarchies generally.

  Responding to the reality of reverse entanglement requires three strategies. The first is an economic development and industrial policy to support and strengthen innovation and industry. This means massive investments in research and development and an active manufacturing and innovation policy that ensures the development of industry within the country’s borders. Development increases resilience in the face of economic threats. But it cannot be implemented through economic policies that support and entrench monopolies and megacorporations. Democracy requires dispersing economic power internally; so, too, must its strategy for development.

  The second strategy is selective disentanglement. Selective disentanglement means uncoupling the American economy from corporations, investments, and the economies of nationalist oligarchies in sectors that are of critical importance to national security. In the short run, selective disengagement would require the Committee on Foreign Investment in the United States (CFIUS), which can block foreign companies from making acquisitions in the United States, to act far more aggressively when dealing with nationalist oligarchies. It will also require the United States to adopt stringent, perhaps even draconian, policies to protect against both legal and illegal technology transfers and theft of intellectual property. Corporations that give up important technology, particularly when funded through US government grants, enhance the ability not just of companies within nationalist oligarchies but the states themselves.

  In addition, the United States should push our allies to engage in similar policies. Former ambassador to Russia Michael McFaul has argued, for example, that Germany should cancel its plans to build a natural gas pipeline with Russia. The new pipeline would increase German dependence on Russia for critical energy needs, which is both a military and economic threat. Democracies also need to be far more attentive to Russian attempts to hide wealth in the West and to Chinese and Russian purchases of companies, technology, and even property. These efforts can not only have problematic economic effects (like increased real estate prices) but also economic security consequences (like spying, hacking, and theft).11

  The final strategy is diversification of economic partners. As of 2017, China was not only the United States’ largest trading partner in the world for goods but also the largest supplier of imported goods. It is also the largest holder of US government debt. As we have seen, dependency on nationalist oligarchies can be a vulnerability because economic power can be used for political purposes. This is why it is important to support international economic cooperation with democratic allies. But diversification must be done in a way that simultaneously expands connections abroad while preventing inequality and the concentration of economic power at home.12

  Diversifying economic partners will mean rethinking and reforming critical alliances. Alliances help us defend our democracy from internal and external threats. Consider NATO. Since its founding, NATO was based on two premises. The first was preserving security and stability in Europe. In the classic formulation by Lord Ismay, after two World Wars that started in Europe, the goal was to “keep the Soviet Union out, the Americans in, and the Germans down.” The second was that its member countries shared liberal democratic ideas and practices. In the post–Cold War era, the first premise had lost much of its force, leading to endless discussions of whether NATO was still relevant. The second premise, perhaps unsurprisingly given the neoliberal character of the age, was reduced to promoting a thin notion of electoral democracy combined with neoliberal market economics for the countries of the former Soviet bloc.13

  Over time, three serious problems with the decades-old alliance have become clear. The first, as Celeste Wallander has argued, is that “there is no price for violating NATO’s liberal democratic standards, and some weak links are indeed backsliding.” Countries like Hungary and Turkey are no longer robust liberal democracies, and their links to Russia in particular make it harder for NATO to defend the democratic foundations of its members.14

  The second problem is that NATO’s vision of liberal democracy was relatively thin to begin with. With a goal of democracy promotion and the expansion of capitalism, countries could be admitted for making democratic reforms with respect to elections and political changes and without regard for their degree of economic equality. Rather, NATO (and the EU as well) saw the alliances as ways to induce reforms over time—to engage in democracy promotion rather than democracy protection. Many of the ensuing neoliberal reforms, however, actually eroded the middle class. They undermined the very foundations of the democracies they were trying to promote. After the 2008 financial crash, populations in countries that had more insecure economies unsurprisingly engaged in various forms of political rebellion—against the EU and against their own governments.

  The third problem is that the threat to transatlantic liberal democracies has evolved—but foreign policy and the alliance have not fully refocused on the nature of the new challenge. The Soviet Union’s threat to Europe during the Cold War was largely understood to be a military threat—a threat of invasion. Today, the Russian threat to democracy “operates through shadowy financial flows, corrupt relationships, bribes, kickbacks, and blackmail.” Cron
yism and corruption are not a bug but the central feature of the model. For this system to continue, nationalist oligarchs need a steady diet of economic resources so they can pay off their clients. Because every domestic economy has limits, nationalist oligarchies look abroad to make deals with foreign countries, gain influence over foreign companies, and steal foreign technology. At the extreme, think of it as a foreign policy Ponzi scheme. To keep power, you need to continue to get more and more wealth to buy off your supporters. A foreign policy of aggressive economic influence, deal making, and theft enables the corruption that sustains the regime. Ideologically, Russia now spreads “the same combination of intolerant nationalism, xenophobia, and illiberalism that is on the rise in Hungary, Poland, Turkey, and elsewhere in Europe.” Combined with the technology—hacking, cyberwarfare, and social media disinformation campaigns—the current challenge may be even greater than the military threat was during the Cold War. Instead of taking over Europe by force, nationalist oligarchies might be able to break democracy through corruption and fraud.15

  Today, the central purpose of our alliances must be to defend democracy. We must recognize the existential threat to democracy that comes from hacking, election vulnerabilities, social media disinformation, and other forms of electronic attacks and cyberwarfare. These are areas in which democratic countries can help one another by sharing intelligence and learning from attempted attacks across the West. For example, NATO countries that want to meet their 2 percent of GDP spending commitment, as President Trump has undiplomatically asked them to do, should be able to invest in cybersecurity as long as the benefits can be shared with other members of the alliance.

  Economic democracy in transatlantic countries is also at great risk, as inequality reaches historic levels and power is increasingly concentrated in the hands of wealthy families and corporations. International institutions from the Organisation for Economic Co-operation and Development (OECD) to the European Union to NATO can work together to disseminate data and information and coordinate policy that will help fight oligarchic policies. Another proposal is for alliances themselves to build incentives into their structure to prevent democratic backsliding. Wallander thus argues for changing NATO’s voting rules so that a majority of members can strip countries of voting rights and funding to punish countries that pursue undemocratic practices.16

  Perhaps the boldest proposal would be to create a new alliance of democracies, which some commentators, including 2008 Republican presidential candidate John McCain, have alternatively called a league, or concert, of democracies. As a path forward for defending democracy, this idea has merit, particularly if President Trump undermines NATO to the point of no return. But for it to work, its goals would have to diverge significantly from those of its original promoters.

  Advocates for an alliance of democracies came up with the idea after the intervention in Iraq in 2003. They were largely responding to the failure of the United Nations Security Council to intervene in a variety of conflicts and humanitarian crises with sufficient haste and attention. Although proponents argued that a concert of democracies would cooperate on a wide variety of issues of common concern, they also believed that this new international institution would be able to engage in foreign interventions more easily than the United Nations. And far from being exercises of power by Western elite democracies, the alliance’s military and humanitarian interventions would be legitimate because the alliance would include upward of sixty countries, including the Philippines, India, and Brazil. As James Lindsay wrote in 2009, the concert of democracies “would be composed of a diverse group of countries from around the globe—small and large, rich and poor, North and South, strong and weak.” Some others, like Anne-Marie Slaughter and John Ikenberry, saw an alliance of democracies as updating the architecture of the international system for a new era and hoped the alliance would form a bloc that could push for the reform of traditional international institutions, like the UN, World Bank, and IMF. Opponents of the idea were primarily worried that an alliance of democracies would cause backlash. China, Russia, and other nondemocracies would see the alliance as a threat, leading to a downward spiral of mistrust that could potentially end in conflict.17

  Today, the case for an alliance of democracies is stronger than it was in the post-Iraq context—but for different reasons. By now, it is clear to everyone that we were never at the end of history, at a unipolar moment where the United States and other democracies had time, money, and military power to spend engaging in adventures abroad. Even those who once believed that now recognize that the global context has shifted. Today, the primary goal of an alliance of democracies would not be to engage in interventions or promote democracy. It would be defensive—to maintain democracy inside each of the member countries.

  An alliance today would also focus on deepening economic cooperation in order to build collective, countervailing economic power vis-à-vis nationalist oligarchies. The original proponents of an alliance argued for “eliminating tariffs and other trade barriers among member countries.” But as Trump’s election, Brexit, and data on the China Shock suggest, the liberalization of trade barriers without regard to the consequences is destructive for economic democracy and is a threat to social cohesion. Instead, the alliance’s economic agenda should be to enforce antitrust and anti-monopoly rules across borders, to prevent tax havens and simplify the financial system, to regulate tech platforms, promote corporate democracy, reinvigorate worker power, and fight corruption. In other words, an alliance of democracies would seek to facilitate international cooperation on the agenda that each country must pursue to achieve economic democracy at home. This cooperative effort is critical because individually each democracy is vulnerable to lucrative offers from nationalist oligarchies abroad. The enemies of economic democracy can play countries against each other, creating a race to the bottom that ultimately undermines democracy itself. Cooperation is critical to helping solve this problem.18

  Importantly, building alliances among democracies is not the same as promoting democracy in places that do not have it. And although the United States and an alliance of democracies like NATO should advocate for the conditions that allow democracies to flourish, they should not focus on the kinds of aggressive military interventions that defined the neoliberal era’s foreign policy on both the right and the left.

  The logic of this more restrained foreign policy stems from the nature of democracy itself. As we have seen, democracy demands much more than holding elections or adopting formal political and civil rights. Because democracy has an economic and social component, it is not easily exported or created unless the preconditions for democracy are already in place. And if the preconditions for democracy are in place, there is a good chance democracy is already in place. Changing deeply held values, social structures, and the distribution of wealth is inevitably a long-term process. Attempts to rush it or impose solutions from abroad can backfire.

  This is precisely where aggressive proponents of democracy promotion have gone wrong for decades. It wasn’t just a matter of sufficient planning for postwar reconstruction. The idea that foreigners who knew nothing about a country’s history, culture, customs, and language, didn’t care enough to learn, and didn’t want to stay for decades could somehow transform Iraq, Afghanistan, or any other country into a democratic paradise was misguided from the start. Add that the tactics for democracy promotion were elections and neoliberal economic policies, and it is unsurprising that these interventions often left behind chaos, corruption, and crisis.

  What true democracy involves is that communities take charge of their own destinies. Philosophers from John Stuart Mill to Michael Walzer have understood that a commitment to self-determination actually requires restraint, not adventurism. In “The Moral Standing of States,” Walzer argued that believing in self-determination paradoxically required nonintervention. For a people to be free, they must be free to engage in rebellion and overthrow their government—or free not to rebel and to ret
ain their government even if it might seem, from abroad, to be undemocratic or illiberal. Intervention undermines the ability of a people to shape its own destiny. True democracy means the people themselves must determine their own fate. We cannot do it for them.19

  The idea that restraint is a function of our commitment to democracy does not mean humanitarian interventions are never possible. Walzer himself argued that intervention would be permissible if there is an internal rebellion in a state, if intervention is necessary to counter the use of force by a foreign country, or in the case of slavery or mass murder. The common theme is that in each situation, self-determination is being violated. None of this, of course, means that intervention is mandatory. It might be too expensive, judged to be counterproductive, or simply politically unpopular at home.

  Restraint in promoting democracy and intervening abroad isn’t isolationism, and it doesn’t morally endorse corrupt and oppressive regimes. It is a hardheaded recognition that stable democracies require not only political democracy but also a good measure of economic equality and social solidarity—all of which cannot be imposed from abroad. Democracy is fragile and rare, and people must achieve it on their own. In this sense, “American restraint abroad is not an abandonment of democratic values but rather an expression of them.”20

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  Democracy might have ended with imperialism, or fascism, or communism. But with each challenge, democracies adapted and outlasted those rival forms of government. Today, the greatest threat to the persistence of democracy is nationalist oligarchy, both at home and abroad. The stakes of this challenge are about the struggle for global power and influence, but also the very character of our country. Crony capitalism and authoritarianism already threaten to undermine democracy from within. Nationalist oligarchies abroad seek the power to redefine world affairs and the leverage to dictate domestic ones.