World on Fire World on Fire World on Fire

by Amy Chua

  Like other group hatred movements directed against market-dominant minorities, Islamic fundamentalism offers an alternative to humiliation. It offers a scapegoat, a mission, an identity, and a chance—however deluded—for the powerless to regain power.

  CHAPTER 12

  The Future

  of Free Market Democracy

  The bottom line is this. Democracy can be inimical to the interests of market-dominant minorities. There were good reasons why the Indians in Kenya and whites in South Africa, Zimbabwe, and America’s Southern states resisted democratization for generations. Market-dominant minorities do not really want democracy, at least not in the sense of having their fate determined by genuine majority rule.

  Some readers will surely protest. Many market-dominant minorities—the Chinese in Malaysia, for example, or Jews in Russia, and Americans everywhere—often seem to be among the most vocal advocates of democracy. But “democracy” is a notoriously contested term, meaning different things to different people.

  When entrepreneurial but politically vulnerable minorities like the Chinese in Southeast Asia, Indians in East Africa, or Jews in Russia call for democracy, they principally have in mind constitutionally guaranteed human rights and property protections for minorities. In other words, in calling for democracy, these “outsider” groups are precisely seeking protection against “tyranny of the majority.”

  Similarly, when the European-blooded elites in Bolivia, Ecuador, or Venezuela discuss democratization, they invariably mention the “rule of law” in the same sentence. What these elites decidedly don’t want from democracy is to have property rights and economic policies suddenly determined by their countries’ poorly educated, impoverished Indian-blooded majorities. (Witness the horror of the Venezuelan elite when populist leader Hugo Chavez swept to power and the subsequent efforts to remove him.) On the contrary, by democratization, Latin America’s elites usually mean a very gradual process of majority inclusion, beginning first with educational reform, perhaps local elections, and some political participation of the masses—but always tempered by, and subordinated to, an overriding concern for the stability of property rights, foreign investment, and the status quo.

  In the Middle East, Israeli Jews are justly proud of the strength of Israel’s democratic institutions, which are almost unique in the Middle East. But even Israel does not extend suffrage to the roughly 3 million Palestinians living in the West Bank and Gaza Strip. Among other reasons, enfranchising the Palestinians of the Occupied Territories would significantly dilute Israel’s “Jewish character” and could even lead to Jews eventually becoming a minority in Israel. Nor is it clear that democratization of the Arab states would be in Israel’s best interests. In Egypt, for example, rapid democratization might very well bring to power a regime much more hostile to Israel than Hosni Mubarak’s autocratic military rule.

  Finally, when Americans call for world democratization, we don’t mean world democracy. For Americans, global democratization means democracy for and within individual countries. That is, we envision a world in which brutal and unjust dictatorships are replaced by freely and fairly elected leaders, accountable to their citizens. We imagine ourselves, moreover, at the helm of such a world. As President Clinton predicted in his second inaugural address: “The world’s greatest democracy will lead a whole world of democracies.”1 By contrast, the last thing most Americans want is a true world democracy, in which our economic and political fate is determined by a majority of the world’s countries or citizens. The idea, for example, of the U.N. General Assembly controlling U.S. foreign investments would probably not be appealing to most Americans. Like other market-dominant minorities, we don’t trust the relatively poor, frustrated, resentful majorities surrounding us necessarily to act in our best interests.

  Democracy or Markets?

  Deservedly or not, market-dominant minorities—with their disproportionate capital, skills, business networks, and control over the modern economy—drive global capitalism. Any backlash against market-dominant minorities, whether the Chinese in Indonesia, Ibo in Nigeria, or America at the global level, is thus also a backlash against markets.

  In other words, in societies with a market-dominant minority, democracy can pose a grave threat not only to the minority, but to markets themselves. Rather than reinforcing the market’s liberalizing, wealth-producing effects, the sudden political empowerment of a poor, frustrated “indigenous” majority often leads to powerful ethnonationalist, anti-market pressures. And these pressures, as Rwanda, Indonesia, and the former Yugoslavia vividly show, are more likely to lead to confiscation and ethnic killing than to the widespread peace and prosperity that proponents of free market democracy envision. There is always an inherent tension between market capitalism and democracy. But in societies with a market-dominant minority, this tension is inflamed by the dark energies of ethnic hatred. As a result, throughout the non-Western world today, markets and democracy—at least in the raw forms in which they are currently being implemented—are not typically mutually reinforcing. On the contrary, their combined pursuit in the face of a hated market-dominant minority is a recipe for ethnic conflagration.

  So where does this leave us? What are the implications of market-dominant minorities for national and international policymaking?

  Influential writer Robert D. Kaplan recently offered this general answer: hold off on democracy until free markets produce enough economic and social development to make democracy sustainable. In The Coming Anarchy, Kaplan argues that a middle class and civil institutions—both of which he implicitly assumes would be generated by market capitalism—are preconditions for democracy. Contrasting Lee Kuan Yew’s prosperous authoritarian Singapore with the murderous, “bloodletting” democratic states of Colombia, Rwanda, and South Africa, Kaplan fiercely condemns America’s post–Cold War mission to export democracy abroad, to “places where it can’t succeed.”2

  This position—markets first, democracy later, if at all—has a long and impressive pedigree. In 1959, noted sociologist Seymour Martin Lipset wrote that “the more well-to-do a nation, the greater the chances that it will sustain democracy.” And in his 1968 Political Order in Changing Societies political scientist Samuel P. Huntington made what continues to be the most powerful and subtle case against rapid democratization in modernizing societies.3 Not surprisingly, this view also finds support among many leaders of non-Western nations, who argue that democracy is a Western value that should not indiscriminately be imposed on other cultures.

  In 1992, for example, Saudi Arabia’s King Fahd publicly stated that the “democratic system prevailing in the world does not suit us in the region . . . Islam is our social and political law. It is a complete constitution of social and economic laws and a system of government and justice.”4 Similarly, Malaysia’s prime minister Dr. Mahathir Mohamad has frequently attacked the “moral degeneration” of Western democracy and the superiority of “Asian values.”5

  Singapore’s Lee Kuan Yew recently explained in an interview in Foreign Affairs that “Asian societies are unlike Western ones. The fundamental difference between Western concepts of society and government and East Asian concepts”—referring to China, Japan, Korea, and Vietnam, as distinct from Southeast Asia—“is that Eastern societies believe that the individual exists in the context of the family. He is not pristine and separate.” On democracy, Lee Kuan Yew responded, “What are we all seeking? A form of government that will be comfortable, because it meets our needs, is not oppressive, and maximizes our opportunities. And whether you have one-man, one-vote or some-men, one vote or other men, two votes, those are forms which should be worked out. I’m not intellectually convinced that one-man, one-vote is best.”6

  Singapore, with its astounding rise to prosperity, modernity, and civil stability, has proved an alluring exemplar for those who question the wisdom of democratizing developing societies. According to Kaplan, the American urge to democratize others is arrogant, provincial, and irrespon
sible. “To think that democracy as we know it will triumph—or is even here to stay—is itself a form of determinism, driven by our own ethnocentricism,” argues Kaplan.7

  Although Kaplan’s view is refreshingly unromantic, I ultimately differ from him. To begin with, as one writer has quipped, “If authoritarianism were the key to prosperity, then Africa would be the richest continent in the world.” There is no way to ensure that any given dictator will be beneficent, farsighted, and pro-market. Ask (as some do) for an Augusto Pinochet or an Alberto Fujimori, and you may get an Idi Amin or a Papa Doc Duvalier. As many political economists have observed, there is no clear correlation between authoritarianism and economic growth.8 While democracy is certainly no panacea for corruption, many of history’s most predatory regimes, from the Marcos dictatorship in the Philippines to Burma’s repugnant SLORC, have been autocratic.

  More fundamentally, Kaplan overlooks the global problem of market-dominant minorities. Kaplan stresses the ethnic biases of elections, but neglects the ethnic biases of capitalism. At the same time he is overly optimistic about the ability of markets alone to lift the great indigenous masses out of poverty. The awkward reality is that markets in developing societies favor not only some people over others, but some ethnic groups over others. Worse, they often benefit a hated ethnic minority, leaving the vast majority of the nation in frustrated poverty. Overlooking this reality, Kaplan blames too much of the world’s violence and anarchy on democracy.

  Consider, for example, the brutal takeover of Sierra Leone by diamond-hungry, limb-chopping rebels; the confiscations of white land in Zimbabwe; or the 1998 anti-Chinese riots in Indonesia that triggered $40 billion of capital flight and helped economically destabilize all of Southeast Asia. In all these cases and many more, markets set up the disasters by reinforcing the stark economic dominance of an “outsider” minority and by fomenting intense resentment among the poor, frustrated “indigenous” majority. Once such intense resentment among the majority exists, Kaplan is absolutely right that suddenly holding free and fair elections could well produce catastrophic results. What he fails to see is that unrestrained markets—superimposed on postcolonial societies with massive initial ethnic imbalances in financial and human capital—have helped create intolerable and volatile conditions in these societies, the very conditions that unrestrained democracy detonates.

  The remainder of this chapter will be based on three assumptions. First, the best economic hope for developing and post-socialist countries lies in some form of market-generated growth. Second, the best political hope for these countries lies in some form of democracy, with constitutional constraints, tailored to local realities. And third, avoiding ethnic oppression and bloodshed must be a constant priority. But if these goals are to be achieved—if global free market democracy is to be peaceably sustainable—then the problem of market-dominant minorities, however unsettling, must be confronted head-on. The answer is not to swing from one wishful panacea to another, for example by scapegoating democracy and glorifying markets, or vice versa.

  Rather, the next several sections will address the following specific topics: (1) the possibility of “leveling the playing field” between market-dominant minorities and the impoverished “indigenous” majorities around them; (2) ways of giving the poor, frustrated majorities of the world a greater stake in global markets; (3) ways of promoting liberal rather than illiberal democracies; and (4) approaches that market-dominant minorities themselves might take to forestall majority-based, often murderous ethnonationalist backlashes. If we stop peddling cure-alls—both to ourselves and others—and instead candidly address the biases and dangers inherent in both markets and democracy, there is in many cases room for optimism.

  Leveling the Playing Field:

  Addressing the Causes of Market Dominance

  The first, most obvious step is to isolate, where possible, and to address, where appropriate, the causes of the market dominance of certain groups. In South Africa, for example, expanding educational opportunities for the black majority—relegated for more than seventy years to inferior Bantu schooling—is properly a national priority and should be vigorously supported by the international community to the extent that it has an interest in promoting the stability of a democratic South Africa. Throughout Latin America as well, the market dominance of the European-blooded elite reflects at least in part centuries of subjugation, exclusion, and corrupt, oligarchic rule. Educational reform and equalization of opportunities for the region’s poor indigenous-blooded majorities are imperative if global markets are to benefit more than just a handful of cosmopolitan elites.

  Similarly, to the extent that political favoritism has contributed to the astounding wealth of certain market-dominant minorities, eliminating such favoritism would plainly be a step in the right direction. The monopolies awarded by indigenous leaders, always in exchange for kickbacks, to outsider market-dominant minorities not only are inefficient, but fuel invidious group stereotypes and aggravate ethnic resentment.

  On the other hand, we have to be realistic. The truth is that the underlying causes of market dominance are poorly understood, difficult to reduce to tangible factors, and in any event highly intractable. Research, for example, suggests that additional educational spending, if not accompanied by major socioeconomic reforms, produces depressingly few benefits.9 (Educating girls, however, might have a significant indirect payoff: Research results are strong that young women with more education have smaller families, and population pressures exacerbate all the problems of poor countries, including those related to market-dominant minorities.) Likewise, while political favoritism is a frequent, exacerbating problem in societies with a market-dominant minority, such favoritism tends to be more the consequence than the cause of market dominance. Most market-dominant minorities, whether the Bamiléké in Cameroon or Indians in Fiji, are disproportionately economically successful at every level of society, including small traders, retailers, and shopkeepers with no political connections whatsoever. Further, many market-dominant minorities have been successful notwithstanding long histories of official discrimination against them. This is certainly true of the Chinese in Southeast Asia, Lebanese in West Africa, and Jews almost everywhere.

  Sociologists and anthropologists have been trying for years to understand the economic success of some groups over others. Ever since Max Weber argued that Protestantism was more conducive to capital accumulation than Catholicism, religion has often been cited as a critical determinant of group economic success. More recently, many have stressed cultural factors—for example, group differences in work habits, savings propensities, or attitudes toward education, commerce, and wealth—to explain differentials in group economic performance.10

  To the extent that religion and other cultural factors play a significant role in producing the market dominance of certain groups, the appropriate policy implications are by no means clear. Even if there were a demonstrable relationship between certain religions and economic success, an effort to instill “entrepreneurialism” through, say, group conversions to Protestantism (or Judaism or Confucianism, depending on the theory) would seem unpromising. Attempts to inculcate a “work ethic” may seem more attractive, but have not proved any more effective. Indigenous elites in developing countries have frequently encouraged their fellow citizens to emulate market-dominant minorities and to become more “diligent” and “motivated.” Malaysia’s prime minister Mahathir, for example, has often urged his Malay constituents to model themselves on their more “hardworking” and commercially “astute” Chinese counterparts.11 Not surprisingly, such governmental “cultural revolutions”—attempting to change culture from the top down—have been notoriously unsuccessful.

  Apart from the issue of feasibility, there is also a moral question. “Culture” cannot simply be treated as an inconvenient impediment to free markets. Even if it were possible to transform every developing-world villager into a consumer entrepreneur, it is hardly obvious that this ought t
o be the goal of development policy.

  But the fundamental point is this. To “level the playing field” in developing societies—to try to bring impoverished, often illiterate majorities up to the level where they can compete successfully with the hypercapitalized market-dominant minorities in their midst—will be a painfully slow process, taking generations if it is possible at all. As a result, overreliance on this strategy is unwise. Leaving in place for years or even decades the existing ethnic economic imbalances, long-term efforts to “level the playing field” assume a horizon of social stability that many non-Western countries do not have. Indeed, in the short term, investment in education and other forms of human capital can contribute to ethnonationalist movements. As many have pointed out, the relationship between education and ethnonationalism is by no means straightforward; Osama bin Laden’s Al Qaeda pilots were very well educated.

  Policies to expand education and promote equal opportunity, while comforting and uncontroversial, do not directly address the pressing, potentially explosive problems of ethnic resentment and ethnonationalist hatred that threaten so many developing and post-socialist societies today. To address these problems it will be essential to try to devise measures and create institutions restraining the worst excesses of markets and democracy—excesses that in the presence of a market-dominant minority often lead to confiscations, authoritarian backlash, and mass slaughter.

  Stakeholding: Spreading the Benefits of Markets

  The essential problem is that in societies with a market-dominant minority, laissez-faire capitalism leaves significant numbers of the relatively impoverished majority feeling that they have no stake in globalization or a market economy. There are at least four basic strategies for redressing this problem. Each has drawbacks; some are more controversial than others; and some might be inappropriate or infeasible in particular contexts. But all should be seriously considered.