China's authoritarian capitalism undermines Western values, argue three new books.

By Steven Levingston
Sunday, May 30, 2010

THE BEIJING CONSENSUS: How China's Authoritarian Model Will Dominate the Twenty-First Century

By Stefan Halper

296 pp. $28.95

THE END OF THE FREE MARKET: Who Wins the War Between States and Corporations?

By Ian Bremmer

244 pp. $26.95

FREEDOM FOR SALE: Why the World is Trading Democracy for Security

By John Kampfner

304pp. $27.95

In a chest-thumping essay and book published 20 years ago, Francis Fukuyama asserted that the end of the Cold War ushered in the everlasting dominance of Western democracy. History, as Fukuyama famously declared, had ended -- the evolutionary struggle between ideologies was over, and market democracy had emerged as "the final form of human government."

Well, it turns out history lives on. Three convincing new books show that, far from ascending as predicted two decades ago, Western values are under threat in many corners of the world. The books identify a convergence of forces: the influence of China's authoritarian capitalism, skepticism over free markets in the wake of the financial crisis, and the willingness of millions of people to exchange individual rights for a secure middle-class life. The authors -- a former White House and State Department staffer under Presidents Nixon, Ford and Reagan; a political risk expert; and a journalist -- collectively create a portrait sure to chill the hearts of Western optimists.

Stefan Halper, the former administration staffer and now a senior fellow at the University of Cambridge, England, sums up the dilemma as "the shrinking of Western appeal as a politicoeconomic brand." In "The Beijing Consensus," he lays out the crafty tactics China has deployed to push its brand of state capitalism over the West's messy, market-driven version. For example, China has shown countries from Africa to Asia to South America that robust economic growth can be achieved and sustained under the controlling hand of the state. In place of the aid structure known as the Washington Consensus, which imposes onerous, free-market conditions on emerging countries in exchange for assistance, a Chinese alternative has emerged that provides generous debt relief, infrastructure investment and other assistance with fewer demands. The Beijing Consensus, as Halper calls it, diminishes the monetary and ideological suasion of the West that has long guided international development.

"Twenty years ago . . . globalization was driven by American capitalism and its two founding ideas -- that markets, not governments, drive progress, and that democracy is the optimal way to organize society," Halper explains in his tightly written argument. "Today, in the world beyond the West, these certainties are eroding."

In "The End of the Free Market," Ian Bremmer, president of Eurasia Group, a research and consulting firm specializing in political risk, presents a solid primer on the emergence of state capitalism, its operation in countries such as Algeria, Ukraine and India, and "how it threatens free markets and the future of the global economy." The Western model is an ever tougher sell to these countries, thanks to that ugly poster child of free markets: the global financial crisis. But China, Russia and the nations of the Persian Gulf are not averse to exploiting markets to their advantage. Bremmer shows how they have built massive state-run companies that now control three-quarters of the world's crude-oil reserves and intervene in a range of industries from aviation to telecommunications. Their success has spawned national wannabes among regimes -- particularly in Africa -- attracted by the prospect of strong growth and limited democracy. Bremmer points out that the goal of state-run capitalism differs markedly from that of its free-market cousin: "The ultimate motive is not economic (maximizing growth) but political (maximizing the state's power and the leadership's chances of survival)."

But when markets are exploited for political gain, Bremmer adds, inefficiencies result, causing price distortions and imbalances in the global economy. What's more, state-ordained commercial relationships freeze out free-market competitors such as U.S. multinationals. Bremmer cites an energy partnership between Iran and Venezuela that "is more about political stagecraft than commercial cooperation." If these kinds of business ties accumulate, he writes, they "will have important consequences for America's global political influence and the longer-term health of the U.S. economy."

But state capitalism has its vulnerabilities. Despite his book's dire title -- "The End of the Free Market" -- Bremmer is confident that over the long term an authoritarian model will prove a poor rival to Western capitalism. Governments that make themselves responsible for economic performance also will have to shoulder the blame when prosperity falters. China, for instance, must continue to push its economic engine at high speed to satisfy consumers' accelerating demands. Beijing acknowledges it is under pressure to deliver 10 million to 12 million new jobs every year to maintain current employment rates. Too many Chinese out of work, Bremmer says, and the threat of social unrest escalates. "In the end," he adds, "it's much more likely that the Chinese leadership will have to reconsider core assumptions about government's role in an economy than that the leaders in the United States will retreat fundamentally from free-market principles."

To John Kampfner, the differences between the two economic approaches hardly seem the point anymore. Both systems are dedicated to creating wealth -- and over the past 20 years have done so with remarkable success. The result, Kampfner writes in "Freedom for Sale," is a "narrowing of the gap between democracies and autocracies." What has emerged, he contends, is populations dedicated to amassing wealth and material comforts, even at the expense of their individual liberties. In Kampfner's telling, consumers now pursue the same goals no matter whether they live under authoritarian regimes in Singapore, China, Russia or the United Arab Emirates, or in democratic societies of the United States, United Kingdom or Italy. In all cases, he argues, these consumer societies have produced docile, disengaged citizens who have formed a pact with their governments: The people will overlook an infringement of liberties so long as they are permitted the freedom to pursue a lifestyle of designer clothes, sports cars and holiday travel. The loss of liberties is obvious in the authoritarian countries. But Kampfner, the former editor of the New Statesman, also identifies subtle encroachments in Britain, for example, where authorities spy on citizens using a fifth of the world's closed-circuit television cameras, and in Italy, where Prime Minister Silvio Berlusconi has systematically eroded the independence of the Parliament, media and courts, and in the United States, where the war on terror brought covert surveillance of citizens, expanded the government's powers of detention of noncitizens and gave the Treasury increased power to investigate bank dealings.

The assumption among free-market proponents over the past 20 years has been that the globalization of wealth would inspire a growing middle class to lead a march toward ubiquitous democracy. Kampfner takes the reader around the world with him on an engaging first-person journey packed with interviews of locals and finds such optimism sorely misplaced. "It sounds good in theory," he writes, "but it has not worked out that way."

Steven Levingston is the nonfiction editor of Book World.

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