How did it happen that the ideas of a courageous few ultimately changed the world? Broadly speaking, the past half-century served as a vast and tragic social science experiment, in which the hypothesis of central planning's superiority to markets was tested and decisively repudiated. The fall of the Soviet Union on the one hand, and the rise of East Asia on the other, were the two most important data points that exploded the statist worldview. "Between the fall of the Berlin Wall and the collapse of the Soviet Union in 1991," a senior economic official in India admitted, "I felt as though I were awakening from a thirty-five-year dream. Everything I had believed about economic systems and had tried to implement was wrong."
Yergin and Stanislaw pile example upon example of socialism's shining ideals gone awry. My favorite is their account of the Hindustan Fertilizer Corporation in India: "In 1991, at the time of the economic crisis, its twelve hundred employees were clocking in every day, as they had since the plant had officially opened a dozen years earlier. The only problem was that the plant had yet to produce any fertilizer for sale. It had been built between 1971 and 1979, using considerable public funds, with machinery from Germany, Czechoslovakia, Poland, and a half-dozen other countries. The equipment had looked like a great bargain to the civil servants who made the basic decisions, because it could be financed with export credits. Alas, the machinery did not fit together and the plant could not operate. Everyone just pretended it was operating." After a while, even true believers lose their faith in the face of such evidence.
Of course, the specific events by which the ideas of a few dissident economists came to topple governments and change the course of history looked nothing like a neat and tidy scientific experiment. In the exceptional case, the path from ideas to practice was direct. Yergin and Stanislaw relate a mid-'70s visit by the new Conservative leader Margaret Thatcher to the party's research department. She got into an argument with a staffer who was preparing a paper advocating a middle way between left and right; reaching into her briefcase, she pulled out a copy of Hayek's The Constitution of Liberty and held it aloft. "This," she said, "is what we believe."
Much more often, though, freedom's resurgence received aid from unexpected quarters. Mikhail Gorbachev broke up the Soviet Empire while trying to revive it. Deng Xiaoping unleashed market forces that lifted 200 million people out of poverty in two decades, all in the name of the Communist Party. Carlos Salinas, a creature of Mexico's corrupt PRI who came to power in an apparently rigged election, swept away trade barriers and privatized industries. In Peru, Mario Vargas Llosa was a dedicated believer in economic freedom, but he lost the election; instead, Alberto Fujimori, an obscure agricultural engineer, won the presidency and led his country through dramatic market reforms. New Zealand's sweeping liberalization during the mid-'80s came under a Labour government. Airline deregulation in the United States was launched by Stephen Breyer, now a Supreme Court justice and then a staffer for Sen. Ted Kennedy. And so on.
Indeed, Yergin and Stanislaw's account highlights the crucial importance of sheer accident in the historical process. A flap over a reference to U.S. food aid as "chicken feed" led Gen. Lucius Clay to fire the German director of economic administration in the American and British occupied zones; Clay replaced him with Ludwig Erhard, whose snap elimination of price controls launched the German Wirtschaftswunder. The election of a Polish pope--the first non-Italian in centuries--proved vital in nurturing the Solidarity movement in Poland and sustaining it after the 1981 crackdown. The Falklands War, a third-rate conflict in military terms, catalyzed reform in both the combatant countries; victory gave Thatcher the popular support she needed to launch a full-scale privatization drive, while defeat spelled the end of the generals' rule in Argentina and the eventual embrace of market reforms--by, of all people, a Peronist president, Carlos Menem.
So when you put down The Commanding Heights and descend again into the drift and mediocrity of today's headlines, don't despair. Keep your focus on the larger view that Yergin and Stanislaw have sketched. Remember that over the past half-century, the ideas of liberty have survived near-extinction to gain worldwide acceptance. The struggle between state and market for the commanding heights continues, and doubtless the cause of freedom will suffer setbacks and reverses. Nevertheless, there is firm ground for optimism in the realization that, whether by exceptional leadership, or by assistance from unlikely champions, or simply by accident, good things happen to good ideas.
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