Global Village or Global Pillage?

Why we must create a universal culture of liberty


A short time ago, the town council of El Borge, a tiny town in the Spanish province of Málaga, held a plebiscite. The citizens were asked to decide between two alternatives: humanity or neoliberalism. The result of the poll was 515 votes for humanity and 4 votes for neoliberalism.

I have not been able to chase those four votes from my thoughts. In the face of such a dramatic dilemma, those four musketeers did not hesitate to charge against humanity in the name of the macabre scarecrow of neoliberalism. Were they four clowns or four sages? Was this a "Borgean" joke or was it the only sign of sense in the entire farcical plebiscite?

Not long after, in Chiapas, an International Congress Against Neoliberal-ism was convened by Subcomandante Marcos, the latest hero of the frivolous, media-driven politics of the West. Among the attendees were numerous Hollywood luminaries, a belated Gaullist, and Danielle Mitterrand, the incessant widow of President François Mitterrand, who gave her socialist benediction to the event.

Those are quaint episodes, but it would be a grave error to write them off as the insignificant fluttering of human idiocy. In truth, they are but the tense and explosive extremes of a vast political and ideological movement, solidly rooted in sectors of the left, center, and right, and united in a tenacious distrust of liberty as the solution to the problems of humanity. They have built up their fears into a new phantom and called it "neoliberalism." In the mumbo jumbo of sociologists and political scientists, it is also known as the "only thought," a scapegoat on which to hang both present calamities and those of the past.

Brainy professors from the University of Paris, Harvard University, and the University of Mexico pull their hair out trying to show that free markets do little more than make the rich richer and the poor poorer. They tell us that internationalization and globalization only benefit the giant multinationals, allowing them to squeeze developing countries to the point of asphyxiation and to devastate entirely the planetary ecology. So it should not surprise us that the uninformed citizens of El Borge or Chiapas believe that the true enemy of mankind—guilty of all evil, suffering, poverty, exploitation, discrimination, abuses, and crimes against human rights committed on five continents against millions of human beings—is that terrifying, destructive force known as neoliberalism. It is not the first time in history that what Karl Marx called a "fetish"—an artificial construction, but at the service of very concrete interests—acquired consistency and began to provoke such great disruptions in life, like the genie who was imprudently catapulted into existence when Aladdin rubbed the magic lamp.

Liberal caricatures

I consider myself a liberal. I know many people who are liberals, and many more who are not. But, throughout a career that is beginning to be a long one, I have not known a single neoliberal. What does a neoliberal stand for? What is a neoliberal against? In contrast with Marxism, or the various kinds of fascism, true liberalism does not constitute a dogma, a closed and self-sufficient ideology with prefabricated responses to all social problems. Rather, liberalism is a doctrine that, beyond a relatively simple and clear combination of basic principles structured around a defense of political and economic liberty (that is, of democracy and the free market), welcomes a great variety of tendencies and hues. What it has not included until now, nor will it include in the future, is that caricature furnished by its enemies with the nickname neoliberal.

A "neo" is someone who pretends to be something, someone who is at the same time inside and outside of something. It is an elusive hybrid, a straw man set up without ever identifying a specific value, idea, regime, or doctrine. To say "neoliberal" is the same as saying "semiliberal" or "pseudoliberal." It is pure nonsense. One is either in favor of liberty or against it, but one cannot be semi-in-favor or pseudo-in-favor of liberty, just as one cannot be "semipregnant," "semiliving," or "semidead." The term has not been invented to express a conceptual reality, but rather, as a corrosive weapon of derision. It has been designed to devalue semantically the doctrine of liberalism. And it is liberalism—more than any other doctrine—that symbolizes the extraordinary advances that liberty has made in the long course of human civilization.

We should celebrate the achievements of liberalism with joy and serenity, but without hubris. We must understand that although the achievements of liberalism are notable, that which remains to be done is more important still. Moreover, as nothing in human history is fated or permanent, the progress obtained in these last decades by the culture of liberty is not irreversible. Unless we know how to defend it, the culture of liberty can become stagnant and the free world will lose ground to the forces of authoritarian collectivism and tribalism. Donning the new masks of nationalism and religious fanaticism, those forces have replaced communism as the most battle-hardened adversaries of democracy.

For a liberal, the most important thing to occur in the last century was the defeat of the great totalitarian offensives against the culture of liberty. Fascism and communism, each in its moment, came to threaten the survival of democracy. Now they belong to the past, to the dark history of violence and unspeakable crimes against human rights and rationality, and there is no indication that they will rise from their ashes in the immediate future. Of course, fascism lingers in the world. At times, ultra-nationalist and xenophobic parties, much like Jean Marie Le Pen's National Front in France or Jorg Haider's Liberal Party in Austria, attract a dangerously high level of electoral support. Also, there exist anachronistic vestiges of the vast Marxist archipelago, represented today by the flagging specters of Cuba and North Korea. Even so, those fascist and communist offshoots do not constitute a serious alternative—less still a considerable threat—to the democratic option.

Dictatorships still abound, true enough, but in contrast to the great totalitarian empires, they lack messianic aura and ecumenical pretensions; many of them, like China, are now trying to combine the monolithic politics of the single-party state with free-market economics and private enterprise. In vast regions of Africa and Asia, above all in Islamic societies, fundamentalist dictatorships have arisen that have returned those countries to a state of barbaric primitivism in matters concerning women, education, information, and basic civic and moral rights. Still, whatever the horror represented by countries like Afghanistan, Sudan, or Iran, they are not challenges that the culture of liberty needs to take seriously: The backwardness of the ideology they profess condemns those regimes to fall ever farther behind in the race of modernity—a swift race, in which the free countries have already taken a decisive lead.

Battling the apocalyptics

Despite the gloomy geography of persistent dictatorships, liberals have much to celebrate in these past decades. The culture of liberty has made overwhelming advances in vast regions of Central and Western Europe, Southeast Asia, and Latin America. In Latin America, for the first time in history, civilian governments—born of more or less free elections—are in power in nearly every country. (The exceptions are Cuba, an explicit dictatorship, and until recently Peru, a subtle dictatorship.) Even more notably, those democracies are now applying—sometimes with more gritting of teeth than enthusiasm, sometimes with more clumsiness than skill—market policies, or at least, policies that are closer to a free economy than to the interventionist and nationalizing populism that traditionally characterized the governments of the continent.

Perhaps the most significant thing about that change in Latin America is not the quantity, but the quality. Although it is still common to hear intellectuals who have been thrown out of work by the collapse of collectivist ideology howling at neoliberalism, their howls are like those of wolves to the moon. From one end of Latin America to the other, at least for now, a solid consensus exists in favor of the democratic system and against dictatorial regimes and collectivist utopias. Although that consensus is more restricted with regard to economic policy, Latin American governments are also bowing to liberal economic doctrine.

Some governments are embarrassed to confess that, and others—including some real Tartuffes—cover their bases by spewing out volleys of rhetoric against neoliberalism. Nevertheless, they have no other recourse than to privatize businesses, liberalize prices, open markets, attempt to control inflation, and try to integrate their economies into international markets. They have come to learn—the hard way—that in today's economic environment, the country that does not follow those guidelines commits suicide. Or, in less terrifying terms: That country condemns itself to poverty, decay, and even disintegration. Many sectors of the Latin American left have evolved from being bitter enemies of economic liberty to embracing the wise confession of Václav Havel: "Though my heart may be left of center, I have always known that the only economic system that works is a market economy….This is the only natural economy, the only kind that makes sense, the only one that can lead to prosperity, because it is the only one that reflects the nature of life itself."

Those signs of progress are important and give historical validity to liberal theses. By no means, however, do they justify complacency, since one of the most refined (and rare) certainties of liberalism is that historical determinism does not exist. History has not been written so as to negate any further appeal. History is the work of men, and just as men can act rightly with measures that push history in the direction of progress and civilization, they can also err, and by conviction, apathy, or cowardice, allow history to slide into anarchy, impoverishment, obscurantism, and barbarism. The culture of democracy can gain new ground and consolidate the advances it has achieved. Or, it can watch its dominions shrink into nothingness, like Balzac's peau de chagrin. The future depends on us—on our ideas, our votes, and the decisions of those we put into power.

For liberals, the war for the progress of liberty in history is, above all else, an intellectual struggle, a battle of ideas. The Allies won the war against the Axis, but that military victory did little more than confirm the superiority of a vision of man and society that is broad, horizontal, pluralist, tolerant, and democratic, over a vision that was narrow-minded, truncated, racist, discriminatory, and vertical. The disintegration of the Soviet empire before the democratic West validated the arguments of Adam Smith, Alexis de Tocqueville, Karl Popper, and Isaiah Berlin concerning the open society and the free economy, and invalidated the fatal arrogance of ideologues like Karl Marx, V.I. Lenin, and Mao Zedong, who were convinced that they had unraveled the inflexible laws of history and interpreted them correctly with their proletarian dictatorships and economic centralism. We should also remember that the West achieved its victory over communism at a time when its societies were full of inferiority complexes: Ordinary democracy offered scant "sex appeal" next to the fireworks of the supposedly classless societies of the communist world.

The present battle is perhaps less arduous for liberals than the one that our teachers fought. In that battle, central planners, police states, single-party regimes, and state-controlled economies had on their side an empire that was armed to the teeth, as well as a formidable public relations campaign, conducted in the heart of democracy by a fifth column of intellectuals seduced by socialist ideas.

Today, the battle that we must join is not against great totalitarian thinkers, like Marx, or intelligent social democrats, like John Maynard Keynes, but, rather, against stereotypes and caricatures that attempt to introduce doubt and confusion in the democratic camp; hence the multiple offensive launched from various trenches against the monster nicknamed neoliberalism. The battle is also against the apocalyptics, a new species of skeptical thinker. Instead of opposing the culture of democracy, as did Georg Lukacs, Antonio Gramsci, or Jean-Paul Sartre, the apocalyptics are content to deny it, assuring us that democracy does not really exist and that we are dealing with a fiction, behind which lurks the ominous shadow of despotism.

Dictators or democrats?

Of that species, I would like to single out an emblematic case: that of Robert D. Kaplan. In "Was Democracy Just a Moment?," a provocative essay originally published in the December 1997 issue of The Atlantic and later incorporated into the 2000 book The Coming Anarchy: Shattering the Dreams of the Post Cold War, Kaplan maintains that, contrary to the optimistic expectations about the future of democracy heralded by the death of Marxism in Eastern Europe, humanity is actually headed toward a world dominated by authoritarianism. In some cases, this authoritarianism is undisguised, in others, it is masked by institutions of civil and liberal appearance. For Kaplan those institutions are mere decorations. The real power is—or will soon be—in the hands of giant international corporations, the owners of technology and capital that, thanks to their ubiquity and extraterritoriality, enjoy almost total impunity in their actions.

"I submit," he writes, "that the democracy we are encouraging in many poor parts of the world is an integral part of a transformation toward new forms of authoritarianism; that democracy in the United States is at greater risk than ever before, and from obscure sources; and that many future regimes, ours especially, could resemble the oligarchies of ancient Athens and Greece more than they do the current government in Washington."

His analysis is particularly negative with regard to the possibility that democracy may be able to find root in the developing world. According to Kaplan, all Western efforts to impose democracy in countries that lack a democratic tradition have resulted in terrible failures. Some of those failures have been very costly, as in Cambodia, where $2 billion invested by the international community have not advanced legality or liberty even a single millimeter in the ancient kingdom of Angkor. Efforts in places like Sudan, Algeria, Afghanistan, Bosnia, Sierra Leone, Congo, Mali, Russia, Albania, or Haiti, have created chaos, civil wars, terrorism, and the resurgence of ferocious tyrannies.

Kaplan looks with similar disdain upon the Latin American process of democratization. The exceptions are Chile and Peru. In his view, the fact that the first experienced the explicit dictatorship of Augusto Pinochet and the second experienced the oblique dictatorship of Alberto Fujimori guarantees stability to those countries. By comparison, the so-called rule of law cannot preserve that stability in Colombia, Venezuela, Argentina, or Brazil. In his judgment, the weakness of civil institutions, the excesses of corruption, and the astronomical inequalities are pushing "a backlash from millions of badly educated and newly urbanized dwellers in teeming slums, who see few palpable benefits to Western parliamentary systems."

Kaplan says what he thinks with clarity, and what he thinks is that democracy and the developing world are incompatible: "Social stability results from the establishment of a middle class. Not democracies but authoritarian systems, including monarchies, create middle classes." He cites the examples of the Asian Pacific Basin (his prime example is the Singapore of Lee Kuan Yew) and Pinochet's Chile. Although he does not mention it, he could have also cited Francisco Franco's Spain. The present-day authoritarian regimes he sees creating middle classes and making democracy possible are the China of "market socialism" and Fujimori's Peru (a military dictatorship with a civilian puppet as figurehead). Those are the models of development that he sees as forging "prosperity from abject poverty." For Kaplan the choice in the developing world is not "between dictators and democrats" but between "bad dictatorships and slightly better ones." In his opinion, "Russia may be failing in part because it is a democracy and China may be succeeding in part because it is not."

True social progress

I have taken the space to review these arguments because Kaplan says out loud what others—many others—think but do not dare say. Kaplan's pessimism with respect to the developing world is great; but it is not less than that inspired in him by the developed world. Once the efficient dictatorships have developed the poor countries and the new middle classes seek to gain access to Western-style democracy, they will only be chasing a mirage, he says. Western democracy will have been supplanted by a system (similar to those of Athens and Sparta) in which oligarchies—the multinational corporations, operating on the five continents—will have snatched from governments the power to make significant decisions for society and the individual. The oligarchies will exercise that power without accountability, because power comes to the giant corporations not by electoral mandate but through their technological and economic strength. Kaplan reminds us that out of the top 100 economies in the world, 51 are not countries but businesses, and that the 500 most powerful companies alone represent 70 percent of world commerce.

Those arguments are a good point of departure for comparison with the liberal vision in the new millennium. In that vision, the human creation of liberty is the source of the most extraordinary advances in the fields of science, human rights, technical progress, and the fight against despotism and exploitation.

The most outlandish of Kaplan's arguments is that only dictatorships create middle classes and bring stability to countries. If that were so, the paradise of the middle classes would not be the United States, Western Europe, Canada, Australia, and New Zealand. It would be Mexico, Bolivia, or Paraguay. Latin American history is a veritable zoo of petty tyrants, strongmen, and maximum leaders. Juan Domingo Perón—to give but one example—nearly destroyed the middle class of Argentina, a middle class that until his rise to power was vast and prosperous and had developed its country at a faster pace than most of the European countries. Forty years of dictatorship have not brought Cuba the least prosperity, but have reduced it to the status of an international beggar; to keep from starving, Cubans have been condemned to eat grass and flowers, while their women prostitute themselves to capitalist tourists.

Of course, Kaplan can say that he is not talking about all dictatorships, but only the efficient ones like those of Pacific Asia and those of Pinochet and Fujimori. I read his essay, coincidentally enough, just when the supposedly efficient autocracy of Indonesia was crumbling, General Suharto was renouncing his office under pressure, and the Indonesian economy was collapsing. Shortly before that, the ex-autocracies of Korea and Thailand had collapsed and the famous Asian Tigers had begun to vanish into smoke, like something out of a Hollywood super-thriller. Apparently, those market dictatorships were not as successful as Kaplan thought. They are now gathered on their knees before the International Monetary Fund, the World Bank, the United States, Japan, and Western Europe, asking to be saved from total ruin.

From the economic point of view, the dictatorship of General Pinochet was successful, and up to a certain point (that is, if efficiency is only measured in terms of the rate of inflation, the fiscal deficit, official reserves, and the growth rate of gross domestic product) so was Fujimori's dictatorship. Even so, we are talking about a very relative efficiency. When we leave the comfortable security of an open society (the United States, in Kaplan's case) and examine those regimes from the perspective of those who have suffered the crimes and outrages of dictatorship, that relative efficiency vanishes. In contrast with Kaplan, we liberals do not believe that ending economic populism—or snapping the neck of inflation—constitutes the slightest progress for a society if, at the same time that prices are freed, public spending is cut, and the public sector is privatized, a government causes its citizens to live in abject fear.

Progress does not run roughshod over the rights of citizens. Progress does not deprive citizens of a free press or deny them recourse to an independent judiciary when they are abused or defrauded. Progress does not permit that citizens be tortured, expropriated, disappeared, or killed, according to the whim of a country's ruling gang. Under liberal doctrine, progress is simultaneously economic, political, and cultural. Or, simply, it is not progress. That is for practical as well as moral reasons. Open societies, in which information circulates without impediment and in which the rule of law governs, are better defended against crises than satraps. That was demonstrated by the Mexican regime several years ago and more recently by General Suharto in Indonesia. The role performed by the lack of genuine legality in the authoritarian countries of the Pacific Basin has not been sufficiently underlined in the current crisis.

Strong government vs. big government

How many efficient dictatorships have there been? And how many inefficient ones? How many dictatorships have sunk their countries into prerational savagery, as is happening today in Algeria and Afghanistan? The great majority of dictatorships are inefficient; efficient ones are the exception. Isn't it reckless to opt for the recipe of dictatorship to achieve development—to hope that such a regime will be efficient, decent, and transitory—and not the contrary? Aren't there less risky and cruel paths to economic progress? Indeed, there are, but people like Kaplan do not wish to see them.

In countries in which democracy flourishes, the culture of liberty is not necessarily a longstanding tradition. It was not a tradition in any of the current democracies until, after many setbacks and trials, those societies chose that culture and moved forward, perfecting it along the way, until they made that culture their own. International pressure and aid can be a factor of the first order in a society's adoption of democratic culture, as demonstrated by Germany and Japan, two countries as lacking in democratic tradition as any in Latin America. In the short time since the end of World War II, they have joined the advanced democracies of the world. Why, then, would developing countries (or Russia) be unable to free themselves from the authoritarian tradition? Why would they be unable to do as the Japanese and Germans did, and make the culture of liberty theirs?

Contrary to the pessimistic conclusions that Kaplan reaches, globalization opens up a first-class opportunity for the democratic countries of the world—and especially for the advanced democracies of America and Europe—to expand tolerance, pluralism, legality, and liberty. Many countries are still slaves to the authoritarian tradition, but we should remember that authoritarianism once held sway over all of humanity. The expansion of the culture of liberty is possible as long as the following occur:

(a) We have a clear belief in the superiority of this culture over those that legitimize fanaticism, intolerance, and racism, and that legitimize religious, ethnic, political, or sexual discrimination.

(b) We adopt coherent economic and foreign policies that encourage democratic tendencies in the developing world, while penalizing those regimes that, like China's, promote liberal policies in the economic field but are dictatorial in their politics.

Unfortunately, contrary to Kaplan's position, the discrimination in favor of democracy that brought so many benefits to countries like Germany, Italy, and Japan a half century ago has not been applied by the democratic countries of today to the rest of the world. When it has been applied, it has been done in a partial and hypocritical manner, as in the case of Cuba.

Early in the new century, however, the advanced democracies of the world have a stronger incentive to act with firm and principled conviction in favor of democracy. That incentive comes from the existence of a new danger, a danger that Kaplan mentions in his essay. In apocalyptic terms, Kaplan prophesies the emergence of a future nondemocratic world government composed of powerful multinational corporations that operate without restraint in all corners of the globe. That catastrophic vision points to the real danger of which we are conscious. The disappearance of economic borders and the proliferation of world markets stimulate fusion and alliance among businesses as they attempt to compete more effectively in all areas of production.

The formation of giant corporations does not constitute in and of itself a danger to democracy as long as democracy is a reality, that is to say, as long as there are just laws and strong governments. (For a liberal, "strong" means "small and effective," rather than "big.") In a market economy that is open to competition, a big corporation benefits the consumer because its scale enables it to reduce prices and multiply services. Danger does not lie in the size of a business; danger lies in monopoly, which is always a source of inefficiency and corruption. As long as there are democratic governments that command respect for the law—governments that will even prosecute Bill Gates if he transgresses that law—there is no danger. As long as democratic governments maintain markets that are open to competition and are free of monopolies, then there is nothing to fear from giant corporations, which frequently serve society by spearheading scientific and technological progress.

Liberal utopia, liberal reality

The capitalist firm has the nature of a chameleon. In a democratic country, it is a beneficent institution of development and progress. However, for countries in which there is no rule of law and no free markets and everything is resolved by the absolute will of a leader or a ruling clique, the capitalist firm can be a source of catastrophe. Corporations are amoral, and they adapt with ease to the rules of the game in the environment in which they operate. If in many developing countries the behavior of multinationals is reprehensible, the ultimate responsibility rests on those who fix the rules of the game in economic, social, and political life. We cannot blame firms for following those rules in their quest for profits.

From that reality, Kaplan extracts this pessimistic conclusion: The future of democracy is gloomy because in the coming millennium the giant corporations will act in the United States and Western Europe with the same impunity that they currently do in, say, the Nigeria of the late Col. Abacha.

In truth, there is no historical or conceptual reason for such an extrapolation. Instead, we should reach the following conclusion: It is imperative that all countries today under dictatorship evolve quickly toward democracy and develop the kind of free legal order that can demand of corporations that they act decently and equitably, as they are required to do in the advanced democracies. Without the globalization of legality and liberty, economic globalization presents a serious danger for the future of civilization—and, above all, for the planetary ecology. The great powers have a moral obligation to promote democratic processes in the developing world. They also have a practical obligation. With the evaporation of borders, the greatest guarantee that economic forces will benefit all people is to ensure that throughout the world, economic life flows within the limits of liberty and competition, and is guided by the incentives, rights, and restraints imposed by democratic society.

None of that will be easy, and none of it will be achieved in a short time. For liberals, however, it is a great incentive to know that we are working toward an attainable goal. The idea of a world united around a culture of liberty is not a utopia but a beautiful and achievable reality that justifies our efforts. As Karl Popper, one of our greatest teachers, said, "Optimism is a duty. The future is open. It is not predetermined. No one can predict it, except by chance. We all contribute to determining it by what we do. We are all equally responsible for its success."

This essay is excerpted from the Cato Institute anthology Global Fortune: The Stumble and Rise of World Capitalism.