‘ …the ideas of economists and political philosophers,
both when they are right and when they are wrong, are more
powerful than is commonly understood. Indeed the world is
ruled by little else. Practical men, who believe themselves
to be quite exempt for any intellectual influences, are usually
the slaves of some defunct economist. Madmen in authority,
who hear the voices in the air, are distilling their frenzy
from some of a few years back. I am sure that the power of
vested interests is vastly exaggerated compared with the
gradual encroachment of ideas.’ (John Maynard Keynes – The
General Theory of Employment, Interest and Money – first
published 1936 – p.383.)
It was in 1989 that Francis Fukuyama, professor of political
economy and School of Advanced International Studies at John
Hopkins University, and author of many best sellers in related
subjects, first put forward his ‘end of history’ thesis.
This came at a critical historical conjuncture in the post-1945
world. This period can be outlined as follows. Firstly, there
was the collapse of communism in the east of Europe. Secondly,
the transmutation of social-democratic parties in the west
of Europe, into what were increasingly liberal-democratic,
centre-right parties (this finding its most extreme expression
in the UK with Tony Blair’s new Labour phenomenon;
the market leader in this respect). Thirdly, the increasing
integration of the world economy and the liberalisation of
controls on capital movements – particularly finance
capital. This process was to become known as globalization.
Fourthly, the increasing fusion of political and economic
elites, particularly in the Anglo-Saxon world. Fifthly, the
genesis of a new economic and political orthodoxy - in which
Fukuyama himself played a pivotal role – namely, the
Washington Consensus.
The end of history thesis was based upon the idea that liberal,
deregulated global capitalism had scored a definitive historical
triumph, not only over communism, but over the other variants
of regulated capitalism, such as that found in western Europe
and the Far East. All the arguments had been settled; all
societies would now move toward this North American model
of capitalism, and it would be in their interests to do so.
The fact that this sounded like a right-wing version of some
of the cruder varieties of historical materialism was not
lost on more thoughtful commentators: ‘What Francis
Fukuyama called ‘the end of history’ was the
apparent end of intellectual opposition to the dogmas of
economic liberalism.’ (Susan Strange – Mad Money).
Moreover, ‘Fukuyama’s vision of the end of history ‘is
incorrigibly Americocentric, purveying a view of the world
that is unrecognizable to the majority of Asians and Europeans.’ (John
Gray – False Dawn). At the time, however, the Fukuyama
thesis seemed to be carrying all before it; opposition was
confined to intellectual groups with little or no political
purchase.
What really undid Fukuyama, however, was history itself.
It was not to behave in the manner which he had predicted.
But isn’t this always the way with fashionable ideological
fads. The end of history thesis did not survive the empirical
testing that any hypothesis has to undergo in the real world.
The remark made by the late Lord Stockton regarding the most
difficult thing in politics ‘events dear boy, events’ can
be applied a fortiori to the type of abstract theorising
for which academics have such an evident penchant. History
is a graveyard of failed theories.
What actually happened after 1989 was not a new golden age
of liberal capitalism, it was more akin to a permanent crisis
of a much more unstable and volatile capitalism. Shock therapy
in eastern Europe turned into an economic collapse transforming
the area into almost third world status. (The Ukraine, for
example, now has a per capita national income only slightly
above that of Pakistan.) Additionally, there have been various
financial blow-outs in Latin-America, Brazil, Argentina,
for example, followed by the Far East financial crisis of
1998 which led to financial and economic mayhem in Thailand,
the Philippines, Indonesia and South Korea. This was in turn
followed by the dot.com bubble which popped in 2000. Presently
there are unwinnable wars raging in both Iraq and Afghanistan.
Whilst in the heartlands of the new capitalism the Anglo-American
liberal model seems little more than a debt-saturated bubble
based upon excess liquidity and unsustainable property price
rises. In this connexion, it should also be borne in mind
that the American economy is being kept afloat by the willingness
of East Asian central banks to take as US Treasury Bills
as payment for their dollar surpluses. This means that these
dollars are then recycled back to the USA, which, incredible
as it sounds, is actually a dollar-deficit country. This
arrangement allows the Americans to fund the historically
unprecedented current account deficits as well as the US
Federal government debt.
Not quite what Fukuyama had in mind perhaps? These events
have forced Fukuyama to re-consider some of his earlier ideas.
His present book, whilst not actually a full-on recantation
of his earlier position, has had to revise some of the more
extravagant claims made in 1989. On the universality of liberal
Western values for example he now opines that ‘At issue
is whether the institutions and values of the liberal west
are indeed universal, or whether they represent … merely
the outgrowth of cultural habits of a certain part of the
Northern European world.’
Further, the imposition of western institutional models
on non-western societies has been more problematic than anticipated. ‘There
were very few warnings issued from Washington-based policymakers
about the dangers of liberalisation in the absence of proper
institutions. Indeed, the general inclination among policymakers
at the time was that any degree of liberalisation was likely
to be better than no liberalisation at all. ‘
In light of the abject failure of the crude, one-size-fits-all
shock therapy approach, Fukuyama has considerably reworked
his original paradigm. He now thinks that, in terms of development
policy, a more nuanced and culturally specific approach is
needed. This means that the types of institutions which have
been the precondition for the type of self-sustaining growth
patterns necessary to propel traditional societies into modern
industrial societies would have to be crafted and nurtured
with careful regard to local conditions and local history.
These state institutions needed to be efficient and transparent.
The state needed to be strong, but its scope needed to be
limited. Globalization – with all of its putative benefits
- could still be made to work, if the appropriate institutional
framework was put in place. It is notable that in terms of
core beliefs, however, Fukuyama still holds fast to the basic
postulates of the 1979 settlement. ‘The privatisation
of state-owned enterprises is of course and appropriate goal
of economic reform.’
The book is rather more downbeat and sober than Fukuyama’s
initial writing – but given what has happened what
else could it be? It is still replete with the lingering,
question-begging values, beliefs and general nostrums of
the 1980s, such as the reputedly benign intentions of American
foreign policy, and the benefits of globalization. But unquestionably
this book marks a retreat from the counter-revolutionary
euphoria of 1989. The elan and self-assurance of earlier
years is no longer there. The tone is defensive, the certainties
have now become uncertain. At this commanding level at least
the ideological tide seems to be turning. It was always a
moot point as to whether or not the neo-liberal ideology
had any mass popular base; we can now say with some confidence
that at this point it has none whatsoever. Not that Tony
Blair knows this of course. But then there is always a time-lag
between the delineation of a particular ideology and its
acceptance into the mainstream. The opposite is also true.
Ideologies begin and end their shelf-lives in think-tanks,
entering and exiting the mainstream during the course of
their journeys. If nothing else the book is an excellent
example of this process.
State Building: Governance and World
Order in the Twenty-First Century by Francis Fukuyama is published by Profile Books
(Hb £15.99) |
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