What we are witnessing in the spreading turmoil around the world – in Iraq, in Ukraine, in Gaza – is the silent rejection of a central tenet of U.S. post-World War II foreign policy: that global prosperity would foster peace and stability. Countries would rather trade than fight. Promoting economic growth would suppress the divisive forces of nationalism, ideology, religion and culture. So we thought.
It’s an idea with a long pedigree in American thinking, going back to at least Thomas Jefferson. The purpose of free trade, he and his followers believed, “was not merely to promote commercial prosperity everywhere but to promote peace everywhere,” writes historian Gordon Wood. Free trade “would tie nations together peacefully and change the way international politics had traditionally been conducted.”
The idea is not just wishful thinking. It succeeded in the decades after World War II to help pacify Europe, to return Japan to the community of nations and to triumph in the Cold War. But in the euphoria accompanying the Soviet Union’s collapse, this success was unrealistically generalized into a universal law of nations. In 1989, Francis Fukuyama had written a famous (and naive) essay arguing that we had reached “the end of history.” Most countries would march toward democratic political systems and relatively free-market economies, he said. How reassuring.
There was also a lot of sloppy support for “the McDonald’s theory of international relations,” which held – as my perceptive colleague Anne Applebaum noted in a recent column – that two countries with McDonald’s would never fight, because both were integrated into the world economy and wouldn’t jeopardize the benefits. As Russia with 400 McDonald’s and Ukraine with more than 70 face off, writes Applebaum, “we can finally declare the McPeace theory officially null and void.”
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The leaders of large expanses of humanity never bought into the idea that achieving prosperity was life’s central purpose or what fundamentally defined them. They had other competing beliefs, traditions and ambitions that qualified and limited the power of economic growth. This applies to Iraq and Afghanistan, much of the Middle East and – including the influence of nationalism – China and much of Asia.
One characteristic of this post-euphoric world is a pervasive contradiction. On the one hand, we are being drawn closer together by the explosion of low-cost digital technologies, cheapening transportation and expanding trade. In a word: globalization. On the other hand, we’re being pulled further apart by deep and durable ethnic, religious, historical and nationalistic schisms. The power of the former make the latter more threatening, because unwanted consequences and conflicts are more easily transmitted across borders. Think terrorism, cyber warfare, mass migrations and Ebola.
Globalization amazes and disappoints. The McKinsey Global Institute – the research arm of McKinsey & Company, the management consulting firm – recently estimated the value of all cross-border flows of trade, money and services, including data. The total was $25.9 trillion in 2012. Said McKinsey:
“Today, 35 percent of goods cross borders, up from 20 percent in 1990. More than a third of all financial investments in the world are international transactions, and a fifth of Internet traffic is cross-border.”
It is not just that we overestimated globalization’s power to subdue traditional sources of mayhem. We also failed to see that it could breed conflict and upheaval in its own right. In some circumstances, it can encourage countries to resort to force: They assume that their trading partners will not retaliate for fear of harming their own economic interests. In Ukraine, Vladimir Putin seems to have made that calculation; the resulting sanctions have proved him at least partially wrong. But in the South China Sea, China may be making the same dangerous assumption.
The more obvious peril is that globalization will prove economically unstable. The financial crisis of 2008-09 has already discredited the seductive notion of constant income gains. Because that crisis originated in the United States, it was easier to combat. If the next one were truly global, we might be hampered in fighting it by limited global cooperation and understanding. We have only a primitive grasp of how the world economy, with its huge money flows and intricate supply-chain connections, operates. Even without a full-blown crisis, the slowing of global economic growth has intensified the competition among countries for commercial advantage.
The world arena is simply not the place we imagined it would become. This does not mean that we should succumb to the false temptations of isolationism, which would amplify international disorder. Nor should we abandon the pursuit of prosperity for ourselves and our close economic partners. But we should recognize that it is no panacea and that we should rethink its realistic possibilities and limits. In this post-euphoric time, we cannot afford to believe in utopias.