Google vs. China, and America vs. Itself

Google’s confrontation with China over the freedom of access to information may evoke feelings of both moral and commercial satisfaction for residents of the free market West: Google simultaneously stands in for our disdain for Chinese political repression and for that country’s shortsighted understanding of the economic value of free information flows.

Tom Friedman suggests that a Chinese internal struggle, between “Network China” and “Command China” defines this dispute and may indicate something about the future of that country.

However we may frame it, the conflict should evoke for us as much introspection as satisfaction: We, too, currently struggle themselves to come to terms with the concept of “economy as network”: “a world in which the focus of value creation is effective participation in knowledge flows, which are constantly being renewed.”

Those who stand at the margins of this transformation call forth libertarian slogans in order to evoke a feeling of defiant individualism. They do not understand the dynamic of an economic system that demands the nurturing of relationships and the renewal of knowledge and that suggests that individualism does not flourish in a social vacuum. The more pragmatic brand of economic individualism favored by Wall Street lost all credibility in late 2008, of course, when financiers acknowledged their own dependence on the broader American social network.

Misunderstandings about the changing nature of our economy clearly extend beyond the right-wing: Democrats evince characteristic eagerness to conflate moral and economic arguments as they address needed health and energy reform. They thereby demonstrate a lack of seriousness with regard to the limited role the American state can play in correcting an economy newly susceptible to international capital flows and increasing foreign competition: America must enhance its ability to compete internationally if it is to address its social challenges sustainably.

We, just like the Chinese, require a new relationship to government for 21st century success. The old metaphor of government as a command center, whether encouraged by old guard communist leaders or well-meaning American reformers, or whether opposed by libertarians, no longer suffices. Government at its best will act as a node that has the potential either to complement or to hinder the flourishing of both domestic and international relationships. Understanding this reality, rather than adhering to old nostrums, will give us the greater measure of moral and commercial clarity.

Why Business is The New Communism

Which companies have changed our lives most in recent years?

Could you argue that Google and Facebook have been at the lead?

Perhaps you've thought about how these companies don't just represent new computer tools but new philosophies of doing business: they organize information to make it accessible and trust that that will draw you into their grasp, that they will find out how to make money off of you accordingly.

What's communist about that?

The fact that these companies have an interest in engaging your creativity. That commitment, to the extent that other businesses adopt it, represents a revolution in the relationship of commercial interests to social development: people are inherently valued as knowledge producers and consumers, and the increasing intellectual efficacy of an individual is seen as an economic opportunity for business.

So what?

Many have argued, over the past several hundred years, for a social counterweight (often this role is taken by, and presumed by, government) to the narrow interests of business. Others have argued that the narrowness of business interests is a good thing, as it counterbalances overambitious intellectuals and bureaucrats, and is the stuff of gradual economic and social improvement.

The business philosophies of the Information Age undermine the supposition that broad social thinking and the profit motive tend to lead to divergent paths (though, of course, they sometimes will).

The key idea is that increased access to, and ability to contend with, information is (a) increasingly essential to our economy and, simultaneously, (b) increasingly understood by businesses as an essential avenue for growth.

I am not arguing that business will solve all of our social problems, only that the emerging business philosophy of interconnectivity can lead to enormous social good and hold government increasingly accountable to making economically effective investments in human capital.

A substantiated belief in the alignment of business interest and human development is, where it exists, a salutary development that has wide implications. That trend is where we should keep our attention in coming years, and decades.

Why is the Health Care Debate Happening Now?

Because a Democrat is in the White House?

Because health care costs have skyrocketed?

Because free marketed ideologies have been discredited by the financial crisis?

Because Obama is especially charming?

The principal reason these debates are happening now is none of these things. The sea change in public opinion on health care over the past few decades is a result of the international predominance of capitalism and democracy.

Sound crazy?

During the Cold War, for instance, Americans were much more sensitive about socialist reforms. Now, a minority of Americans expresses such concerns.

At the same time, the idea of taking a huge economic risk in the midst of a focus on international political competition with, say, the Soviet Union or Islamic fundamentalists, was extremely frightening.

Finally, of course, the focus on human development has grown with the increase in the value of human capital in the global economy.

So, the global triumph of capitalism and democracy has (1) reduced ideological sensitivity, (2) shifted our focus away from international political competition, and (3) created the conditions for international economic competition, based on human capital investment, to take on increasing importance.

Prediction: Cuban Regime Will Fall Within Two Years

The Cuban regime has relied upon the sense of defiance of American imperialism to support its claims to political leadership. The American system can no longer look so convincingly monolithic to average Cubans. Won't the appeal of grasping the power that American voters have, to buck the establishment (whether it be the Clintons or the former WASP elite, be quite appealing to the Cuban people?

Are Castro's admittedly thoughtful words a strong enough brew to hold the Cuban system together, especially in the event of his apparently pending passing?

Castro:

Nobody can doubt the sincerity of Obama's words when he says he will make his country into a model of freedom, respect for human rights in the world and for the independence of other nations. . .

[But,] despite all the tests he has been put through, Obama has not faced the most important of all.

What will he do when the immense power he has grasped soon proves to be totally useless in overcoming the intractable, opposing contradictions of the (capitalist) system?

The final question may be interesting but I doubt that it will be sufficient to stir the Cuban people to defiance of the United States.

Sovereign Wealth Funds

Sovereign Wealth Funds represent an attempt by states to benefit from markets but also have the potential to inject political considerations into macroeconomics. Is this inherently a bad thing? Free trade orthodoxy might say so. But, where is the bright line that distinguishes the familiar economic collective of individuals (i.e. the corporation) from the economic collective we call the state? In other words, will the time come at which free citizens endorse increased activity of such funds in the name of economic well-being? Will future citizens of the world look back and have difficulty understanding the distinction between capitalism and socialism?

The Nation-State and Global Integration

A few questions about strains on the power and efficacy of the nation-state:

(a) Does the global financial crisis call for international management of, say, currency exchange rates?

(b) Do globalization and the near-global triumph of capitalism undermine the greatest incentive (namely, international competition, respectively, among capitalist powers and between capitalist and non-capitalist powers) for leading capitalists to attend to the well-being of those who are not succeeding?

(c) Do global warming and other environmental strains demand an internationally-coordinated response that cannot entirely be managed by one nation-state?

My answer to all of these questions is 'yes' and points to the growing importance of international cooperation to solve many of our most pressing problems. I am not arguing that states are not strong. Neither am I am arguing necessarily for inter-governmental cooperation to solve these problems (although, such will sometimes be vital). Rather, I am arguing that a global perspective is becoming of greater importance. In due time, I believe that such a perspective will become the dominant paradigm, superseding the nation-state paradigm.

It is no coincidence that this pattern of integration presents itself as we find ourselves in a world in which everyone can be lifted out of poverty and in which universal education can be imagined. These goals can be achieved because (a) the global economy is sufficiently integrated to distribute basic goods, services, and skills to those in need of them, (b) globalization and the near-triumph of capitalism have led to a global economy in which human capital is of ever-greater economic value, and (c) environmental challenges force us to focus on how we can develop wealth without solely relying on materials. The best answers to this question are the development of technology and of human capital.

End of an Era: Free Market Orthodoxy Is No Longer Ascendant

Agree or not, the following exchange signals the end of a 28-year era of American politics in which free market orthodoxy defined the terms of domestic debate:

“You had the authority to prevent irresponsible lending practices that led to the subprime mortgage crisis. You were advised to do so by many others,” said Representative Henry A. Waxman of California, chairman of the committee. “Do you feel that your ideology pushed you to make decisions that you wish you had not made?”

Mr. Greenspan conceded: “Yes, I’ve found a flaw. I don’t know how significant or permanent it is. But I’ve been very distressed by that fact.”

Read more.

GEOPOLITICS, FINANCE, AND EDUCATION

In the upcoming weeks, world leaders will meet to begin to consider a new financial architecture for the world.

If they fail to found a cooperative framework, the threat of protectionism, economic decline, and the associated political challenges (which would not be small, and could be frightening) will be our biggest challenges.

If they succeed (as I suspect that they will), we will have taken a noticeable step to a more integrated world in which conflict between large nations becomes somewhat less likely. Challenges would still remain in that regard, to be sure, not least the endurance of petrodictatorships. Still, new issues will, after such a success, begin to come to the fore. I believe that one of the boldest dividing lines in a more stable (I take small group terrorism into account here.), integrated world will be the divide between the information technologically-able and the informational technologically-challenged. The would increase the importance of education, relative to international relations, as a defining issue for geopolitical stability.

What do you think?

Intimations of a New Global Order

David Ignatius:

The new interventionism isn't so much socialist as it is Confucian -- a belief that a public-private partnership of the wise ones will get us out of the mess. And if it's any consolation, the Chinese are becoming more like us, even as we are becoming more like them. . . .

One hopeful sign last week was that the Chinese were moving toward private ownership, even as America and Europe were moving away from it. The Chinese government announced a new rural policy aimed at allowing millions of farmers to own the land they have been working. This would create a huge new reserve of private wealth in China, which could power domestic spending and growth. [Read more.]

A focal point of this new order, which I will explain further later, will be the development of the economic potential of the mass of producers. The innovation will be that such focus will be justified in terms of the promotion of prosperity, not just through appeals to social justice.

A few suggested conversation topics:
What positive effects can you imagine coming out of the crisis?
Can democratic institutions respond to crisis with coherence?
What aspect of the financial crisis would you focus on if you were Paulson?

THE MEANING OF THE INFORMATION AGE

This is my most extensive political theory work to date. It may be a bit rough around the edges but I hope that you will find it interesting. I am hoping that it will impress but even more so, that you will be inspired to offer me criticism and guidance.

WEALTH, CAPITALISM, DEMOCRACY, AND INTERNATIONAL ASSERTIVENESS

My thinking about China and my reading of Alan Greenspan's new book ("The Age of Turbulence") has led me to some conjectures about democracy, capitalism, wealth, and assertive power.

I want to propose the following:

+Countries that are capitalist and wealthy tend very strongly to be democratic and internationally assertive. The converse tends to be true as well.

My reasoning:

+Capitalist countries tend to promote an ethic of individualism, which lends itself to democratic political organization and to a sensitivity to international threats. The second point is, perhaps, the more subtle one: I would argue that the 'rough and tumble' world of capitalism keeps its participants more keen to competitive challenges. This principle applies equally to business challenges and to geopolitical challenges. Essentially, this could be one explanation for the more internationally assertive stance of the UK, the US, and Australia, as opposed to France, Germany, and Japan.

+Wealth affords people the opportunity to reflect upon, and oppose, policies that are perceived to be unfair. Also, of course, wealth affords countries the opportunity to play a globally assertive role.

Some exceptions:

+Singapore and Hong Kong are both wealthy and economically free but lack political freedoms. This imbalance may be sustainable, in part, because of their small size. In short, it may be easier to control the political expression of a small, as opposed to a large, merchant society.

+India is an interesting exception. It is neither wealthy nor particularly economically free. Still, it shows some signs of appreciating the importance of confronting geopolitical challenges from less free neighbors. This may be due to (1) India's large size, which makes it both more able to play a regional/geopolitical role and more conscious of its geopolitical weight and to (2) the very fact of the existence of potentially aggressive, less free neighbors, especially Pakistan and China. We am forced to ask: Why is Japan then different from India? It is both relatively large and in the proximity of a neighbor who presents some degree of geopolitical challenge (read: China). If we argue that Japan's history (and constitution) make it especially inclined to pacifism, we are forced to question the assumption that less economic freedom is the proximate cause of Japan's (and, similarly, of Germany's) relative international quietude.


Conclusion:

There is still some more sorting to do on these issues. India is clearly an interesting case for further investigation.