Voice

Is authoritarian capitalism a successful model?

There's been a lot of chatter in the past year month week about the rise of authoritarian capitalism.  How warranted is it? Consider last Friday's Brad Setser post
Not only do we live in a new “age of authoritarianism,” but we live in a world where autocratic governments increasingly finance democratic governments.... One thing is clear: the world’s biggest financial powers are no longer the world’s large democracies. A gathering of the countries that matter for global economic coordination will no longer be a gathering of the leaders of the world’s big democracies. Coordination among the large democracies was never easy — and likely will only get harder as additional countries have to be brought in.
Then there's the New York Times' Jad Mouawad on national oil companies -- most of which are based in non-democratic countries: 
Oil production has begun falling at all of the major Western oil companies, and they are finding it harder than ever to find new prospects even though they are awash in profits and eager to expand. Part of the reason is political. From the Caspian Sea to South America, Western oil companies are being squeezed out of resource-rich provinces. They are being forced to renegotiate contracts on less-favorable terms and are fighting losing battles with assertive state-owned oil companies. And much of their production is in mature regions that are declining, like the North Sea. The reality, experts say, is that the oil giants that once dominated the global market have lost much of their influence — and with it, their ability to increase supplies.... As late as the 1970s, Western corporations controlled well over half of the world’s oil production. These companies — Exxon Mobil, BP, Royal Dutch Shell, Chevron, ConocoPhillips, Total of France and Eni of Italy — now produce just 13 percent. Today’s 10 largest holders of petroleum reserves are state-owned companies, like Russia’s Gazprom and Iran’s national oil company.... Western companies are far better than most national oil companies at finding and extracting petroleum, experts say. They have developed advanced exploration technologies and can muster significant financing to develop new fields. Many of the world’s exporting states, however, have spurned their expertise. Oil company executives see a straightforward explanation: a trend known as resource nationalism. They contend that they have been shut out of promising regions by a rising assertiveness in the Middle East, in Russia, in South America and elsewhere by governments determined to keep full control of their oil. Even in places where they are allowed to operate, the Western oil companies face growing problems. Countries like Russia, Algeria, Nigeria and Angola have recently sought to renegotiate their contracts with foreign investors to capture a bigger share of the profits. “The problem with the supply side of the equation is a problem of accessing the resources in the ground so they can be explored and developed,” Rex W. Tillerson, the chairman of Exxon, said in a recent interview. “That’s a political question where governments have made choices.”
And oil is not the only area of resource nationalism and nationalization.  There's cement.  And, potentially, food
While Saudi Arabia sets up its first sovereign wealth fund, ordinary Saudis are more preoccupied with the rising price of food. This is prompting the Saudi government to consider a new direction for foreign investment: buying farms in the poorer parts of the world.... Saudis are thinking of buying rice farms in Thailand, the world’s biggest rice exporter. Rice prices are climbing especially fast, as several rice-producing countries have restricted exports, fearing domestic shortages. Thailand has even flirted with the idea of an OPEC-style rice cartel. Investors from elsewhere in the Gulf, including Qatar and Abu Dhabi, are scouring the world for undeveloped farmland to buy, especially in Pakistan and Sudan. Libyans and other Arabs have been checking out Ukraine. Kuwaitis have been looking in Myanmar, Cambodia and Laos.
A few thoughts on all of this:
  1. There's no question that there's either been a shift in the distribution of power -- or a shift in norms.  Fifty years ago, there's just no way the United States tolerates this kind of nationalization in Venezuela, for example. 
  2. The rise of authoritarian capitalism still seems a bit overstated to me.  Setser, for example, makes his point by looking at the size of official reserves in democratic vs. authoritarian countries.  And, sure enough the latter now dawrfs the former.  Except this is a bit deceptive, since I'm willing to bet that the distribution of privately-held assets looks much more like the traditional distribution of power.  Even in an area like oil wealth, OECD governments still hold a lot of leverage, as Daryl Press and Eugene Gholz point out in today's New York Times
  3. I don't doubt that authoritarian capitalism can thrive in the short to medium term, but I'm still unconvinced that it can outperform the more liberal varieties of capitalism in the long term.  Centralized governments do pretty badly once they are done with technological catch-up.  And I'm very fond of this Ken Rogoff quote:  "Governments have a long tradition of losing massive amounts of money in financial markets.  This tradition is not likely to end anytime soon."    
  4. I could be wrong about point #3.  Maybe Rogoff was talking about the U.S. Trasury rather than China's State Administration of Foreign Exchange. 
  5. Really, this all boils down to China.  Every other "rising power" in today's economy is either a democracy or sitting on natural resources that will eventually decline in value.  
This is the $64 billion RMB question of the day -- can China convert itself into a billion person version of Singapore?   

Daniel W. Drezner

Trying for the full Huntington

As I've said before, I've greatly admired Samuel Huntington's career. Huntington's gift as an academic is that he has been unafraid to make the politically incorrect argument, regardless of the consequences. This doesn't always mean he is right -- but it does mean he's usually interesting. I suspect that John Mearsheimer and Stephen Walt are trying to copy the Huntington template in their essay, "The Israel Lobby" for the London Review of Books: Here's how it starts:

For the past several decades, and especially since the Six-Day War in 1967, the centrepiece of U.S. Middle Eastern policy has been its relationship with Israel. The combination of unwavering support for Israel and the related effort to spread democracy throughout the region has inflamed Arab and Islamic opinion and jeopardised not only U.S. security but that of much of the rest of the world. This situation has no equal in American political history. Why has the U.S. been willing to set aside its own security and that of many of its allies in order to advance the interests of another state? One might assume that the bond between the two countries was based on shared strategic interests or compelling moral imperatives, but neither explanation can account for the remarkable level of material and diplomatic support that the U.S. provides.

Instead, the thrust of U.S. policy in the region derives almost entirely from domestic politics, and especially the activities of the Israel Lobby. Other special-interest groups have managed to skew foreign policy, but no lobby has managed to divert it as far from what the national interest would suggest, while simultaneously convincing Americans that U.S. interests and those of the other country  in this case, Israel are essentially identical.

Well, that argument certainly won't rub anyone the wrong way. Interested readers should be sure to check out the longer, footnoted paper which is archived at the Kennedy School of Government. So do Mearsheimer and Walt achieve the full Huntington? No, not really. "The Israel Lobby" is the academic equivalent of waving a big red cape at one's ideological opponents, hoping they'll foam at the mouth and act stark raving mad because the authors cited Chomsky or CommonDreams, or because, "the Fatah office in Washington distributed the article to an extensive mailing list." [Or maybe they're pissed that they didn't crack the 100 Most Dangerous Professors in America!!--ed.] So let's avoid that bait. Reading the essay, I can conclude the following:

1) Mearsheimer and Walt make a decent case of arguing that interest group lobbying is responsible for some aspects of U.S. policy towards the Greater Middle East. Now this asssertion alone is enough to make people very uncomfortable at cocktail parties and other venues. Whenever I bring up ethnic lobbying in my American foreign policy class and mention Israel, everyone in the room tenses up. So kudos to Mearsheimer and Walt for speaking the taboo thought.

2) Shot through these papers are an awful lot of casual assertions that don't hold up to close scrutiny [Which makes it eerily similar to some of your blog posts!!--ed. True that.]. The authors assert that, "If Washington could live with a nuclear Soviet Union, a nuclear China or even a nuclear North Korea, it can live with a nuclear Iran. And that is why the Lobby must keep up constant pressure on politicians to confront Tehran." I'm pretty sure that there's more to U.S. opposition to Iran possessing nuclear weapons than the protection of Israel.

From the longer Kennedy paper, Mearsheimer and Walt make a fascinating logical assertion: "[T]he mere existence of the Lobby suggests that unconditional support for Israel is not in the American national interest. If it was, one would not need an organized special interest group to bring it about. But because Israel is a strategic and moral liability, it takes relentless political pressure to keep U.S. support intact." What's fascinating about this quote are the implicit assumptions contained within it: i) the only interest group in existence is the Lobby, and; ii) in the absence of the Lobby, a well-defined sense of national interest will always guide American foreign policy. It would be very problematic for good realists like Mearsheimer and Walt to allow for other interest groups -- oil companies, for example -- to exist. This would allow for a much greater role for domestic politics than realists ever care to admit.

Finally, they argue that the U.S. invaded Iraq only primarily because Israel and the Lobby -- in the form of neoconservatives -- wanted it. I wrote my take on this argument three years ago:

The notion that such a conspiracy exists rests on the belief that the administration's foreign policy principals -- Donald Rumsfeld, Condoleezza Rice, Colin Powell, Dick Cheney, and Bush himself -- have somehow been duped by the neoconservatives into acting in a manner contrary to their beliefs. But while critics have never lacked for accusations against these officials, being weak-willed is not among them. In the end, it's far more likely that Bush is exploiting the neoconservatives' ideological arsenal to advance his preferred set of policies than vice versa.

3) There are sins of omission as well as commission. Walt and Mearsheimer assert that Israel has been a "strategic burden." They do a good job of cataloging why that's the case -- but omit important examples of Israel being useful, such as the 1981 Osirik bombing. They also go into depth on the Bush administration's policy towards the Palestinian Authority, but never mention the arms shipment that Arafat lied to Bush about as a causal factor behind Bush's decision to freeze out Arafat.

4) The evidence is pretty thin in some sections. To demonstrate the current political power of the American Israel Public Affairs Committee, they cite a 1984 election where AIPAC was allegedly curcial. They argue that the Israeli-Palestine problem is at the root of Al Qaeda's beef with the United States -- which is funny, because I was pretty sure it was the presence of U.S. forces near the holy shrines of Mecca and Medina. They claim the Lobby is responsible for U.S. policy towards Syria, but that policy amounts to little more than some empty sabre-rattling.

After finishing the article, I began to wonder whether the paper is simple a massive exercise in explaining away a data point that realism can't cover. Most realists opposed the Iraq War, and Mearsheimer and Walt were no exception. They can and should take some normative satisfaction in being proven right by what happened after the invasion. However, I suspect as positive social scientists they are bothered by the fact that the U.S. invaded Iraq anyway when realism would have predicted otherwise. When realists are confronted with contradictory data, they tend to fall back on auxiliary hypotheses -- the cult of the offensive, the myth of empire -- that have very little to do with realism. Explaining away Iraq on The Lobby might have a whiff of the Paranoid Style, but it's certainly consistent with the literature.

In the end, I think Mearsheimer and Walt get to the full Huntington -- but alas, it's the Huntington of Who We Are? rather than The Soldier and the State. There's more I could write about, but I'm eager to hear what others think.

UPDATE: OK, I should have said, "I'm eager to hear what others think... after they read the article." Two final thoughts. First, I'm surprised and disappointed that the article has gotten zero coverage from the mainstream media in the United States. I completely agree with Walt and Mearsheimer that this is a topic that needs more open debate. Second, there's one non-event that keeps gnawing at me after reading the piece. If "The Lobby" is as powerful as Walt and Mearsheimer claim, why hasn't there been a bigger push in the United States for more fuel-efficient cars, alternative energy sources, and the like? After all, the only strategic resource that Israel's enemies possess is large quantities of oil. If "The Lobby" is so powerful and goal-directed, wouldn't they have an incentive to reduce the strategic value of their advesaries?

ANOTHER UPDATE: See this follow-up post on the Walt/Mearsheimer paper as well.