PART ONE




PEACE CHALLENGED
1
20:21 VISION
THERE ARE many wonderful things about being a journalist. The excitement of responding to, and trying to make sense of, the flow of news. The challenge of trying to sort out the wood from the trees, the important from the unimportant, the honest from the dishonest, the reasonable from the hyperbolic. The independence of mind and of spirit, the accompanying sense of the ridiculous, that are available to an outsider, an observer of rather than participant in events, processes and organizations. The fact that so many people read or hear what you have to say, and that some of them even pay heed to it. The privilege of being able to, and actually being paid to, write or broadcast what can fairly be described as a sort of first draft of history, albeit with all the foibles and frailties that performing that task typically implies.
Yet that is also where the limitations of journalism begin. Our perspective is always a fairly short-term one. Our readers want to know how something that happened today might be connected to something that happened yesterday, or last month. Furthermore, our preoccupations are forever vulnerable to the fads and fashions of instant hopes, fears and worries. Writing in a weekly such as The Economist, with a global, highly motivated readership and a clear analytical mission, this journalist is insulated against some of that vulnerability. But it is still necessary to write about the issues and events that preoccupy people, even when such preoccupation is not really justified and when the journalist's main role is simply to say so. And, like all instant analysts, the journalist is constantly at risk of overinterpreting the short-term and underrating or underinterpreting the longer-term trends. Something that did not seem to matter at all yesterday becomes, tomorrow, the only thing that does seem to matter.
Thus it was that on 10 September 2001 international terrorism by religious zealots was not thought to be an especially important topic. It was just one fear among many on the standard lists of present and future threats, but not a very immediate one. After 8:46 a.m., American Eastern Daylight Time, on the following day, such terrorism was, for a time, transformed into the only topic that mattered.
That shift in perspective was entirely understandable, given the magnitude, drama and horror of the events of that day, and at the time it was also entirely appropriate. Everyone's attention was transfixed by what had happened, their minds filled with possible explanations for it and with possible ramifications. Yet the truth about that particular episode, as can already be seen with the benefit of hindsight, is that neither the view on 10 September nor that on the 12th was correct.
The threat of international terrorism by the sort of group that devastated the World Trade Center in New York and the Pentagon in Washington, killing thousands of civilians, was already real before that infamous day. It had been the subject of many worthy reports, conference papers and articles, whether the expected terror was in the form of low-tech warfare as in those attacks or, more worrying still, in the high-tech form of nuclear, chemical or biological weapons of mass destruction. But, being chiefly theoretical as one danger among many, it was not given a high priority either by pundits or by policymakers, even though several attempts at such terror attacks had been thwarted already, including in the United States itself. Had these succeeded, they could have delivered a shock comparable to that of 11 September. But they did not, and so international terror was not the talk of any town.
By the same token, in the days and weeks after those attacks on 11 September, and after the ensuing war in Afghanistan, the danger of international terrorism was by no means the only danger to the peace and prosperity of the West, nor was it the only important political force at work in the world. Even so, for quite a while, it was the only threat being talked of in most Western capitals and on the editorial pages of much of the Western media. On one day, furthermore, two of the world's great civilizations were assumed to be ignoring each other, living separate lives; on the very next morning, it was widely believed that those civilizations, Islam and the Judeo-Christian West, were in fact engaged in a mighty, epoch-making clash.
A very big event was thus given an even greater significance than it deserved. This was a telling example of one of journalism's biggest weaknesses, that of jumping to conclusions. The events of 11 September did have the potential to become world-shattering, era-dominating, overshadowing all other candidates for that role, yet that was only ever one possible outcome. It is unlikely that in years to come we shall see 11 September as insignificant, but nevertheless it remains far too early to say whether this will in fact be the most important occurrence during the first decade of the twenty-first century. The more common examples of this weakness, though, are of journalists allotting a misleadingly high significance to quite minor events. These may just be misjudgments, or they may be efforts to create drama and hence to sell papers, for the news media are, after all, only a branch of the entertainment industry. Whatever the reason, the draft of history that journalists write is not just frail and full of foibles but inevitably flawed.
Instant judgments are not all bad judgments; indeed, some can be very sharp. What gets lost, however, is a sense of perspective, a sense of the relative weight of different events, tendencies, ideas or people. It gets lost because of the hurly-burly of news and the cacophony of competing voices. It gets lost because the half-life of an idea or a theme in today's world can be measured in months, weeks or even days. But it also gets lost for the simple reason that we do not actually know what is going to happen next.
Compared with the historians who will be writing about the same event in fifty or a hundred years' time, journalists face two crippling disadvantages. One is that to a historian, a decade is a blink of an eye amid a broad theme or movement, the events within it just detailed evidence for or against a wider thesis. To a journalist even a year seems an eternity, and a month can seem to change everything. A trend, to some commentators, is something that will last until their next show or column. We are forced, both by our readers and by ourselves, to be shortsighted.
The other disadvantage is that we lack the most crucial thing that is necessary to evaluate an event properly: knowledge of what happened next, or later, as a consequence of the event about which we are writing. Our "first draft of history" always contains, along with known facts, a huge amount of speculation about the future context within which the particular event will in the end be judged, either implicitly or explicitly. The anarchist who shot Archduke Franz Ferdinand of Austria and his wife on a visit to the Bosnian capital, Sarajevo, on 28 June 1914 may have thought he was simply striking a blow in a regional struggle over power and autonomy. That would indeed have been a reasonable interpretation at the time. Only later was it possible to interpret this event in a rather different context, that of the struggle between old empires and new that generated two world wars during the ensuing four decades.
It is banal to say it, but it is true: what is needed is a longer view. We need a longer view simply in order to understand the present: how we got here, what are the most important forces in today's world for good or for ill, and what are the reasons that some people are rich and some poor, some at peace and some at war, some content and some in despair. We need a longer view in order to put current events, issues and preoccupations into their appropriate contexts. But what everyone also wants is for that longer view to be clairvoyant, laying out a good sketch of what the future will hold. Once you have such a sketch in hand, it ought to be possible to plan for that future.
The trouble, of course, is that clairvoyance is not possible. In the whiskery words of Sam Goldwyn, "Never prophesy, especially about the future." No one knows what the future holds, and those who claim to know, at least beyond quite a short perspective, are charlatans. Just as a weather forecast is inherently unreliable beyond a few days, and an economic forecast is unreliable beyond a few months, so a broad forecast of future political, economic, technological and social events is unreliable beyond a very few years—and it generally does not pass muster for even that long. Futurology should be seen just for what it is, namely enjoyable speculation. It cannot be more than that.
This is awkward, to say the least. It also flies in the face of human nature. For not only are we all curious about the future, but we also carry an implicit set of expectations about it around in our heads. We are all prisoners of some idea of the future that is inherent in our view of the present. It is there in our beliefs and disputes about current issues, in life, in politics, in economics, in science, in religion. It is contained in our beliefs about the security of our jobs, about the sort of education that it is desirable to have, in our choices about where and how to live and work, in our decisions, by omission or by deliberation, on how best to save or invest for retirement or for rainy days. All these are, in effect, bets we are constantly placing about what the future might hold.
Similarly, our view of tomorrow can be found in the topics we choose to protest about or, more mildly, the causes we try to help through our donations. It is contained in the allegiances and alliances that we consider acceptable for our countries to enter into or maintain, in the sort of relationships our political leaders affect to strike up with the leaders of other countries, most of which reflect not personal "chemistry" but a more established set of assumptions about national and international interests, priorities and relationships. And many of our decisions, especially those made by big organizations or by governments, could themselves end up altering the very future about which we are all wondering: by polluting more or polluting less, by encouraging hard work or discouraging it, by restraining corporate activities or fostering them, by stimulating financial volatility or dampening it down, by making war or making peace, by having babies or not having them.




The future matters, in other words. It cannot be avoided or ignored just because we are necessarily ignorant of what it will bring. So what can we do? The best answer is to avoid making a conscious effort to look forwards and to understand the future by looking backwards instead. That sounds paradoxical, and it is. But it is the best way to understand the present, as well as to gain a sense of the forces that really matter in determining what lies ahead. We cannot use the past to make predictions, of course. But we can use it to help set our priorities, to assign a more appropriate set of weights or levels of importance to our current preoccupations. Such a claim can give rise to scepticism. In that case, listen to one of the twentieth century's greatest men, Winston Churchill, who as well as being a politician, amateur painter and wartime prime minister of Britain, was also a popular historian. Churchill once said: "The further backward you look, the further forward you can see."
That is the spirit of this book, and also its purpose. The aim is to step back from the short-term preoccupations of the journalist, and to try to take a longer view. It is a view, first and foremost, about what the past tells us matters most today and will matter most in the future, a future which for convenience can be called the twenty-first century. Whether the view is of a hundred years or fifty or just twenty-five does not matter very much, for it is a view about the sweep of future history, and only the arbitrary dictates of the calendar associate such a sweeping view with the whole of the century that has just begun. The view of what will matter most is itself derived from history, a history which for similar reasons of calendrical convenience can be called that of the twentieth century, whether or not that relevant past can, in truth, be held to have lain strictly or only between 1900 and 2000.
This book's longer view is also, however, a view about the issues in today's world that are especially relevant to those broad, future-shaping topics, and about what past experience, the long-term perspective, has to tell us about those contemporary issues. Thus, even if you do not happen to accept the book's overall hypothesis about which are the big, future-shaping questions, you will at any rate find here an exploration of what this author considers to be the biggest issues of our time, of how history and principle meld together to suggest the real importance of those issues, and of what factors will be important in determining how they evolve.




What, then, were the big, life-determining issues of the twentieth century? And why should they continue to shape our lives in the twenty-first? Can't we move on? The answer is that we can't. One of the two big issues that shaped the twentieth century was really of an eternal nature, made more important and apparent by the onward march of technology; it will also, in one form or another, shape the twenty-second and twenty-third centuries. The other big issue, which began to emerge as long ago as the nineteenth century, is one that continues to dog us. Despite an apparent denouement a decade ago, this issue is not, in reality, settled. Quite probably it never will be, given the nature of modern life and an essential contradiction at the heart of humanity.
All this may sound rather enigmatic. What are these two issues? Well, the first of them can begin to be glimpsed by the observation that, above all other things, the twentieth century was shaped by war. This is despite the fact that it was a century in which, for human beings in general, the most notable development was a big rise in life expectancy, thanks to a combination of improvements in medical technology, better diet and better sanitation. Someone born in 1900 could expect, at that point, to live for an average of 45–50 years if he or she was lucky enough to be born in a richer, developed country, or 20–40 years if he or she was unluckier and lived in the poor world. By the end of the century those averages had risen to 75–80 years in the rich countries and 50–60 in the poorer ones. Such figures measure quantity of life, not quality. Something else besides sheer chance helped to determine whether or not a particular life enhanced or impaired those averages, and whether it was lived in peril or in some semblance of stability: whether the person's country, or region, was at war. And the nature of that life was also determined by whether the country was ruled by a dictatorial government that killed its own citizens or was a democracy that avoided such atrocities.
All centuries, all periods of human history, have felt the heavy influence of war and other forms of violence. But although the twentieth century did not differ in kind, it differed in degree. It was the first century to feature a truly world-spanning conflict, one involving countries from opposite sides of the globe. And, as if to emphasize the point, it featured not just one such worldwide conflict, but two.
Some historians like to suggest that the two world wars were in reality just one, interrupted by an interlude of peace. That idea may contain some truth for the European powers, but it underrates the much greater geographical spread of the second war, and the fact that one of the crucial participants in that war, Japan, had been on the opposite side during the first conflict. China's condition today, moreover, was shaped crucially by the war that began on its territory in 1931 and did not in reality end fully until the communist takeover in 1949. Nevertheless, some historians even extend their definition of the twentieth century's single world war to include the "cold war" of 1947–91 between the Soviet Union and the United States, despite the fact that in both the conventionally defined hot wars of the century Russia and America were formally on the same side. The conclusion of the second war, however, crystallized a basic rivalry between the two. And the postwar settlement of 1945 froze some countries in the unsatisfactory state in which they had found themselves as the war ceased, with Eastern and Central Europe mostly under Russian occupation, for example, and the Balkans given the artificial unity of Tito's communist Yugoslavia. Even if we disagree that the whole period should be seen as a single conflict, it is surely true that the world did not properly start to shake off even the medium-term effects of these successive wars until the 1990s.
The twentieth century's wars and dictatorships did not merely innovate by geography. They innovated by the sheer, appalling size of the death toll they caused. The table on page 12 shows estimates, derived from a 1994 book, Death by Government, by an American academic, R. J. Rummel, of the numbers of people killed in wars, the direct consequences of wars or by governments; the figures have been updated to include conflicts in the final years of the century. Such figures will always be estimates, and controversial, for nobody during these killings sat ticking off names in a ledger, and many of them occurred in the jurisdictions of dictatorial governments with a strong interest in falsifying such records as did exist. The estimates may be wrong in their specific magnitudes, but they offer a good indication of the horror and general scale of what occurred. The category of deaths "associated with" war involves civilians who were slaughtered by their own governments (e.g., Germany's Nazis) or by occupying governments (e.g., Germany's Nazis) in or near wartime; or who died in civil conflicts exacerbated by an international war (e.g., China in the 1930s); or (a large category) those who died in famines resulting from war. For this last group, it should be noted that famines rarely occur because of a lack of food; they typically occur because of disruptions to the distribution of food, generally caused by war or government action.
PEOPLE KILLED IN WARS AND BY THE MOST MURDEROUS GOVERNMENTS IN THE 20TH CENTURY
1.Deaths in declared wars:International29mCivil5mSubtotal34m2.Civilian deaths associated with wars, or in undeclared wars:Germany (1933–45)21mChina (Kuomintang, 1928–49)10mJapan (in China, 1936–45)6mSubtotal37m3.Civilian deaths directly or indirectly caused by governments:Soviet Union (1917–91)62mChina (1949–)35mCambodia (1975–79)2mTurkey (1909–18)1.8mSubtotal100.8mUngrand total171.8m
Government action explains the final and largest category of all, the 97 million estimated here to have died in the Soviet Union and communist China as a result of unnatural causes. These numbers are especially controversial: plenty of studies can be found that claim that they are either too high or too low. For this purpose, however, it does not really matter whether the total ought really to be 60 million or 140 million. As Stalin himself said: "One man's death is a tragedy; a million deaths is a statistic." These statistics give a terrible sense of what occurred. Some deaths were direct, official killings, some were in labor camps, some (in China especially during the "Cultural Revolution" of 1966–76) occurred amid government-inspired anarchy. The largest numbers of deaths, though, were probably caused by famine when, in both the Soviet Union and China, at different times, the central government brought about chaos in food production and distribution either because of misplaced ideas or for brutal political ends.
The list of individual countries and perpetrators could have been much longer, of course. Cambodia is included in the table because Pol Pot's Khmer Rouge slaughtered an extraordinary percentage (about 30 percent) of that country's population in just four years. But more than a million people were killed in Vietnam, too, for reasons outside the direct conflict between North and South, and with America. Indonesia's brutal suppression of a supposedly communist uprising in the 1960s could have added 600,000 or more, as could the Rwandan genocide of the 1990s. No one knows what number should be included for North Korea, as a result of official killings, labor camps or famines. But these details would not have altered the basic point: the twentieth century, a century of enormous progress in medical, agricultural and other technologies, was nevertheless one in which governments working alone or in wars managed to kill somewhere in the region of 170 million people, a figure equivalent to more than 10 percent of the world's entire population in 1900.
Why? There are many explanations: ideology, ambition, greed, fear, insanity, the legacy of colonial empires, among others. Two, however, stand out as being important for today and for the future. The first, simplest and most enduring is technology.
Developments in the second half of the nineteenth century and in the early decades of the twentieth in electronic communications and in transportation made it possible not just to be a dictator but to exercise far greater control over more people and across much larger areas. Dictators existed before, but it was hard, perhaps impossible, for them to be "totalitarian." The electric telegraph and the telephone made it possible to send and receive commands and other information instantly over huge distances, serving military, intelligence and propaganda purposes. Railways, motorized vehicles and aircraft similarly enabled power to be deployed or projected over huge areas. Add the increasing destructive power of weaponry, especially in armored tanks, machine guns and bomber aircraft, and the result was the potential for powerful despotisms, cowed populations and mass slaughter.
Those technological underpinnings of dictatorial brutality continue to exist and develop today. In one sense, though, recent technological change has weakened governmental control. The even cheaper long-distance communication that is possible through computers, telephones, satellites and the Internet has made it harder to maintain a monopoly of knowledge, harder to bamboozle a population. George Orwell's "Big Brother," manipulating people's minds in his novel 1984, became, in the Britain of 2000, merely the name of a tawdry television game show. That change needs, however, to be weighed against others more sinister. It may be easier to find out that your government consists of knaves or fools, and easier to organize resistance movements, but that resistance would now face even more overwhelming odds than in the past. The ability of governments to detect dissidents has been improved by the same new information technology that helps the dissidents, and military firepower continues to become more efficiently destructive. China's dictatorship has so far seen off the Tiananmen Square protests, the Falun Gong religious sect, and Internet-based organization and dissemination. It has proved adaptable in many aspects of life and economics, but not in terms of its political control.
This also helps to explain why a group of American gun activists once published an advertisement in their magazine making the remarkable accusation that the present author is in favor of genocide. The Economist had published an article advocating greater governmental control of the availability of guns in the United States. According to the gun activists' logic, when it is made harder for a citizenry to possess and bear arms the balance of power is tilted in favor of the government; and in history, genocides have occurred only when a population has been unable to resist its government. Such logic has half a point, though it does rather overrate the probability that the United States might descend into dictatorship anytime soon. Nevertheless, it is true that a dictator such as Saddam Hussein in Iraq, who is willing to use chemical or biological weapons against his own lightly armed or unarmed people as well as powerful conventional means, can be very hard to dislodge.
In the long run, the real limits to dictatorship are chiefly economic: the ability of a government to continue to harness resources sufficient to maintain military control at home or to satisfy ambitions abroad. Those resources can come from the sale of natural commodities such as oil, but generally, and especially over the longer term, they come from the wider economy. That, in the end, is what brought down the Soviet Union: the contradiction between a weak economy and large military or totalitarian aims. In the long run, dictatorships generally fall if, or rather when, they fail to maintain their countries' economic capacity, for they then become vulnerable to overthrow or military defeat. But, to paraphrase Lord Keynes, in the long run, many more citizens would already be dead.




The potential for dictatorship, with associated deadly brutality, is undimmed. The main limiting factor is economic: centralized control has proved to be a poor way to build a wealthy, modern economy, and wealthy economies are those most able to afford the latest offensive, defensive or repressive technologies. Modern, wealthy economies have developed when economic power has been dispersed to a wide population and when individual enterprise has been given its head. Such developments make dictatorship harder and repression costlier. But it is far from impossible to sustain a dictatorship over long periods of time, as the Chinese Communist Party has shown. And the importance of the economic sacrifice entailed by centrally directed regimes is essentially relative: it is the growing wealth of other countries, operating in an open market economy, that makes it harder for a dictatorship to restrain the economic expectations of its own citizens and to keep up with other countries' military technology and resources. But if other countries' economies become depressed, life for the dictator could well become easier.
An open, global market economy is not, moreover, an inevitable by-product of the modern world. To the degree that it exists (for it remains incomplete) it is a by-product of the existence of a general state of peace that seems sufficiently reliable or durable for companies and individuals all over the world to feel willing to engage in international trade and investment, and of the existence of a state of trust between most countries that is sufficiently reliable or durable for that trade and investment to take place according to a more or less agreed set of laws and financial arrangements.
This brings us to the second important explanation for why the twentieth century was characterized by so much violence and war. It is that, for the century's first forty or forty-five years, there was no guarantor of such a state of peace, no keeper of the balance between nations, no preserver of that trust and that rule of international law. There was, in other words, no hegemon, no dominant power, until the United States of America emerged to take on this role in 1945.
After 1945, America competed with the Soviet Union for the role, but soon did so with greater acquiescence from the subjects of its dominance and with much less need for military control. It does not even feel quite right to call the United States a hegemon today, now that the Soviet Union has gone, though many of America's opponents and critics use the word. Similarly, it is probably too simple to describe Great Britain as having been the hegemon of the nineteenth century, even though that was the period when "Great" appeared to be a significant part of the country's name. Still, Britain built a worldwide empire, an empire on which "the sun never set," an empire that meant that British schoolchildren's maps appeared to be covered with pink. The empire was built on naval power; like Britain's large and effective army, it was built on the foundation of her early industrial revolution and relatively rapid economic growth. Although it has not, since the loss of Calais in the sixteenth century, occupied or otherwise ruled any substantial part of continental Europe (the sole exception is Gibraltar), Britain has acted and intervened to keep the balance of power in Europe, to prevent any other country there from becoming dominant and thus a potential rival. For the half century following Britain's defeat of France's Napoleon in 1815, Britain had no political or military rival on the continent. The British empire suffered a great defeat in 1776 when its most promising colony of all, America, declared its independence. But it made up for that loss by expanding its imperial territories to the east, in India, and to the south, in Africa. The most important thing of all was that the former colony itself exhibited no desire to rival Britain around the globe, preferring to concentrate on its own development and on its closer foreign interests in its own hemisphere.
After 1815, the nineteenth century was a relatively peaceful period, with few clashes between the great powers around the globe. Although France, Germany, Italy and even young (1830) Belgium had sought by the end of the century to establish small colonial empires of their own, especially in the uncharted territory of Africa, none felt it worthwhile to confront Britain head-on, or at least not for long. Russia expanded its contiguous empire to the east and south, and came to rival Britain on the fringes of both countries' empires, notably in Afghanistan, but never in such a way as to pose a durable or broad-based challenge. The result was that an international system of communication, trade and capital flows developed, led and generally designed by Britain and chiefly policed by the British navy. There was nothing perfect about this outcome, and it was one that depended on Britain's maintaining occupying forces and administrations in a large number of countries, governing large numbers of people. But it endured, more or less peacefully, for many decades because it was accepted or at least acquiesced in by other countries.
That acquiescence was disappearing as the new century was born in 1900. The spread of industrial technology and trade was enabling other countries to catch up with Britain, and leading them to expect a commensurate influence over world affairs as well as their own colonial empires. Old, smaller empires—the Austro-Hungarian empire of the Habsburgs in Central Europe, the Ottoman empire in the Middle East—were decaying, as nationalist feelings among their various component states combined with rivalrous pressures from outside to undermine them. In place of clear British dominance over a world in which other powers were either feeble or balanced against each other, the new world of the twentieth century was one in which several powers—Britain, Germany, France, Russia, Japan, the United States, Turkey—were strong but in which none commanded sufficient resources or technology to dominate or to deter the others. A fateful blend of ambition and insecurity led to war, and to the fracturing of the old British-led system of international trade, payments and investment.
Any system based chiefly on force, especially the force of a small island economy off the coast of Europe, was bound to collapse eventually. The trouble was that nothing—or rather nobody—was ready to replace the system or to repair it. The first half of the twentieth century is best understood as a story of the decline of empires, of the rise of new powers as technology and wealth spread, but, most of all, as the story of a power vacuum. Only after 1945 was the vacuum truly filled, as the United States of America took on the mantle of world leadership (albeit in rivalry to the weaker Soviet Union) that had been forfeited by Britain. In effect, the most important story of the century, at least in hindsight, was not one of Germany rivalling its European neighbours, or communism rivalling capitalism, or even of Soviet Russia rivalling others, but that of the United States taking over from Britain. It had long been capable, in principle, of doing so. But it had not wanted to adopt an international role commensurate with the size and strength of its economy, and Britain was not yet weak enough to yield the vestiges of its own preeminence voluntarily. The Second World War altered America's wishes, as well as enfeebling Britain.
The result was seen in economics as well as in politics. The second half of the twentieth century was far more prosperous than the first for most people in the world. The annual growth rate of output, per head of population, doubled in what are now the rich member countries of the Organization of Economic Cooperation and Development (OECD), a club for rich countries originally set up to manage and monitor America's economic aid to Western Europe in the late 1940s. The OECD members' growth rate rose from a 1.3 percent annual average between 1900 and 1950 to 2.6 percent, but that rate meanwhile soared in populous Asia (from a miserable 0. 1 percent to a life-changing 3 percent). Although there were wars aplenty—Korea, Vietnam, Afghanistan, India-Pakistan, Israel, Iran-Iraq, Congo, Angola, Ethiopia, former Yugoslavia, to name but a few—this period was on the whole more peaceful than the century's first half. Fewer people died in war, although many continued to be killed by their governments. Wars destroy economies, peace builds them.
There was no new colonial empire to explain the post-1945 peace. Britain's empire was dismantled during the three decades after 1945, but none rose to take its place. America maintained military bases abroad, in Japan, South Korea, the Philippines, Germany, Britain and elsewhere, but always with the consent and even at the request of the host country. The rules for trade were agreed upon in the General Agreement on Tariffs and Trade (GATT), signed up to by 23 countries in 1947. A new framework intended to maintain financial stability was superintended by two institutions, the International Monetary Fund and the World Bank, which were also set up in 1946 and which now have 183 member countries.
For the West European countries and for Japan, it may be that the exhaustion of war partly explains why after 1945 they accepted international rules and conventions of conduct, and avoided military conflict. In general, though, there is one explanation alone for the relative peace and prosperity of the past fifty years: the existence of a dominant power, in economic, technological and military matters, namely the United States of America. This power, moreover, has been willing to exert its dominance across the globe whenever there was a serious threat to the general peace, and has been willing to exert leadership whenever there was a serious threat to prosperity.
During the first few decades after 1945, this point was obscured by the existence of a rival nuclear-armed superpower, the Soviet Union. During the 1950s the legacy of war combined with ignorance of the truth led some to believe that the USSR might even overtake its capitalist opponent. But the truth was that America was always the stronger power, and knowledge of that fact (for it knew about its own weaknesses) restrained the USSR. Moreover, while America led a trading and financial system adopted by much of the world, the USSR's rival system was adopted only by a modest number of countries.
America's behavior during this period was far from perfect, and it blocked the emergence of fully fledged international institutions on several occasions itself (e.g., GATT's proposed evolution into an "International Trade Organization" in 1948, and the creation of an International Criminal Court in the late 1990s). Its willingness to engage in international disputes and problems was and remains patchy. But the important point is that America will, in extremis, intervene in disputes, attempt to quash threats to global peace and stability, and work to maintain the existence of international economic institutions, and this knowledge serves to deter others from letting ambition or insecurity lead them into military adventures. America is not a true hegemon, in the sense of a power that seeks to impose its will on all and sundry. Nor is it a true policeman, patrolling the globe. But it is like a giant elder brother, a source of reassurance, trust and stability for other weaker members of the family, and a source of nervousness and uncertainty for any budding bullies.
For that reason, the biggest geopolitical question for the twenty-first century must be whether that American leadership, that American role as a giant elder brother, will endure, or whether it will go the way of Britain in the twentieth century and decline. America could forfeit its role in one of three ways: by becoming weaker; by becoming unwilling to exert itself outside its own borders; or by being challenged by other, newly strong powers. In principle, America's loss of leadership may prove to be only a matter of time: a country of 280–300 million people ought not to be expected to lead forever a world whose population is already twenty times its size, and which by 2050 could be about twenty-five times its size. Yet, to all of us, time is of the essence. What matters to us is whether America's dominance is going to last merely another thirty years or for a further century or more. That is what the first part of this book explores.




The second part of the book concerns itself with the other issue that dominated the twentieth century, and which promises also to matter hugely in the twenty-first. It is an issue that began to emerge during the nineteenth century, as the industrial revolution forced agriculture-based feudalism into an accelerated decline and replaced it in the most advanced countries with a new, urban, industrial capitalism. What began at the time when Karl Marx and Friedrich Engels wrote their Communist Manifesto in 1848 and when Charles Dickens was sketching out the misery and dislocation of modern London between 1835 and 1870 was a struggle between not just two ideas but two parts of human nature itself: on the one side, man's inherently competitive, selfish, acquisitive instincts, and on the other his frequent intellectual or moral distaste for the consequences of his own selfishness.
This struggle took on a systemic, ideological, geopolitical flavor after 1917, when the Bolshevik revolution overturned the provisional government in Russia and the world's first communist regime was proclaimed, with the declared ambition of helping to spread communism around the globe. From then until 1989–91, capitalism and communism were said to be engaged in a battle for supremacy, a battle to prove which set of ideas offered a superior way to organize an economy and a country and a superior insight into the true nature of human instincts and motivation. With the fall of the Berlin Wall in 1989 and the collapse of the Soviet Union itself in 1991, this battle was, not surprisingly, considered to have reached a denouement. Capitalism had won.
Yet, understandable though that conclusion was, given the political history of the century and especially of the cold war, it was at best shortsighted, at worst somewhat blinkered. What had undoubtedly come to an end was the cold war between the United States and the Soviet Union. What had also undoubtedly been made clear by the preceding decades was that central planning is a poor way to run a modern economy. It can occasionally work well in a simple, primitive economy, but it is unable to deal effectively or efficiently with the complex range of activities and needs of a more diverse, sophisticated state. However much political or military power he possesses, no planner has sufficient knowledge either to produce or execute his plans in an economy that is at all advanced. Central planning failed. But did capitalism therefore succeed? It fared better than did central planning. But that is not saying much.
To say more, it is as well to ask oneself why this battle occurred in the first place. Communist ideas did not, in truth, arise in a vacuum, as a rival set of ideas to capitalism, springing out of nowhere. They arose because the true battle lies within capitalism itself. The twentieth century, which experienced the most rapid and widespread economic development in history, was also a century in which capitalism engaged in a series of struggles with itself, with its inherent weaknesses. It was these weaknesses that gave rise to communism, and in particular to its appeal to a wide range of people. That appeal was for a time identified with communism's particular (and supposed) implementation in the Soviet Union and in China, but it went far beyond that association.
Chief among its weaknesses is capitalism's very instability, the way it veers wildly from boom to bust and back again. As well as wealth, productivity and innovation, capitalism produces insecurity, of jobs, of housing, of pensions, of welfare, even of family unity. Any economic system that can allow the Great Depression of the 1930s, with falling incomes and appalling unemployment, is bound to raise doubts and cause dissent. Although the extremes of the 1930s were of a sort that has occurred at most once a century, evidence of capitalism's continuing instability can be seen in any decade. In the 1990s alone there was Mexico's trauma in 1995; there was the East Asian financial crisis of 1997–98, in which currencies, companies and countries slumped, seemingly overnight, putting millions out of work and giving rise to a popular revolution in Indonesia; there was the extraordinary boom in American financial markets, especially those dealing in high-tech companies' shares, followed by an equally extraordinary bust; and there was a long stagnation in Japan, which followed a similar story of boom and bust in Japanese shares and property. Some may argue that modern economies have "built-in stabilizers" in the form of government spending and borrowing, which prevent such instability from proving disastrous, or that central banks have learned enough from history to deploy their own stabilizing mechanisms. That may well be true. Yet collapses still occur, and the bookshops periodically fill up with works explaining why another huge crash could be just around the corner.
At least, you might say, instability hurts everyone. But it doesn't: during a crash or recession the already poor and vulnerable are invariably hurt more than the rich and powerful, both within countries and when comparing richer countries and poorer ones. That inequality of resources and power is another inherent weakness within capitalism. Indeed, one of capitalism's main motors is the very desire to create inequality, an inequality between those who succeed and those who fail. It is a competitive system. The incentive to create wealth, to build successful businesses, is an incentive to become unequal. While a well-functioning capitalist economy does tend, over time, to make everyone better off, it also tends to make some people better off than others. Among those who do less well, it is probably inevitable that at some points and in some circumstances resentment will build up, and that minds will be drawn towards alternative ways of organizing things, or new ways to adapt a capitalist economy. Politicians often like to describe the aim of such thinking as "social justice." It is a telling phrase, as it implies that the outcome of capitalism is somehow unjust, simply because it is unequal.
The richer the country, the more likely it is that even those who have profited from capitalism will find a further reason to dislike it: the environment. All economic activity alters the natural environment, whether under the label of capitalism or communism. Many of the worst examples of pollution and other environmental damage occurred when Soviet or Chinese communists were directing economic activity. The fact that capitalism proved cleaner than its twentieth-century rival does not rescue it from criticism, however: it may be less bad, but that does not make it good enough. Insofar as industrial capitalism consists of taking the resources of the earth and processing them into new forms, it will always alter the earth and will distribute its residues to places where such materials did not exist before. It will always, therefore, give rise to awkward and controversial choices, between those who would prefer the earth (or, generally, their part of the earth) to be left unchanged and those who would prefer to have the jobs, incomes and profits that arise from change. And, as the world's population grows from 6 billion now to 9 billion at some point in the twenty-first century, the pressure of such choices is likely to grow and to spread to more and more places around the globe.
Capitalism is what brought, directly or indirectly, the improvements in human welfare that were seen during the twentieth century. Its resources and incentives produced the technological developments that altered our lives, from antibiotics to MRI scans, from telephones to computers, from motor cars to jet airliners, from oil refining to air conditioning. In countries that enjoy such developments, capitalism has paid for education, health care, welfare support, vacations and pensions. For most of the second half of the twentieth century, especially the 1980s and 1990s, the lure of those benefits proved strong enough to make most people accept capitalism even if they could not bring themselves to love it.
Moreover, the phenomenon that has come to be called "globalization" is in truth simply the spread of this open trading capitalism to more and more countries around the world that previously sought to shut themselves away from it. China, Vietnam, the Soviet Union and its Eastern European satellites shut themselves away because they were communist; most of Latin America shut itself away because it wanted to be self-sufficient; India shut itself away because of a mixture of socialism and the urge for self-sufficiency. During the past twenty years, the governments of countries containing around 3 billion people—half the world's population—have sought either to adopt a basically capitalist economic system or to connect their existing domestic capitalisms to international trade and capital flows by opening up their borders. Globalization is simply the voluntary adoption of international capitalism.
It is not necessary to be a professional economist to realize that this voluntary process is controversial, however. Protests against globalized capitalism have erupted in many cities around the world, generally at times when international institutions (and thus the media) were holding their annual get-togethers. In domestic politics, too, trade unions and corporate bosses campaign for restrictions on imports or on foreign competition when their own sales are suffering badly. This happens especially frequently in Europe and America in old industries such as steel, textiles and agriculture. Environmentalists meanwhile seek restrictions on capitalism everywhere, regardless of whether the firms involved are domestic or international ones, and whether the environmental damage is domestic (e.g., pollution or new dams) or international (e.g., global warming).
Since all the progress that has been, and will be, seen in technology and in general welfare has arisen from capitalist activities, and since no alternative set of ideas has emerged to give hope to poorer countries that they can match the rich world's progress by adopting anything other than capitalism, it might seem reasonable to assume that capitalism is likely to be simply a given for the twenty-first century. One way or another, it will be a feature of life during the next hundred years. That is surely true. But all the difference in the world, and for the world, is contained in that phrase, "one way or another." How much technology develops, how it develops, how well-off we become in material terms, how big a problem the relative poverty of the underdeveloped world will pose for the developed countries, how the planet's environment serves to limit or enable our activities and circumscribe or enhance our lives: all these questions depend on the way capitalism develops, or rather the way it is allowed to develop.
This, too, like the role of leadership in preserving peace, is probably an eternal question. Our feelings about capitalism have always been and probably always will be mixed. Capitalism works. It appeals to the inherently competitive instinct in man, the instinct that to survive and thrive one must compete, and that to compete one must take risks. Man, however, has other instincts. We are social animals, seeing both pleasure and benefit in cooperation. Capitalists combine competition with cooperative ventures. It is not just dog eating dog. But we also have what Adam Smith, capitalism's greatest economic thinker, described (approvingly) in the eighteenth century as "moral sentiments": emotions, feelings about fairness, compassion. Such sentiments can be, and often are, affronted by capitalism. The losers, the less successful, are always likely to think of fighting against the outcomes of capitalism. Yet even the winners, the more successful, feel a clash between their selfish instincts and their moral ones. It makes them worry about capitalism, seek to modify or mollify its nature and, at times, even to repress it altogether. It leads them sometimes to enter into alliances with the losers. It means that capitalism is forever under challenge, forever being questioned. How that challenge takes place and is met will make all the difference in the twenty-first century.




This book's argument is beguiling in its simplicity. It is that from the morass of issues, problems and solutions that we might envisage as having a bearing on our futures, only two questions really matter when we are thinking about our future in the twenty-first century. These are the questions that have mattered most in determining how we stand now, in the present, because they also determined the shape of the twentieth century. One is whether capitalism will survive, thrive and retain the current, unusual allegiance that it commands around the world. The other is whether the United States of America will continue to keep the peace around the globe, making the world safe for capitalism to spread, by retaining its current clear preeminence as a political, military, economic and cultural power, and by retaining the desire to exercise its power as a force for peace and progress. Simple indeed: just two questions. If only it were as simple to provide the answers.
Copyright © 2003 by Bill Emmott