America and the world: Part I.

The key words in this cluster of books, focusing on the US, are emerging , retreat, closing and anger. Pankaj Mishra, in Age of Anger: A History of the Present, says that the paranoid hatreds of the present world have a precedent in the Romantic response to the universalist ideals associated with the Enlightenment of the eighteenth century, while Kim R Holmes warns Americans, and by implication Europeans, about The Closing of the Liberal Mind: How Groupthink and Intolerance Define the Left.  Edward Luce, writing in response to Donald Trump’s election to the US Presidency, discusses The Retreat of Western Liberalism. The message is that the days of US primacy are counted. Robert J. Gordon’s The Rise and Fall of American Growth: The US Standard of Living since the Civil War, charts the surge in innovation during the period 1920 to 1970, its narrower base from 1970 to the present, and predicts that this trend will be very difficult to turn around.

The westernisation of the world.

Pankraj Mishra does not hide his colours. In his book From the Ruins of Empire, he records his history of Asia’s rape by ruthless westerners, and the come-uppance Asians delight in when contemplating the West’s decline. “It is no exaggeration to say that millions, probably hundreds of millions of people that have grown up with a history of subjection to Europe and America-derive profound gratification from the prospect of humiliating their former masters and overlords”.

His book, The Age of Anger, is imbued with the same spirit, but takes a rather different angle. “I started thinking about this book in 2014 after Indian voters, including my own friends and relatives, elected Hindu supremacists to power, and Islamic State became a magnet for young men and women in Western democracies. I finished writing it during the week in 2016 in which Britain voted to leave the European Union. It went to the printers in the week Donald Trump was elected President of the United States”. His book is in effect about a worldwide phenomenon, rooted in the events and ideas surrounding and following the French Revolution,- a new mode of politics suited to frustrated men, prone to the use of violence, terror and rage against strangers-nationalism, in short. He quotes The Futurist Manifesto published in 1909, by Filippo Marinetti, one of the inspirers of the Italian fascist regime under Benito Mussolini. “We want to glorify war-the world’s only hygiene-militarism, patriotism, the destructive art of the anarchists, the beautiful ideas for which one dies and contempt for women. We want to destroy museums, libraries and academies of all kinds”. ’ He wrote this over a century before Islamic State.

“This book, Mishra goes on, argues that the unprecedented political, economic and social disorder that accompanied the rise of the industrial capitalist economy in nineteenth century Europe, and led to world wars, totalitarian regimes and genocide in the first half of the twentieth century, is now inflicting much vaster regions and bigger populations: that, first exposed to modernity through European imperialisms, large parts of Asia and Africa are now plunging deeper into the West’s own fateful experience of that modernity”. Mishra’s purpose is to recall the “West’s own extraordinarily brutal initiation into political and economic modernity”. And he does so by focussing on the German, Russian and Italian thinkers of the nineteenth century, who rebelled against the British utilitarians of the time, and their preachings about free trade, growth, liberty of the individual, and in some cases of parliamentary democracy. In the 1990s, Anglo-American thinkers took up the baton of triumphalism anew along the lines that the world was engaged on an irreversible process to convergence on the American way of life.

In a quotation from Notes from the Underground, Dostoievesky inveighs against the westernising engineers of soul,”who think there is no soil, there is no people, nationality is just a certain tax system, the soul is a tabula rasa”.”The belief systems, Mishra continues, and institutions that Britain, France and the US initiated and advanced- commercial society, the global market economy, the nation state, and utilitarian rationality-first emerged in Europe, before rolling over the older worlds of Asia and Africa.” And he concludes that “the modern West can no longer be distinguished from its apparent enemies”. Mao, Nehru, Ataturk or India’s Modi pass for rebels but they are also mimics of what they have learnt from each other and  the West: that rulers can fashion new citizens, that Khomeini can learn from Zionism, and Boshevism to recast Shiism, or that Modi, the leader of Hindu revivalism can go around in a $15,000 Saville Row suit.

“In the late twentieth century, the old dream of internationalism was revived on a much grander scale after Communism, the illegitimate child of Enlightenment rationalism, suffered a shattering loss of state power and legitimacy in Russia, and eastern Europe. The financialisation of capitalism seemed to realize Voltaire’s dream of the stock exchange as the embodiment of humanity which, however religiously or ethnically diverse, spoke the unifying language of money. The establishment of the European Union seemed to vindicate Nicolas de Condorcet, who had insisted that the universal history of human rights seemed to be replacing the old language of justice and equality within sovereign national states. The “magic of the market…seemed to be bringing homogenisation of all human societies”.

The violence which has spread through the world since 1990, Mishra argues, had a precedent in the response of Germany, and then of Russia, to Napoleon’ conquests. The fierce politics of identity visible around the world-in Modi’s India, Putin’s Russia, or Erdogan’s Turkey-are rooted in nascent German, Russian and Italian nationalist responses to the claims of cosmopolitanism. After Austerlitz and Jena came the German reaction. After Borodino, came the Russian aristocracy’s discovery of the heroism of the Russian serf. Into the “immeasurable abyss which extinct Christianity had left behind,” in the words of Michelet, France’s pre-eminent nineteenth century chronicler, flowed efforts to  revive old religions, forge new ones, or simply learn to live without through the celebration of violence as did the Italian Futurists of the early twentieth century.

In the late twentieth century, we rediscovered these paths of “convergence” on “angry tribalism or equally bellicose forms of antimonian individualism” in what Mishra describes as a global civil war. “Globalisation, while promoting integration among shrewd élites, unites political and cultural sectarianism everywhere else, especially among people forced against their will into universal competition”.

Intolerant liberalism.

It used to be thought by an America confident in its exceptionalism that the rest of the world was attracted to its values, its soft power. But anger stormed the White House in the presidential elections of 2016. Samuel Huntington, the late Harvard political scientist, had anticipated this homecoming in his final book, Who are We? The ideology of multiculturalism, he writes, is a frontal assault on the core of American identity-the English language, Christian faith, the work ethic and values of individualism and dissent. The ideology’s roots lie in guilt towards victims of alleged oppression, whose presence in the United States is celebrated by pliant politicians and intellectual élites in the name of diversity. These élites are prepared to sacrifice the traditional American identity, and embrace free trade, porous borders and mass immigration. Denouncing multiculturalism as an “anti-European civilisation”, Huntington calls for a renewed nationalism devoted to preserving and enhancing “those qualities that have defined America since its founding”.

Huntington states that transnational ideas and people fall into three categories: universalist, economic and moralist.

  • The universalist approach is, in effect, American nationalism and exceptionalism taken to the extreme. America is seen as exceptional “not because it is a unique nation but because it has become the “universal nation.” It has merged with the world through the coming to America of people from other societies and through the widespread acceptance of American popular culture and values by other societies.”
  • “The economic approach focuses on economic globalization as a transcendent force breaking down national boundaries, merging national economies into a single global whole, and rapidly eroding the authority and functions of national governments. This view is prevalent among executives of multinational corporations, large NGOs, and comparable organizations operating on a global basis and among individuals with skills, usually of a highly technical nature, for which there is a global demand and who are thus able to pursue careers moving from country to country.”
  • “The moralistic approach decries patriotism and nationalism as evil forces and argues that international law, institutions, regimes and norms are morally superior to those of individual nations. Commitment to humanity must supersede commitment to nation. This view is found among intellectuals, academics and journalists. Economic transnationalism is rooted in the bourgeoisie, moralistic transnationalism in the intelligentsia”.

For our present purposes, the most significant of these three categories, are the moralist transnationals, who reject or are highly critical of the concept of national sovereignty. “They agree with UN Secretary General Kofi Annan that national sovereignty ought to give way to “individual sovereignty” so that the international community can act to prevent or stop gross violations by governments of the rights of their citizens. This principle provides a basis for the United Nations to intervene militarily or otherwise in the domestic affairs of states, a practice explicitly prohibited by the UN Charter. More generally, the moralists advocate the supremacy of international law over national law, the greater legitimacy of decisions made through international rather than national processes, and the expansion of the powers of international institutions compared to those of national governments. Moralist international lawyers have developed the concept of “customary international law”, which holds that norms and practices that have wide acceptance can be a basis for invalidating national laws.”

This advocacy of anti-patriotic attitudes among liberal intellectuals has opened up a gulf between them and the American public, Huntington argues. “Most Americans, as the American public philosopher Richard Rorty has written, take pride in their country, but “many of the exceptions to this rule are found in colleges and universities, in the academic departments that have become sanctuaries for left-wing political views.” These leftists have done “a great deal of good for . . . women, African-Americans, gay men and lesbians. . . . But there is a problem with this Left: it is unpatriotic.” And being unpatriotic, its influence is sharply reduced. “Without patriotism, the Left will be unable to achieve its goals for America. Liberals, in short, must use patriotism as a means to achieve liberal goals.”

What Huntington is analyzing may be paraphrased as the growing gulf between Washington and voters. “In a variety of ways, the American establishment, governmental and private, has become increasingly divorced from the American people. Politically, America remains a democracy because key public officials are selected through free and fair elections. In many respects, however, it has become an unrepresentative democracy because on crucial issues–especially those involving national identity–its leaders pass laws and implement policies contrary to the views of the American people. Concomitantly, the American people have become increasingly alienated from politics and government.”

As Carlos Lozada has pointed out, Huntington was in effect a prophet of the Trump era (“Samuel Huntington: a prophet for the Trump era”, Washington Post,  08.07.2017), Huntington’s works anticipated “America’s political and intellectual battles — and [pointed] to the country we may become.” In Lozada’s words, Huntington “captures the dissonance between working classes and elites, between nationalism and cosmopolitanism, that played out in the 2016 campaign.” The divide is best encapsulated in Hillary Clinton’s description of white working people as “deplorables”.

 

Kim R. Holmes, author of The Closing of the Liberal Mind: How Groupthink and Intolerance define the Left, New York, Encounter 2016, analyses how this has come about.  Illiberalism’s prime trait is intolerance, and paradoxically for a revolutionary movement , its protagonists are the cognitive élite of about ten thousand , ultra-wealthy, smart, well connected and influential individuals. They dominate the universities, business, the law,  and government and set the tone for the media. The sociology of this thesis derives from the book Coming Apart: The State of White America, 1960-2010, (Crown Forum, 2012), co-authored  by Charles Murray, the libertarian political scientist, and his co-author, W.H.Brady. The authors trace the emergence of this new white ruling class from the 1960s on, when cognitive ability became the essential predictor of professional and financial success, and people overwhelmingly began marrying others in the same cognitive stratum and living in areas surrounded largely by others in that same stratum, leading to not only an exacerbation of existing economic divides, but an unprecedented sociocultural segregation that had not existed before in America. Religiosity, work ethic, industriousness, or family have remained strong in the élite, the book argues, whereas these same attributes have weakened substantially or have become  almost nonexistent in the white lower class.

How come that the élite is leftist, one may ask? One answer may lie in the failure of economistic Marxist-Leninism. The failure took the heat off the new élites, distinguished by their cognitive credentials and much less vulnerable to hostilities through their ability to identify themselves through cultural affinities with as broad a public as they would wish to associate with.  The Old Left had claimed that its insights to the workings of the class struggle were objective, and scientific; the New Left insisted on subjectivity and the non-existence of objective truth. Truths were relative, not absolute. Where Old and New Lefts agreed was that class and identity were both rooted in groups pitted against each other. Both of their creeds were illiberal. Both derived from Marx.

The rise of the postmodern Left may be traced to the 1960s, the student movements of the time, the opposition to the Vietnam war, the civil rights movement, and the enfranchisement of black people in the American south. Its ideas were imported, and bedded into American universities. One source was the Frankfurt School of Marxists associated with Herbert Marcuse and Theodor Adorno. American progressives from the interwar years had shared the body of ideas derived from the study of biology, about eugenics, the selection of the fittest and abortion with their European colleagues. The insight of Marcuse was to rescue the politics of biology from the discredit into which it had fallen under National Socialism by reinventing it not as race, but as sex. By fusing philosophies of cultural Marxism with Freudianism, he helped launch a new wave of politics aimed at sexual liberation. Technology added to the thrust of things with the pill, the condom or the implant. As a gynecologist friend of mine commented in comparing the young women of 1960 and the young women of 1970, their sexual mores were poles apart.

The other strand to influence the American New Left was post-modernism, also imported from Europe. This body of thinking-famously associated with the works of Jacques Derrida, Michel Foucault, and Jean-François Léotard-rejected the rationalist tradition in favour of cognitive and cultural relativism. The movement faded in the early 1970s, as its denizens bedded themselves into the universities. Their intellectual progeny is a cornucopia of identity theories: multiculturalism, critical race theory, gender and transgender theory, gay and lesbian theory; media “criticism”; postcolonial studies, or indigenous cultural studies.

The principle tenets of this intellectual movement are rooted in the belief that ethics are relative, and that human knowledge is whatever the individual, “society” or political powers say it is. As Holmes describes it, “ we are who we say we are”; the only real truth is my truth. Here are some of its main principles

  • Multiculturalism: all cultures deserve equal respect, but some cultures are more equal than others. White peoples are racist.
  • The law is a “narrative” where free speech is a myth; hate speech is not. It is what the accuser wishes it to be.
  • Feminism sets itself against the patriarchy, society organized by and for men, and posits  hostility between the sexes.
  • The currency of the postmodern movement is power. It pits one group against another, as in classical Marxism.

What matters in the revolutionary process is to achieve domination over others. The rules were set out in a book by Saul Alinsky, Rules for Radicals, Random House, 1971,  where the author spelt out tactics for successful collective action. He synthesised these in aphorisms, such as:

  • “Power is not only what you have but what the enemy thinks you have.”
  • “Make the enemy live up to its own book of rules.”
  • “Keep the pressure on.”
  • “Pick the target, freeze it, personalize it, and polarize it.”

The progressive and post-modern left practices power politics, and uses a wide variety of tactics to wIn. Racial stereotyping, for instance, includes the idea of collective white racial guilt; brand your opponent, rather than argue substance; promote  group identity in preference to  individual preference; Jews become the oppressors in the Mid-East conflicts, and Arabs the Jews of Nazi Germany; welfare access is opened wide to immigrants, who also acquire voting rights and vote progressive parties; judicial activism insures the creation of new rights; hate laws silence dissent;  Christians are the enemy. Modern illiberalism, in short, is a child of the radical Enlightenment, as were Stalin and Mao. And as with these tyrants, postmodern progressives recognize no bounds to the politics of passion. Holmes concludes by citing Jefferson: “I have sworn upon the altar of God eternal hostility against every form of tyranny over the mind of man”.

 

Edward Luce, writing in response to Donald Trump’s election to the US Presidency, discusses The Retreat of Western Liberalism, Little Brown, 2017. The message is that the days of US primacy are counted. As with Holmes, he dates the retreat from the early 1970s, when the western left began to shed class solidarity for personal liberation and identity politics. In the 1972 election to the Presidency, McGovern had included seats on his Commission for women, ethnic minorities, and young people, but none for the “hard-hats”, the working males who began to gravitate to Nixon’s brand of patriotism. The Nixon-Kissinger White House initiated relations with China, opening the way to China’s pragmatic transformation to what has been dubbed “market leninism”, its entry to the WTO, and the hollowing out of America’s manufacturing base, as US corporations outsourced production to the world’s new manufacturing platform. The story is recounted in Peter Navarro’s and Greg Autry’s, Death by China: Confronting the Dragon, Pearson, 2011. The book was presented also as a highly popular Netflix documentary, now available free on the internet. https://www.youtube.com/watch?v=mMlmjXtnIXI

Luce, an editor of The Economist,  presents his case in three parts: Fusion, Reaction; Fallout. The first part essentially presents the rise of Asian per capita incomes, and the return of China after two centuries of what Keith Pomeranz wrote about in The Great Divergence: China, Europe and the Making of the Modern World Economy, Princeton, 2001. Between 1820 and 1990, the share of the world income going to today’s wealthy nations soared from roughly twenty to over seventy per cent. Since then, the share of the wealthy nations has fallen back to where it was in 1900. Steam power, trade and the Pax Britannica lowered the costs of moving goods across frontiers, triggering a long cycle of industrial agglomeration and growth that propelled the world’s rich nations to prominence.

Richard Baldwin  analyses the post 1990 reversal in his The Great Convergence, Information Technology and the New Globalisation, Harvard, 2016. The new globalization is driven by information technology, radically reducing the cost of moving ideas across borders. This has made it practical for multinational firms to move labour-intensive work to developing nations. But to keep the whole manufacturing process in sync, Baldwin points out that firms also ship their marketing, managerial, and technical know-how abroad along with the offshored jobs. The process creates a new possibility of combining high tech with low wages, offering an opportunity of  rapid industrialization to a handful of developing nations, and the simultaneous deindustrialization of developed nations.  Given the combination of technological change, and the fragmentation of production through value chains, its social and political fallout may be more sudden, more selective, more unpredictable, and more uncontrollable. As The Great Convergence shows, the new globalization presents rich and developing nations alike with unprecedented policy challenges in their efforts to maintain reliable growth and social cohesion. It also presents major challenges in international relations.

Luce builds on these two important books to develop his argument on the link between China’s economic transformation and the changing sociology and politics of the western world. The western world has experienced growing inequality, a shrinking middle class and a growing gap between the national base and globalised élites. In 2000, 33% of Americans, he records, described themselves as lower class; by 2015, 48% did. Conversely, 51% of Americans considered themselves middle or upper class, down from 60% fifteen years earlier. http://news.gallup.com/poll/182918/fewer-americans-identify-middle-class-recent-years.aspx The change translated into shrinking support for open markets, inciting Laurence Summers, former President of Harvard, and Treasury Secretary,  to write that “America needs to make a new case for trade”, https://www.ft.com/content/0c185e3a-1478-11dd-a741-0000779fd2ac As Luce correctly observes, “the world’s élites have helped to provoke what they feared: a populist uprising against the world economy”.

To my mind, the most interesting section of the book is the second, labelled Reaction. In this section, he details the growing sense of western confidence in the last three decades of the twentieth century. There were, he records, 30 democracies in the world in 1974-75 when the two Iberian dictatorships disappeared, and 120 out of the 192 states in the world by 2000. The West in the intervening years went on a proselytizing mission, to carry their models and ideals to the rest of the world. Although he does not develop this crucial point, it is worth recording that there was not just missionary zeal for  more democracy, but also for human rights, open markets, share holder value, more power to international bureaucracies at the expense of national states, international law to override national law, and the whole agenda of New Left advocacy for women rights, gay rights, or diversity.

On the latter point, there was a convergence of views: China referred to “diversity” as meaning diverse regimes and traditions; western élites meant diversity in terms of inter-racial relations. Singapore has all that, but it does not want to be preached at. As Singapore’s Kishore Mahbuhani has pointed out, Asians rejected western “human rights imperialism”.  China rejected much else as well, successfully selling its own brand of authoritarian-cum-market development to an enthralled Asia, Africa and Latin America. In fact, China arguably has become the champion of a global Westphalian world, where nation states pursue national interests, and grand strategy is conducted by great powers, involving the balance of international power, alliances, and prestige. Size matters,  as China’s Foreign Minister, Yang Jiechi, reminded his audience at  ASEAN’s Regional Forum, held in Hanoi in July 2011: “China is a big country, and other countries are small. That’s a fact”.

Things began to go wrong for the western proselytizing mission in 2000. Putin replaced Yeltsin, embarking Russia on an anti-western trajectory; democracy’s brand was damaged by Bush’s reaction to 9.11, the Patriot Act paved the way to spying on US citizens, while the dilution of liberties at home gave comfort to autocracies abroad; the invasion of Iraq proved a ham handed way of bringing democracy to the country; the “Arab spring” of 2011, where Obama, Luce writes, backed the pro-democracy protests in Takhir Square, that brought a Moslem Brother to power, and within a year, an Egyptian military takeover; meanwhile the “global recession”, which broke out in 2008, was in fact western, as the rest of the world of the world powered ahead, with China setting up the Asian Infrastructure Investment Bank (AIIB), which the UK, France, Germany and Australia joined against the advice of Washington DC; led by China and Russia, 40 countries have expelled NGOs since 2003; the number of democracies has shrunk by 25 since the turn of the century, and last but not least, Americans elected Donald Trump as President.

Why did Americans vote Trump? Luce argues much along the lines of  Huntington and Holmes that Hillary Clinton believed that demography in the shape of a “rainbow coalition”  would waft her  to the White House. Immigration to the USA, running at 300,000 a year in the 1990s, reached 500,000 in the mid-2000s, putting pressure on school places, housing, and social services (As a comparison, the number of new National Insurance numbers issued in the UK over the past decade have been running at over 600,000- in a country with a population 5 times smaller than the US). Whites were fast becoming a minority; political correctness was a winning agenda; blue collar jobs were shrinking; and temporary difficulties on the way to a postmodern America could be fixed by a plethora of technical policy fixes. What Clinton overlooked, Luce points out, is that US statistics did not classify Hispanics as “whites”, though Hispanics were gravitating to the Republican camp (nor may it be added were Asians, outstandlingly the most successful of recent US immigrants).  As Luce points out, the “whitelash” explanation of why Clinton lost suggests that the Democrats do not want the blue collar vote back. They are “deplorables”.

Luce writes that a similar trend is observable, for instance, in France: the ruling élites have become divorced from the working class. By contrast, when asked what he thought of “white trash”, Trump said, “they are like me, but poor” (quoted in Michael Wolff, Fire and Fury: Inside the Trump White House, Little Brown, 2018) I would argue that this provides one insight as to why Trump won: in style, language and brashness, he is America’s equivalent of white van man. The American electorate, given a chance to kick the élites, elected bombast to the White House, the antithesis of political correctness. They despise the élites, accused of being what Roger Scruton calls “oikophobes”, defenders of “enlightened universalism against local chauvinism”.

Luce looks askance at the western propensity to flag democracy as a core value. The UK government, he argues, came to champion democracy in 1916, as a survival tactic to justify the mass deaths during the war. Wilson, the elitist, brought the US into Europe’s affairs, in the name of saving democracy, and after 1945, the UK, the US and France held up democracy as the West’s Crown Jewel. But European integration (promoted in its Brussels format by France, and it should be noted by The Economist) was “part and parcel of the comprehensive approach to constrain the popular will”. As I have argued elsewhere on this blog, the mandarins of Brussels are blind to vox populi; the same goes in Washington DC, where 96% of voters opted for Clinton.

One key implication from Luce’ book is that western élites have cooled on democracy, while the poor are now democracy’s biggest fans. Our societies, he writes, are split between the will of the people and the rule of the expert. Trade is taken out of the hands of elected politicians in the WTO; money is managed by independent central banks; the EU’s Fiscal Pact of 2012 adds tax and spend to the list. In the US, the result is the revolt of the masses, and the election of Trump; in Europe, “having arrogated most of the big decisions to itself, Brussels has left little more than identity politics to its member states”.

Is identity politics capable of bringing down the post-1945 institutions that have delivered peace and prosperity to the Euro-American area, and beyond to the rest of the world? The answer for the moment is negative. Both Washington and Brussels have multiple means of instrumentalising their policy interests against popular preferences. As Mike Lofgren has written in his book, The Fall of the Constitution and The Rise of a Shadow Government, Penguin, 2016, Washington’s deep state-the intelligence community, the agencies, the national security bureaucrats-have run rings for years around Congress. In the EU, the Brussels élites have managed to push ahead with their agenda, reverse popular votes, intimidate small opponents, and in the case of Berlin’s relations with Paris, even intimidate France. But there is a cost to these victories, and it is paid in the coin of the dissolution of the glue that binds governors to governed in constitutional democratic states. If Trump does not go some way to satisfying his voters, popular support for the post-1945 institutions will wane further. In Europe, widespread dissatisfaction with Brussels continues to play out in the democracies of the member states. I advise that this be followed most closely in Italy-the forthcoming elections-and even more so in Germany, as I have argued on this blog: https://storybookreview.wordpress.com/2018/02/07/hybrid-austria-is-vienna-setting-a-new-trend/

The Rise and Fall of American Growth.

Robert J. Gordon comes at the same set of issues, but as a professor of economics at Northwestern University. The Rise and Fall of American Growth: The US Standard of Living since the Civil War, Princeton, 2016, is an excellent book. It charts the surge in innovation during the period 1920 to 1970, its narrower base from 1970 to the present, and predicts that this trend will be very difficult to turn around.

Gordon has one central thesis and three propositions. The central thesis is that some innovations are more important than others, and the three propositions run as following:

  • the revolutionary century after the civil war was made possible by a unique clustering of what he calls the great inventions: railroad, steamship, telegraph;
  • economic growth since 1970 has been dazzling but disappointing. The main technological advances have been channelled into a narrow sphere of human activity: entertainment, communication, and processing of information;
  • the rise in the standard of living over the past 150 years rests heavily on the history of innovations, great and small, but headwinds point to a slowing of the rate of innovation, and therefore of growth.

The story that Gordon tells may be presented in some easily understandable charts. The first chart presents figures on the growth rate of output per person, output per hour, and hours worked per person.

Output per person  output per hour     hours per person

1870-1920          1.84                     1.79                          0.05

1920-1970          2.41                     2.82                          -0.41

1970-2014          1.77                      1.62                             0.15

 

Why, he asks, did labour productivity grow faster in the period 1920-1970, than afterwards? The faster growth in the middle period, his answer comes, is rapid technological changes. These may be measured through the concept of total factor productivity-the best available measure of the pace of innovation and of technical progress: it measures how quickly output is growing relative to labour and capital inputs. Here is the data Gordon presents on the annualised growth rate of total factor productivity(TFP) over the period from 1890 to 2014.

1890-1920          0.46

1920-1970          1.89

1970-1994          0.57

1994-2004          1.03

2004-2014          0.40

The century after the civil war, from 1870 to 1970, saw a non-repeatable slew of innovations, marking the transition from medieval to modern. Food supplies came in the form of branded products and frozen foods; clothes came to be bought in retail outlets. In 1870, the house was isolated from the rest of the world, a stand-alone construct. But by the 1940s households were networked via 5 connectivities: electricity, gas, phone, water, sewer. By 1940, nearly 100% of US urban houses were wired; 94% had clean, running water; 80% had flush toilets; 73% had gas heating and cooking; 58% had central heating and 56% held refrigerators. The transformation of home living freed up women to join the labour force. Under the New Deal, legislation, especially the Wagner Act, encouraged unionisation, which contributed to a sharp rise in real wages and a shrinkage in average weekly hours worked. In turn, higher real wages and shorter working hours helped to boost productivity growth. Productivity miracles during the war years of 1941-45 taught workers and firms how to operate more efficienctly. The federal government financed entire new branches of manufacturing. The overall result was a spurt in TFP growth,  three times higher than in the other two periods. Where the US led, western Europe and Japan followed.

Technological progress after 1970 focused in on a narrower range of technologies: entertainment, communications, and IT. Crucial steps along the way were the break-up of the Bell telephone monopoly; and the changeover from mainframe to personal computers. Total business and household spend on the three sectors amounted in 2014 to only 7% of gdp.

In addition to the relative narrowness of technological progress, other factors contributed to the lower growth: the surge in imported manufactured goods eliminated swathes of US-based manufacturing; this was compounded by the practice of corporate outsourcing to cheap labour countries; growth in wages stagnated;  the decline of marriage as an institution, and the rise in divorce rates correlated closely to high school drop out rates and youth crime; the US slipped down international rankings of high school reading, maths, and science abilities; education discrepancies now became a major predictor of inequality; limited job opportunities confronted university graduates, burdened with debts from their education.

In short, the sources of slower productivity growth , rising inequality, declining secondary school performance, or declining hours of work per person employed, Gordon writes, rest on multiple driving forces, which are not readily turned around. It is unlikely that the established trend will revert to mid-twentieth century levels. http://www.oecd.org/education/singapore-tops-latest-oecd-pisa-global-education-survey.htm

Concluding remarks.

What are some of the common threads linking these books which deal through a diversity of lenses about the world and America? Most importantly, they all tell a story that the days of US primacy are counted.

While America’s mid-twentieth century growth-via-innovation spread first to Europe, Japan and the Asia-Pacific “tiger” economies, after 1990 the know-how is now spanning out to embrace the world. America’s and Europe’s growth rates have tailed off, as the rest of the world, led by the demographic and territorial giants of China and to a lesser extent by India, have boomed. The combined West’s post-1990s proselytising mission-for open borders, human rights, the primacy of international law and regimes over nation states, the right of the “international community” to intervene in domestic affairs of states, for women’s rights, gay rights, and now we may anticipate, gender fluidity rights-has prompted a backlash evident in the “democratic recession”, the explosion of anti-western violence of which Mishra writes, and provided China with a global audience, at no cost to itself, of offering an alternative to American leadership in the world. China stands for a diversity of political regimes around the world, for non-intervention in domestic affairs of other states, of no-questions-asked about how governments interpret their human rights obligations under the UN Charter, and for as open markets as local governments are ready to accept. The West’s universalism, the sub-script reads, is simply the old imperialism revived.

Western universalism is in effect rooted in American and European “progressive” ideas. These are and have been inherently elitist. The credentials for membership are cognitive status, marriage and money. They are transnational, and inter-cultural. Their discourses are of heterogeneous origin: a world without frontiers;  international law and regimes above nation states; the economism of globalisation where the world is seen as one market; ethics, religion and culture as subjectively defined; the equality of all cultures inherent in multiculturalism. These discourses, though, contain powerful strands of anti-westernism, as Mishra identifies in his presentation of German, Russian and Italian thinkers’ response to the utilitarianism of Victorian Britain. And as Mishra is very well aware, they provide the means for non-westerners to play on western guilt through the weaponisation of history in the service of an anti-western cause, that in effects mimics western thought and aspires to western prosperity.

All our authors, whether commenting the cultural battles or the sociological and economic trends, agree on one thing above all: the gap has opened up within the western world between élites and people. This is displayed in the so-called “populist revolt: Brexit, the election of Trump, Le Pen in the final round of the Presidential elections, the Five Star movement in Italy, the sharp rise in the Alternative for Germany (AfD), and the governments of Poland, Hungary, the Czeck Republic and Slovakia. As Case Mudde has written, western populism is “an illiberal democratic response to undemocratic liberalism”.  https://www.theguardian.com/commentisfree/2015/feb/17/problem-populism-syriza-podemos-dark-side-europe/

I would phrase Mudde’s statement differently, and substitute utilitarianism for liberalism. The global élite’s dominant ideology is Victorian utilitarianism. That is why it is trumpeted so loudly by The Economist, The Financial Times, The Wall Street Journal, The Washington Post, The New York Times.  Liberalism and democracy have never twinned readily: utilitarianism, less cuddly than liberalism, is incompatible with both.  Its creed is embedded in Jeremy Bentham’s felicific calculus, and that  is measurable in terms of the balance of pleasure and pains its inflicts on what George orwell calls “the proles”. Giving pleasure to the largest number is best. But they needn’t vote. Their pleasures can be assessed via opinion polls, and fed through TV garbage, and popular musak. If you want a picture of their future, paraphrasing Orwell, “imagine a boot stamping on a human face-for ever”.

Will the people win out, meaning policy will revert to the local norms of the past, or rather will we see ever more pronounced centralisation in Washington DC, in Brussels, in corporate board rooms and in top universities?

There are two broad categories of answers we may give to the question: one refers to the westernisation of our world, and the paradox of a backlash to that westernisation; the other refers to the options available to western élites to perpetuate their privilege, relatively unscathed by the plebs knocking at their palace gates.

The cultural theme of the westernisation of the world, as discussed by Mishra, with all its contradictions, is mentioned often in the same breath as phrases depicting the retreat of the West, the decline of western primacy, or the dwarfing of Europe-a categorisation which was current in the Europe of the 1950s. Gordon’s book which examines the US national economy would seem to provide supporting evidence of this. Growth by innovation is tailing off, he argues; turning the trend around is highly unlikely; the US faces significant and adverse headwinds; the rest of the world, led by China, is catching up.

But it has long been argued that it is misleading to judge US power and status purely on an international comparison, when the world economy-largely created by the US -is transnational. As Sean Starrs points out in “American Economic Power Hasn’t Declined-It Globalized”, International Studies Quarterly, (2013), 57, (817-830), “corporations domiciled in the United States account for the leading profit-share in eighteen of the twenty-five sectors of the top 2000 corporations in the world, and dominate across twelve sectors….American firms also make a top three presence in …twenty-one of the twenty-five sectors…Clearly, no other nationality even begins to approach the dominance of American firms across such a vast breadth of sectors…Furthermore, the depth of American profit-shares across the expanse of global capitalism actually underestimates American economic dominance because American investors also own sizeable shares of corporations domiciled outside the United States”. “We live in an age of globalisation. But we also continue to live in the age of American economic dominance”.

I agree. I would add that there are plenty of options available to western élites to preserve their privilege. In his book, On The Autonomy of the Democratic State, (Harvard, 1982), Eric Nordlinger demonstrated that public officials are not only frequently autonomous insofar as they regularly act upon their own policy preferences, but also markedly autonomous in doing so even in the face of opposition from the most politically powerful groups in society: voters, well-organized and financed interest groups, national associations of farmers, workers, employers, and large corporations. The same goes for the world’s cognitive élites. Like Nordlinger’s public officials, there are a myriad of ways for them to shape, alter, neutralize, deflect, and resist the policy preferences and pressures of societal groups. They can make cross-border alliances, as is the present case in the Brexit affair where Remainers are hands in glove with Brussels to reverse the verdict of June 23, 2016; US policy trundles on, despite Trump; corporate boards can decide against investing in whatever territory they like; the cognitive élites share similar transnational paradigms and partners; they can open their membership to whoever has the credentials to join, and alter their collective memories as they proceed. Of course, the gap widens between them and the plebs. But who cares: the world is their oyster.

The flagship experiment of our transnational élite is the EU. It is a democracy free zone, and while all sorts of eruptions may occur in the provinces, the bureaucracy carries on. The vox pop does not penetrate the glass houses in which their denizens live. Corporate lobbyists, advocates of gender fluidity, ambitious lawyers, all love Brussels as a one-stop-shop, for a policy that can be applied Europe-wide. Local politicos can be wooed, scared, bribed or marginalized. They are no more than a nuisance, the price that has to be paid for pushing the project forwards.

There are some problems, though. Mishra’s anger is clearly present in Europe. It is very active in the US. To paraphrase, there has been a “whitelash” in America to parallel the “backlash” in the rest of the world  to western proselytizing zeal to convert the world to its own preferences after 1990. The western proles in particular have not been converted to multi-culturalism. They observe that their wages stagnate, and their jobs become precarious. They realise that a border free world means mass immigration, and the mass immigrants live cheek by jowel with them. They do not live in the Bay Area, in Kensington, the 16e arrondissement.  They vote in ever more unpredictable ways. Social media enable them to challenge the verities which come down from on high. They dislike their governors, and they remain overwhelmingly patriotic. They are available fodder to political entrepreneurs. The proles in short are a problem. And they won’t go away.

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About Jonathan Story, Professor Emeritus, INSEAD

Jonathan Story is Emeritus Professor of International Political Economy at INSEAD. Prior to joining INSEAD in 1974, he worked in Brussels and Washington, where he obtained his PhD from Johns Hopkins School of Advanced International Studies. He has held the Marusi Chair of Global Business at Rensselaer Polytechnic Institute, and is currently Distinguished Visiting Professor at the Graduate Schoold of Business, Fordham University, New York. He is preparing a monograph on China’s impact on the world political economy, and another on a proposal for a contextual approach to business studies. He has a chapter forthcoming on the Euro crisis. His latest book is China UnCovered: What you need to know to do business in China, (FT/ Pearson’s, 2010) (www.chinauncovered.net) His previous books include “China: The Race to Market” (FT/Pearsons, 2003), The Frontiers of Fortune, (Pitman’s, 1999); and The Political Economy of Financial Integration in Europe : The Battle of the Systems,(MIT Press, 1998) on monetary union and financial markets in the EU, and co-authored with Ingo Walter of NYU. His books have been translated into French, Italian, German, Spanish, Chinese, Korean and Arabic. He is also a co-author in the Oxford Handbook on Business and Government(2010), and has contributed numerous chapters in books and articles in professional journals. He is a regular contributor to newspapers, and has been four times winner of the European Case Clearing House “Best Case of the Year” award. His latest cases detail hotel investments in Egypt and Argentina, as well as a women’s garment manufacturer in Sri Lanka and a Chinese auto parts producer. He teaches courses on international business and the global political economy. At the INSEAD campus, in Fontainebleau and Singapore, he has taught European and world politics, markets, and business in the MBA, and PhD programs. He has taught on INSEAD’s flagship Advanced Management Programme for the last three decades, as well as on other Executive Development and Company Specific courses. Jonathan Story works with governments, international organisations and multinational corporations. He is married with four children, and, now, thirteen grandchildren. Besides English, he is fluent in French, German, Spanish, Italian, reads Portuguese and is learning Russian. He has a bass voice, and gives concerts, including Afro-American spirituals, Russian folk, classical opera and oratorio.
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5 Responses to America and the world: Part I.

  1. Mark A says:

    I am very happy you brought up Huntington’s book. Its crazy how accurate he was, and how little his book is known.

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  2. Yes. Its a book that could be usefully read in the UK, too. Thanks for the comment.

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  3. PHILIP LINGARD says:

    Looking forward to reading Part 2. America has gone on vacation from the world for a year a two while a bunch of vodka-sodden louts are trashing things back at home. There is a President who would never dream of reading an article like this let alone be capable of either understanding or relating to any of it if he did. At least you didn’t offer any advice Jonathan- I always find it hilarious when the World’s finest minds attempt to do so. Whoosh- straight over the top.
    Three specific comments:
    The transnational elite you refer to is at least pro-democracy. Transnationalism is fundamentally about market efficiency and doing away with bureaucratic overload. Multiple small countries all doing the same things essential for civic society ineffectively individually has been replaced successfully by European co-operation working effectively and efficiently. This is a key reason why Brexit will be so horribly expensive for the UK- HM Government will become much bigger, much more intrusive and bureaucratic because the UK has to reinvent thousands of regulations and agreements it had outsourced to the relative light touch of Brussels. The EU has a democratic deficit but that deficit will grow far larger for UK citizens with the bungled Brexit.
    The real transnational elite today are Putin/Trump/Mercers/Koch/Mogilev who are protecting their lives and personal wealth by any subversive means possible against the interests of 99.99 recurring % of the global population. OK I am anticipating the findings of Mueller here but I doubt I will be proved far wrong.
    Finally your analysis is written from an economic left-right perspective but the most powerful driver in politics and society is now the authoritarian-libertarian divide. Increasingly this divide is between the rule of law and the authoritarian rule by law as imposed and interpreted by the new elite dressed as “populism”.

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  4. Thanks, Philip. I think you have to disaggregate the “transnational élite”. I don’t think the UK’s transnational élite is democratic. Lip service, yes. But in fact it loves the idea of distancing the proles as far as possible from policy. I also think you may well be right about Brexit leaving to a mushrooming of the UK government. As it is, the UK government is hopelessly centralised, and the trends are continuing. Governance of both Cons and Labs are centralising.
    There are two shifts going on in the world today: one is the “shift of power to Asia”; the other is the huge expansion in the number and reach of transnational actors. The latter, I believe, the most significant. On this, I advise you to look at the film “Narcos” on Netflix.
    I’d also recommend disaggregating what goes by the name of “populism”. Working people I know with minimal education through no fault of their own, but because they were brought up in grinding poverty, are swayed by political entrepreneurs who talk abundantly about “the workers”. My question is: who have these policy entrepreneurs their chance? I would also be careful to place the élite-people gap in terms of left-right. Its also the result of very poorly thought out policy. My gripe is against intellectuals who provide the ammo for policy entrepreneurs, particularly those who reason using klunky abstract words. A shiver.

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