Tuesday, December 28, 2004

Europe's Model and the Future

Click here for AmazonVia Winds of Change, James C. Bennett's Dreaming Europe in a Wide-Awake World is outstanding. I have excerpted it for purposes of readability, but it is worth reading in its entirety.

The world today is a vastly different place from what it was thirty years ago. Then the picture was dominated by the stark contrast between the generally prosperous and free First World, the economically stagnant and drably totalitarian Second World, and the seemingly hopeless Third World. Today, that disturbing but fairly simple tripartite classification has been replaced by a much more complex picture. What stands out in this new picture is the way winners and losers are emerging within each of the former categories. Within the former Third World, erstwhile basket cases such as China and India have become awakened giants, economically dynamic and increasingly more assertive on the international stage, while other Third World locations have become more of a Fourth World... Making sense of this complexity and illuminating a path forward is the intellectual task of today, one which becomes a metric for judging all international trends and policy analysis.

One of the most interesting analytical problems is that presented by the divergent paths taken by the developed nations of the First World, and their respective degrees of success. These are sometimes segmented out as Europe, America and Japan, but the more useful division is probably one of Japan, Continental Europe and what are variously called the "Anglo-Saxon" economies or, increasingly, the Anglosphere. In the early 1970s, all three of these regions were seen to be facing roughly the same set of problems: first, stagnation of a modified market economy defined by substantial economic regulation, high marginal tax rates, and a fairly high percentage of GDP captured by the public sector, as well as high wage levels and inelastic industrial structures reinforced by strong unionism; second, a declining birthrate, which promised trouble downstream for pay-as-you-go pension and benefits programs; and third, a weakening of the old sources of social cohesion, particularly religion, patriotic narratives in education and the media, and (in some countries) ethnic homogeneity.

From the end of World War II to the early 1970s, all three sectors of the developed world enjoyed a general economic expansion. Continental Europe and Japan in fact each experienced more rapid growth and development than the English-speaking nations, mainly from the spur of postwar reconstruction. However, as more and more of the Third World began adopting aggressive, export-driven industrialization strategies, the old cozy collaboration of government protection and passing wage increases on to the consumer began to fall apart.

The Anglosphere nations, led by the United States and Britain, reacted by reducing marginal tax rates, privatizing and deregulating markets, and refusing to subsidize declining smokestack industries. High levels of immigration were accepted, reversing the demographic patterns of decline. Continental European nations responded by increasing European integration, thus expanding internal market opportunities but retaining and even reinforcing the "social market economy"--legislated job protection and generous social benefits, particularly for the unemployed.

A wave of European Union-mandated privatizations ended the most egregious boondoggles, and small, protected national companies were absorbed into a smaller number of EU-wide champions, which were protected more subtly by disguised subsidies and ingenious non-tariff barriers. Meanwhile, most European nations accepted "guest workers", increasingly from North Africa and Turkey. But their assimilation into European national cultures was never aggressively pursued.

Finally, Japan addressed essentially the same set of problems through aggressive use of automation and offshore production, honing their competitive capabilities, and continuing a rather blatant policy of domestic protection. Japan also employed other labor-saving strategies and a minimal number of temporary foreign workers, though making clear that they were expected not to become permanent residents.

So the world economy must today be considered as one vast experiment. The object of this experiment is to determine whether the developed nations might continue to enjoy at least their current levels of prosperity, while the large developing nations of India and China become major economic players and a host of smaller, newly industrialized countries acquire the capability to offer almost every sort of manufactured good and advanced service at the same quality and lower price.

...It is in this global and historical context that we must examine Europe's present and future, and what they may mean for the United States. Any static view of Europe today, or one that merely contrasts Europe and the United States in a less-than-global context, is worse than useless....

...Rifkin's [analysis] is a two-level critique of America contrasted with virtuous Europe. First, he asserts that Europe is surpassing America on the conventional criteria of prosperity. But he then adds that where economic success is absent in Europe, that's okay too, because progress is bad for you anyway.

Rifkin, therefore, requires critiquing on both levels. Gersemann... provides an excellent analysis of Rifkin's surface level. The case for the coming European triumph over America is quickly refuted. Gersemann, himself a German financial journalist (currently Washington correspondent for Wirtschaftwoche), convincingly refutes all of the prevailing Euro-legends about America, from the supposedly collapsing middle class to medical care to income inequality. He likewise documents the growing structural and demographic crisis of a Europe that has created more unfunded obligations than it can fulfill--while producing too few children to pay the bills their parents are racking up.

...Young, mostly Muslim families struggling under ever-increasing payroll taxes will hear calls from ethnic-based politicians to repudiate the checks that old rich white Europeans had written to themselves. To the extent that Rifkin holds up Europe as a model for Americans to emulate, he is in effect urging the purchase of a ticket on the Titanic.

...Rifkin presents a distillation of the positions of a number of European intellectuals over the past decade or two (but with roots in a Europeanist tradition going back much further). This argument states, roughly, that the entire idea of progress--of autonomous individuals possessing stated constitutional rights in a contract-based market society--is a historical aberration, and an unfortunate one...

In Rifkin's narrative, medieval people lived a collective lifestyle, in which individuals were embedded in a web of connections and did not think of themselves as apart from their colleagues. It was only the introduction of the proto-capitalist mentality that shattered this comfortable universe of family, congregation and community and transformed mankind into alienated individuals. The coup de grace was provided by extreme Protestant sects in the English Civil War, who used the new invention of printing to shatter the last stands of community by preaching the direct link, via the Bible, between man and God. These individuals went on to develop capitalism and technology, destroy the environment, subdue the Third World, and create our current world of SUVs, beef eating, obesity, and excessive punctuality... America is of course the ultimate example of this alienated world, while Europe is on the path back to connectedness, mostly by creating vast, unaccountable bureaucracies and substituting positive rights (things the state must do for you) for negative rights (things the state cannot do to you).

...[related] theorists posited a world characterized by universal laws of cultural evolution: Everyone was once tribal, then agricultural, then feudal, then modern (or is destined eventually to become so). The Marxists posited subsequent stages of socialism and communism, and others debated how, when and why peoples moved from one stage to another. Rifkin's novel contribution is to identify the emerging European postmodernist society as the next stage. Instead of a proletarian revolution ushering in central planning, we are to have a centralized bureaucratic revolution that will plan proletarian immobilization.

...[Refuting Rifkin,] Macfarlane and his associates have demonstrated very convincingly that English society back to Anglo-Saxon days has been characterized by individual rather than familial landholding; by voluntary contract relationships rather than by inherited status; and by nuclear rather than extended families. Individuals were free of parental authority from age 21 on, and daughters could not be denied their choice of husband (unlike on the Continent). The English nobility, regularly churned by elevation of commoners and marriage of younger sons to non-titled families, tended to mix freely with the rest of society, rather than being a separate caste, again as on the Continent. Rather than the English Reformation being the event that caused this change, it seems to have been (for the majority of the population) the event that brought formal theology and church government more in line with the pre-existing customs of the country. So the English "peasant" that Hollywood is fond of depicting turns out to be the figment of a 19th-century Marxist's imagination.

Macfarlane's body of work represents a momentous intellectual revolution. The implications of this revolution have not yet been fully realized, or even generally understood. It suggests that modernity and its consequences came particularly easily for the already-individualistic English. Conversely, it came particularly hard for the Continental Europeans, whose societies were characterized by all the non-individualistic features England lacked. It was to these Continentals that the intrusion of individualist, market-oriented relations was particularly disruptive and shocking. With medieval traditions of representative government moribund or long vanished, it is not surprising that Continental states had a particularly difficult time adjusting to parliamentary government, experiencing instead frequent coups, revolutions and periods of authoritarian rule, spiraling down to the abyss of fascism and communism.

...Although certainly the majority of most Continental populations made a perfectly successful transition to modernist life, a significant minority never fully bought in to the psychology or assumptions of liberal society, and thus were easily recruited into the darker visions of fascism. That may explain why Anglosphere nations never developed significant fascist movements, despite experiencing the same traumas of postwar disillusionment and economic depression.

...One must then ask, if the divide between les Anglo-Saxons and the Continentals is genuinely deep rooted, why have Atlantic relations over most of the past fifty years been so relatively tranquil? It may be because the Cold War years, with their combination of Soviet threat and open American markets for recovering Continental industries, and with the Third World economically invisible, provided a period of unique military-political stability and economic opportunities that provided uniquely strong incentives to smooth over problems. With the end of the Cold War, the first incentive has disappeared. With the rise of the newly industrialized countries, the European share of the American export market continues to shrink. Japan now competes for the luxury markets Europe used to dominate, India targets software, while China and the East Asian Tigers take the low-cost manufactured-goods slot from Japan. The Anglosphere nations have navigated this tightrope with a combination of maintaining the high-technology pioneer slot, aggressively combining offshore, low-cost labor with their managerial and financial talents (a strategy followed by Japan as well), and growing their domestic services sector, primarily by entrepreneurism. Continental Europe has so far proven too slow and inflexible to follow this pattern. In this environment, the Anglosphere-Eurosphere divide promises to widen, not shrink.

Rifkin's analysis either ignores or trivializes this problem, despite his frequent invocation of the term "globalization", which in his eyes becomes primarily a justification for European-style multiculturalism. Fortunately, this global context is becoming more widely recognized...

...Given this recognition of the genuine case for an Anglosphere identity and dimension, two questions for Britain regarding Europe arise. First, is Britain a European nation with a special relationship to the United States, or is it an Anglosphere nation with a special relationship to Europe? Second, given that it must interact with both spheres, what should the exact nature of the institutional ties with each be?

....Are the structures of the EU the best vehicle for resolving Britain's need to maintain both cross-Channel and intra-Anglosphere ties? And are the structures of the European Union adequate to the task of maintaining the integration of Europe in the wider Euro-Atlantic world, and in the world in general?

...Draw a circle on the map of a thousand miles radius, centered on Brussels. Within that circle the states are free and democratic, and military conflict is virtually unthinkable. Now draw a similar thousand-mile circle centered on Tokyo. Within that circle or very near lie a half-dozen states. Three of them have nuclear weapons and the rest are close. These states are rising economic, technological and industrial powers. In contrast to Europe, it is highly conceivable that such weapons, or other weapons of mass destruction, could be used at any time. The transnational institutions and agreements that preclude war in democratic Europe have little purchase in this region.

Europeanists have maintained that Europe's model is the world's future, but while Europeans were combining nation-states into a wider entity after World War II, northeast Asians were taking an existing single-market area (pre-war Japan, which integrated Korea, Taiwan and Manchuria) and turning it into separate nation-states, with equally prosperous results. Even today there is no visible movement to a Northeast Asian Union, although many writers automatically assume that other regions will imitate European structural models. Both Free World and The Great Deception suggest the conclusion that the EU is probably a one-off happenstance from unique historical circumstances. Once one leaves the immediate neighborhood of Brussels, transnationalism does not seem so inevitable.

America faces both Brussels and Tokyo, and must act in both of these universes. It deploys troops and nuclear weapons in both theaters. Is it any wonder that America cannot wholeheartedly adopt the Europeanist outlook?

Yet it is this global environment that we must consider as we contemplate Thomas P. M. Barnett's The Pentagon's New Map. Barnett describes a world in which the historically industrialized nations are the Old Core, the new industrial powers are the New Core, and the bulk of the old Third World that has not achieved takeoff is the Gap. He sees the task of the 21st century as stabilizing the Gap enough for it to adhere to the Core through "connectivity"--flows of capital, people and trade goods. In order to sustain these flows in a stable world, he would combat anti-globalization jihadis (not all of them radical Muslims) with a combination of hard military power, "soft" economic-political power, and a new synthesis of the two: a "nation-building" capability which he calls the "System Administrator." This last would have been called a colonial constabulary and colonial civil service in the 19th century. Its mandate today, however, would not be an imperial one, but would emanate from the web of transnational institutions that have sprung up, and the bulk of its power would be provided by the United States.

...A much more significant weakness is that Barnett's focus on the Core-Gap dichotomy leads him to minimize the importance of the existing links that connect particular Gap countries with particular Core nations. Given cheap air transport and telecommunications rapidly moving to a worldwide flat rate, the old paths of empire and emigration have given rise to a series of fluid, overlapping worldwide network civilizations. In the place of the British Empire there is now a demotic Anglosphere of Birmingham curry houses and Indo-American software engineers, a son of Jamaican emigres becoming Secretary of State, and Filipino immigrants commanding British, Australian and American troops together...

...The key point here is that these new constructs all cut across Core-Gap lines, yet they are almost always the most effective lines along which the money, people, goods and services will flow to bring connectivity from the Core to the Gap. Rather than striving for universality of approaches, we would do better to work with the grain and maximize the use of these existing channels.

...The most important fact of the 21st century may be the fact that the educated and ambitious of India have made of English not merely a useful foreign tongue, as have the Chinese, but a language they have taken into their homes and their literature, and into their heads and hearts by creating their own version of it. The new rising generation of well-educated, tech-savvy Indians increasingly regards this intertwining of India and the Anglosphere not as a colonial relic, but as a valuable card that history has dealt to their country, and one that should be played. Evidence that it is being played can be seen in both the quietly accelerating Indo-American military cooperation and the rapidly accelerating economic interpenetration between India and America...

...Continental Europe in general, but especially "Old Europe", has tended to see this emerging world as a game in which they are dealt a progressively worsening hand with every shuffle of the cards. Thus they have concentrated on cashing in chips for short-term gain, while trying to trip up stronger players when the opportunity strikes. At present, the costs of being in the coalition would probably include making major and painful structural adjustments to their economies. Domestic European electorates might therefore be tempted by the alternative of a Euro-Islamic alliance, in which Middle Eastern oil states would prop up unreformed European economies in return for international support, high-tech weaponry and open access to Europe for Islamic economic migrants. The growing "Eurabian" bloc of Islamic voters would thus combine with anti-reform pensioners to veto any other political alignment, driving politics in the direction of the Euro-Islamic solution.

This alignment might then attempt to pick off one other major player from the grand coalition. Russia would probably find this unattractive, given their problem with radical Islamic separatists, and Japan would gain little from it. China might be tempted by access to energy, European weapons technology and the European market, so long as their access to the American market was not entirely precluded. China might not be so much a partner as a semi-detached fellow-traveler, careful never to fully alienate either side. Russia might well try to play a similar semi-detached role to the Anglosphere-India-Japan group.

Under this scenario, we might see the world gradually align into several loose competing politico-economic alliances whose elbow-jostling would not rise to the level of war, or even cold war. The above scenario may in fact be emerging now, with an Anglosphere-plus-India-plus-Japan-plus-Russia team contending with a Euro-Islamic-Chinese bloc. Within such a framework there would still be a need for high-level international agreements and organizations to bind the major players together within a limited framework--to facilitate world trade and prevent any major conflagration among the major powers. But a new world order it would not be, and the transnational elements in it would probably wield about the same amount of influence as during the Cold War.

All in all, the European model is unlikely to be replicated on the world stage--and it may be scaled back and even dismantled in Europe itself when the evidence that India and China are overtaking it becomes too embarrassingly clear. As for the really big picture, instead of problematic schemes for transnational governance on the European model, we are likely to see the gradual rise of associated commonwealths, achieving more modest goals more effectively on a basis of cultural, legal and linguistic affinity. Rifkin's "European Dream" is likely to remain exactly that.

The National Interest: Dreaming Europe in a Wide-Awake World

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