China’s future may be the Developed World’s future 30 years
from now; A world where the state represents corporate
interests at the expense of liberal democracy. This essay was
written in 2009.
In the late 1980’s, numerous articles and books were written suggesting that Japan was on the brink of becoming a new superpower. With its fast-growing economy, high-tech society, and expanding global influence, it was argued that they would soon surpass the United States and become our new primary military rival. Of course, nothing of the sort happened. In 1989, Japan went into a two-decade long recession, and as the global economy mutated into something different, Japan’s rigid and closed way of doing things suddenly seemed outdated and inflexible. To paraphrase Mark Twain, “rumors of America’s decline were greatly exaggerated.” Today Japan remains a key player on the global stage, but it has certainly not become the new global leviathan. What may be dying is not America’s ability to be the world’s dominant economic and military superpower, but rather the Western concepts of liberal democracy and the nation-state.
Today, many are assuming that China will continue its meteoric rise to equal America’s global status, wealth, and military dominance within a few short decades. Astute China-watchers believe China is on the cusp of greatness but must navigate through some difficult political, economic, and environmental challenges. The conventional wisdom suggests that China is headed toward one of the following four scenarios: 1) China will become a democracy with Chinese characteristics—a Chinese version of the more traditional democratic models, 2) remain a one-party state, 3) revert to a rigid authoritarianism, or 4) disintegrate into many smaller nation-states as the former Soviet-Union did. All of these scenarios, however, are viewed through the classic nation-state paradigm. They try to gauge China’s future as a nation-state in relation to other nation-states. Will the new China look like the United States, Mexico, North Korea, or the Russian Federation?
But what if we are trying to analyze China’s rise with the wrong lens? What if the nation-state system itself is being transformed as rapidly as China, so that in the future these various models will make no sense because a new order for states has been created? What kind of new order could replace the traditional nation-state paradigm? Perhaps an order that would require the rest of the world to move toward today’s China as much as the PRC is moving toward the rest of the open world. The truth that China may need to become more like us in the West may be overlooking the fact that we may need to become more like China. The city-state of Singapore may best exemplify the New World Order I believe is on the way; a world order that would demand that the most economically successful countries are highly connected to economic globalization, but highly regulated as well. City-states in and of themselves do not have good historical track records of survival, but the make-up of the Singaporean model of a city-state may merge with the model of the nation-state to create a brand new entity: the Corporate State.
The Corporate State
Unlike the nation-state which is rooted in self-determination and autonomy, the Corporate State will be highly dependent on the rule-sets created by the global economy. The corporate state will not be able to afford extreme nationalism, or wars, or too much chaos within its borders because it is too dependent on internal and global stability for its prosperity. In the same way that the “nation-states” of Europe have ceded much of their autonomy to faceless bureaucrats in the E.U., nations like China and the United States will continue to have their self-determination and autonomy limited in the future. This may seem surprising since both countries seem unlikely to submit their national interests and identity to outside bodies. They will not, entirely. Of course there will still be 4th of July celebrations and elections in America and nationalistic propaganda and military build-ups in China, but true autonomy will be less possible as liberal democracy becomes increasingly viewed as too unpredictable and dangerous in an extremely decentralized world.
The Corporate State will be comfortable with both democratic and authoritarian elements. Nations that want to be successful today need to be involved in free-market economics, they must have strong free trade agreements, open up their borders to foreign companies (and often immigrants
as well which can be risky), attract foreign direct investment, create a significant upper or middle class, and be able to respond quickly to the changes being brought on by the new knowledge-based economy. Extreme corruption, isolation, and instability can too easily deal a death blow to the Corporate State so it must be an open society but a highly regulated society at the highest levels. In the same way that China allows democracy at the lower levels but retains enough centralized power to make the most critical decisions, the Corporate State will allow citizens to have input on the local level, but corporations will dominate at the higher level. This will not be the result of some melodramatic, Orwellian vision of corporate tyranny; rather it will be the result of an increasingly economically interdependent world where corporations are the biggest, most nimble players on the global stage. The Microsofts,
Googles, and Tata’s of the world will have more global connections and flexibility than their host countries government. Their influence on their nations’ economy and the global economy will mean that their interests will need to be protected at to a degree we have not seen in the history of nations and corporations. Already the CEO’s of these companies can command more attention than a head-of-state when traveling to foreign countries and more often than not, a lot more is accomplished with less fanfare and bureaucracy.
Kinder Gentler Tyrants and Oligarchs
With the end of the Cold War, it seemed that Free-Market Economics and Democracy had won the day. The Thatcher-Reagan Revolution seemed to usher in a new age in which the most successful economies would need to promote privatization of state companies, a larger role for central banks, lower taxation, oppose trade unions, create export-led development and decrease the Welfare state. This neo-liberalism has spread to unlikely places such as China, Kazakhstan, Chile, Malaysia, and many other places. Today a large majority of the world is plugged-in to this system of economic globalization. Along with the push toward neo-liberalism has been the assumption that democracy can lead to fast-growing economies and vice versa.
For those countries with a history of strong centralized rule, the argument was that they would slowly transition from their undemocratic state to emerge as healthy, liberal democracies. Taiwan, South Korea, and other East Asian countries supposedly seemed to model the way forward. Economic liberalism appeared to pave the way for democracy even if cronyism and oligarchies were deeply imbedded in the system. The impressive growth rates of East Asia in the 1980’s seemed to make the case.
But after the fall of the Berlin Wall and the Collapse of the Soviet Union, many new democracies stumbled quickly out of the gate. In the Balkans and much of Eastern Europe, throughout the Central Asian republics, in Africa and in Russia democracy was not enough. In the case of the former Yugoslavia and Rwanda, for instance, democracy was the problem as it empowered destructive parties preaching ethnic hatred. In nations such as Kazakhstan and Azerbaijan opportunities for new wealth quickly opened up in the new free-market world order, but democracy did not. In the Ukraine, the economy stalled because democracy had quelled centralized rule and led to governmental gridlock with reforms difficult to implement.
The world seems to be learning two important things in regard to democracy and liberal economics. First, democracy requires a healthy economy, strong institutions, law and order and a well-educated population in order to have a good chance at succeeding. Neither the United States nor Europe were perfect liberal democracies at their inception as modern nation-states. They too were corrupt, oligarchic, and undemocratic but over decades they emerged as models of liberal democracy as those key elements became present in their societies. The failure of the United States to usher in democracy in Iraq has become the exclamation mark on that first point. Western-style liberal democracy and free-market economics cannot be introduced in a vacuum oblivious to a nation-state’s cultural, historical, institutional, and demographical challenges.
The second lesson came from contrasting Russia and China’s modernization which made clear that a centralized government can transform itself economically better than a de-centralized one. In the last two decades, the world has gazed at China admiringly, while turning away in disgust at Russia. One nation’s national morale is sky high while the other has felt a collective humiliation. Sudan, Rwanda, Bosnia, and Haiti are also examples, but none looms as large as the former Soviet Union which for the Chinese provides the blueprint of how not to modernize. Indeed, Vladimir Putin seems to be overturning the Yeltsin years and attempting a more China-style of capitalist authoritarianism and the disturbing thing for idealistic democrats is that it is working better than Yeltsin’s more democratic Russia.
As for rising India, a recent trip there confirmed my suspicions that a lack of a strong, centralized government is hindering that country’s development. India’s infrastructure in comparison to China is abysmal, mostly due to the fact that democratically-elected leaders play to their constituents desires and prevent development. We my say that it is admirable that farms are not being seized to be turned into freeways, but the people of India are expecting economic miracles—miracles that their multi-ethnic admirable yet messy democracy may not be able to provide in time.
Singapore, while infinitely smaller than China, was a multi-ethnic nation that was born out of post-Colonialism. Unlike Sri Lanka, Singapore retained enough control at the top to create a state that valued multi-culturalism, that was plugged-in to the global economy, and which offered transparency and security to a much higher degree than its Asian neighbors. Of course Singapore is small and has its own issues of corruption, racism, nepotism, but they are controlled enough to allow them to be a prosperous actor onthe world stage. While the lack of freedom in Singapore may disturb our Western sensibilities (and many Singaporeans too), many countries may come to realize that they resemble Sri Lanka too much and Singapore not enough. What could make countries desire benevolent, corporate authoritarianism? Perhaps, the sense that they cannot afford to wait 100 years for the more natural, democratic development that the United States and Western Europe has enjoyed.
According to the Economist, we now live in a world where emerging economies account for more than half of total word GDP (measured at purchasing-power parity).[1] Their effect on the economy of the wealthier, developed nations is now very significant. For this and many other reasons, interconnectivity requires rule-sets that all obey in tandem, and countries that can create the right corporate atmosphere (like Lithuania, China, Chile) will be rewarded. In many places, global interconnectivity will pave the way for illiberal democracy as opposed to liberal democracy.
The nations that are Emerging Nations are much more comfortable with authoritarianism. They will not long for the idealism of the American dream in quite the same way as before. Freedom levels will rise enough to satisfy the emerging middle and upper classes in countries that have never known that unique, style of American democracy and openness. Most of the world, in fact, has never really been predisposed toward American-style Democracy. Our great economic ally during the Cold War, Japan, always resembled a Socialist, one-party state aiming for true communism despite the Democratic rhetoric. Today, most countries resemble the
People’s Republic of China in that they are trying to modernize quickly, they have pockets of poverty as well as highly-plugged in global regions, and they have governments that are corrupt. The need to centralize at the highest levels will be tolerated by the people and supported by the companies who ultimately will support the economy. Furthermore, many nations like China have minority groups whose participation in democracy would probably lead to disintegration and the creation of new dysfunctional states. The track record for democracy amongst multi-ethnic states since the end of the Cold War has not been good. The invasion of Iraq has only confirmed that strong institutions, security, rule of law, and a healthy, literate middle-class are pre-requisites to democracy otherwise chaos ensues.
4 Reasons the Corporate State will replace the Nation-State
It may be tempting to believe that Baywatch, Starbucks, and American Idol will create a demand for democracy in previously closed-off countries. But perhaps it will not
create a demand for democracy as long as Baywatch, Starbucks, and American Idol are provided. While Singaporeans seem dissatisfied with their current system, there are no revolts or revolutions. A huge gap between rich and poor is developing (which will be a problem across much of the world), but the overall quality of life is getting better in Singapore each decade as it is in most of the rest of the world. Nevertheless, the question must be asked: Will the citizens of the world really want their lives dominated by governments which provide less democracy in an effort to guarantee prosperity? Are we not creatures made for freedom?
There are 4 developments that will pave the way for a less democratic order in these Corporate States.
First, The rule-sets created by the global marketplace demand a high level of openness and security. China would not be able to be as successful as it is today if it were not opening its doors to foreign investment and developing trade relationships with countries throughout the world. Ideological and nationalistic differences between nation-states mean less than ever before because the corporate state needs to have as many economic partners as possible. The Chinese may bicker occasionally with South Korea, Taiwan, and Japan, but trade and cultural interaction remains untouched. Distrust remains between India and the United States, but the market demands that the channels remain very open and that tensions be avoided.
Of course previous periods of globalization seemed to be too inter-dependent to lead to war and they resulted in the War of Religions cumulating with the Thirty Years War (which ended with the Peace at Westphalia) and the two World Wars. Have we really moved beyond the era of international war?
While war between large nations like China cannot be ruled out, most conflicts are now within nation-states and this new economic interdependence is solidified by technology. A nation-state would be cutting themselves off from too many things if they opt for war with too easily. For dysfunctional failed-states, this might be an option. For nations like China that want to go see their economies go from being Agrarian and Industrial to services-oriented and high-tech the cost may be too high. The Corporate-State’s global interests trump the nation-states nationalistic sentiments. This leads to the second development which will pave the way for the Corporate-State: The nation-state’s biggest threat is assymetrical open-source warfare waged by intra-state actors or trans-national terrorist organizations.
While terrorism has been around for centuries, today’s terrorism is radically different than in previous eras. There are five reasons why this is the case. Today’s terrorism is larger in scope than in previous eras when it was limited to the assassination of a particular army, ruler, or occupying force. Open borders, cheap and powerful new methods of communication, well-educated terrorists, technological innovations, and international financial networks, have completely changed the face of terrorism making it far more expansive.
First, today’s terrorism is larger in scope and has far larger goals than in previous eras. Throughout history, the goals of terrorists have been fairly limited. Terrorism involved the assassinations of kings and princes, the defeat of an army in one fixed location, or the terrorizing of particular populations for limited goals. Even as late as September 10th, 2001, the terrorist organizations we worried about had very limited goals. Hijackers in the 1980’s usually demanded the release of prisoners from Israeli jails or statehood for Palestine. Terrorists in Ireland, Sri Lanka and Spain were attempting to carve out a piece of land from an existing nation-state. Great wars and great campaigns were the stuff of large empires and nations doing battle, not small, decentralized groups. Prior to our current era, technology had not enabled a small group of actors to have such global aspirations.
This is no longer the case. Today, the changes brought by globalization allow terrorism to be truly trans-national. Open borders, cheap and powerful new methods of communication, well-educated terrorists, technological innovations, and international financial networks, have completely changed the face of terrorism making it far more expansive. While groups like the Tamil Tigers and the I.R.A. began ushering in the age of international networks to raise funds (and smuggle weapons), their fight was contained to specific regions. Narco-terrorists in Columbia were able to buy expensive equipment and even compete with the best that American drug enforcement officials had to offer. Nevertheless, their goal was still limited to smuggling drugs. Today, the most lethal organizations are not so limited in their scope. In fact, Al Qaeda (which means “the base”), is not really a particular organization but a loose affiliation of terrorist groups that have common objectives and global ambitions.
Second, today’s terrorists are able to poison the well onmany different levels. The “War Against Terror” has not always been prosecuted in the most effective way, but we must also realize that this war is not just an effort to stop individual attacks, but rather it is an international effort to close gaps in our international systems which allow terrorists to flourish. Terrorism challenges us on many fronts which are not as visible as the carnage of a suicide bomb. Illegal financial transactions and weapon smuggling operations are part of terrorism as well and “a war” does need to be waged against these criminal activities because they terrorize and victimize innocent people throughout the world. While the war against terrorism is often reduced to a fight between the West (particularly the United States) and Al-Qaeda, the reality is that this is a larger battle between the civilized world and the criminal underworld. Today the global economy is growing at a phenomenal rate. Disturbingly however, the criminal economy is growing seven times as fast.
A third major difference is that the weapons terrorists are pursuing are far more lethal today than ever before. While smuggling a suitcase nuke, or executing a biological or chemical attack is not easy, make no mistake about it, people are trying to do just that as William Langewiesche has documented in his new book The Atomic Bazaar. It is true that there is a much higher chance that the person reading these words will die in a fatal car accident than of dying in a terrorist attack. Even waves of terrorist attacks would not be able to hurt the majority of the population. However, those attacks can be far more lethal, cause more damage and cover a greater area in less time than ever before. The cost of protecting the nation-state is increasing exponentially, while the cost to wage destructive attacks for terrorist organizations is decreasing at the same rate in the opposite direction.
Armed with box cutters and just a few thousand dollars, the 9/11 hijackers were able to kill 3,000 people and shift the world geo-politically costing America and the world billions of dollars. In other words, you get more bang for your buck than ever before if you are in the terrorist game. It is because those attacks can be done so easily and effectively on so many different levels of society, that there will be a need to be vigilant against terrorism. One of the biggest lessons of the Iraq was is that it costs the U.S. military millions of dollars to create hardware that can identify and defuse terrorists bombs that operate using garage door openers. Open-source warfare is empowering terrorism with everyone learning and borrowing from everyone. Destroying life has never been cheaper, and saving life has never been more expensive. The real danger is not today’s cartoon version of Al Qaeda which I call Al-Qaeda 1.0. In the future, globalization’s unequal distribution of wealth will open the door for more sophisticated groups that represent new ideologies or even corporate or anti-corporate interests. Think not of Osama Bin Laden representing the 7th century, rather think of a rogue Gazprom terrorist organization—part of a corporate militia which are already becoming more common.
A fourth major difference is that today’s terrorists are far more educated than the terrorists of the past. Great Britain was shocked to find out in 2007, that doctors in their health system attempted to carry out terrorist attacks in Scotland and England. But this increasingly fits the profile or many Muslim terrorists in particular. Doctors, engineers, students at prestigious European universities, or upper and middle class youth are the ones most likely to choose terrorism—not the poor and disenfranchised. Most of them have been educated in the secular ideas of the West, particularly those that are suspicious of capitalism, imperialism, and the foreign policy of countries such as the United States and Israel. In this sense, Osama bin Laden and Ayman Al Zawahiri are not too different than the Western-educated monsters that represented the worst of the Marxist revolutions of the 20th century. Many attended schools in the West. Khalid Sheikh Mohammed, who confessedt o masterminding the September 11th attacks, the Bali nightclub bombing and the 1993 World Trace Center bombing amongst many others attacks, attended a Baptist school in Murfreesboro, North Carolina before completing a degree in mechanical engineering at the North Carolina Agriculture and Technical State University. Mohammed Atta had a degree from Technical University of Hamburg-Harburg. Zacarias Moussaoui received flight training in Norman, Oklahoma and had a degree from South Bank University in London.
A fifth difference is that in the case of Islamic Fascists, negotiations are not an option. Unlike the I.R.A. or even the Tamil Tigers with their clear objectives, some militant Islamic organizations hope to usher in the apocalypse or at least achieve the unachievable such as a peaceful pan-Islamic world . With these groups negotiations are pointless. Due to their decentralized and individualistic natures, there is not even anyone to negotiate with anyway. In the past, the enemy was another country, kingdom or tribe and the goals were limited. Even the use of atomic weapons on Hiroshima and Nagasaki by the United States had a goal—to end the fighting quickly. The Cold War, in which thousands of nuclear missiles were pointed at places around the worldhad a goal as well—to deter the enemy and keep the war from turning hot. A hotline was even set up between the General Secretary of the Soviet Union and the President of the United States in case the tension reached crisis level. Many of the new terrorist organizations, however, could care less if the whole world goes down with them. Unlike Presidents, dictators, or generals of the past, they are not accountable to anyone if they bring destruction on their own people.
Even Mao Zedong and his indifference toward the suffering of his people was ultimately reigned in after the disastrous Cultural Revolution. The war-weary Soviets had many nuclear weapons but had no desire to use them and still had many citizens to take care of in one way or another. Today’s Islamic-Fascists can hardly wait to use nuclear weapons andthey will not need to explain to anyone afterward why they did what they did. The death and destruction is the glorious goal in and of itself.
The decentralized nature of modern-day terrorism which leads to rogue, unaccountable, independent cells, combined with their pursuit of incredibly lethal technology and their desire to destroy for the sake of destruction (as opposed to fighting for a particular attainable objective) makes today’s terrorism one of the world’s greatest problems. The Corporate-State will need to be decentralized when it comes to its business atmosphere but more centralized in its geo-political positions and policing efforts as itincreasingly deals with non-state, transnational actors. Global trade will be so important and assymetrical open-source warfare so dangerous that the citizens of prosperous and emerging nation-states will accept the reigned in civil liberties of the nation-state. Winston Churchill, Alexis De Toquevillle and many others have warned about how difficult democracy is to sustain and how willing the comfortable will give up their rights for security and prosperity.[2]
China’s response to power and wealth may not be a resurgence of imperialism but rather create citizens like the ones in Hong Kong: unable to have full democracy, but mostly satisfied and apolitical in exchange for the right to make money in a secure environment. Thus far, China’s people seem tired and ill equipped for war (as do the peoples of WesternEurope, North America, Japan, Australia and other developed nations). If China develops bad actors in its minority population or in the majority Han, the bulk of the nation would probably be happy to give up its demands for civil security and more democracy in exchange for peace and prosperity.
Third, the need to find natural resources and control the environment will require that all global corporations be global and globally responsible. Keeping corporations global and accountable will be too difficult for the nation-state. But the Corporate-state will always have their nation and companies interests at heart. In order to avoid resource wars, and skirmishes across the globe, nations and corporations will work together to make sure that everyone profits. Key decisions will be made that will be out of the sight of the general population, free from democratic restraints. We now live in a world that has not only added 2 billion to the work force, but which is creating an enormous class of new consumers. Global corporations and conglomerates are aiming for all of these consumers, with their products interconnected to other products. It is not just us in the First World that are dependent on our Japanese laptop, partially made in Malaysia, China, and America—it is the Emerging Nations as well. The process by which products and natural resources are distributed will need to be protected. This dependency of global consumers combined with the need to care for the environment and prevent war will give more power to Corporations to make back-room deals that secure the peace. The backward politics of Saudi Arabia which keeps a country pacified by providing wealth through backroom deals with U.S. corporations may bemore a model of the future of China and the world, than the image of Iraq successfully embracing democracy.
The fourth is the emergence of a global elite that has vested interests across borders and represents the most influential people in the nation-state. They will be supporters of the Corporate-state which keeps the world peaceful allowing their business, investments, and citizenships to remain valuable. From Mexico to Malaysia,people are working for companies and investing in economies that are highly dependent on cross-cultural interaction. It is creating people that are more cross-cultural. I myself am from a Latin American country, have citizenship in America, and residency in Hong Kong. There are more and more of us who for a variety of reasons see citizenship to the nation-state meaning less than less. It does not mean the end of nationalism or loyalty to ones country and people, but it brings a perspective and reality about the limitations of particular cultures and nations that was not so easy to understand in previous eras where travel, residency and communication where more limited and harder to come by. This global elite tends to be well-educated, speaks a lingua franca (English and possibly Mandarin in the future), and spearheads the most successful class of workers in this new age which requires high level of education, cross-cultural skills, and an understanding of Western corporate sensibilities. The Corporate-State’s citizens are ultimately global citizens in every way. Nationalism willprovide identity, but for the world’s global citizens, nationalism at the expense of global corporate interests will not be an option. China does not yet have a “global citizenry,” but China’s future leaders will have been educated in the West, have investments throughout the globe, and will reward and promote those companies and Chinese citizens who best fit the global mind-frame. China may call on nationalistic sentiment from time to time, but the movers and shakers in China will be those global elites who are sophisticated enough to have cross-cultural skills that open the way toward economic dominance. The country bumpkin maybe good for October 1st, but China is banking on theStanford-educated entrepreneur to create businesses and serve as the model for a new globally engaged upper and middle class.
The world that we are entering into may be too inter-connected, too environmentally fragile, with far too many consumers and too threatened by assymetrical open-source warfare for liberal democracy to flourish. The situation fragile China now finds itself in may be a harbinger of the future of the nation-state. We are too wealthy, use too many of the world’s resources, and are too vulnerable to de-centralized forces to disregard the rolethat a strong, state can play. The nation-state with its promotion of liberal democracy may have only been possible in the era between the 1648 Peace of Westphalia and the end of the Cold War1991. The triumph of capitalism has resulted in a world with far too many consumers. These consumers interests and economic growth will be perceived as needing to to be protected at all costs. Democracy will be a luxury few countries can afford in a world where the masses demand such a great degree of comfort. The result will be a world that will trade its freedom for security and comfort. As globalization creates winners and losers the failed-states of the world will become greater threats. The desire to live in a Singapore-like state of peace and prosperity will grow. Security cameras, which are already very prominent in Britain, and eye scanners will seem like a small price to pay for the global worker and consumer who will fly through safe airports to find bargains on another continent before returning to work on Monday at their global corporation. And it will be a small price to pay for the nation-state which will be happy to provide its citizens with peace free from the fear of war and pillage. Relations between nation-states, the dominant global theme of the last four centuries will take a backseat to the relationship between the community of Corporate States and subversive, non-state actors.
As a nation China faces enormous challenges and its successful transition to a world power is anything but assured. But sadly, China’s problems increasingly mirror the problems of much of the world. Deng Xiaoping’s desire to see China mirror Singapore may be the fate of all liberal democracies. Oligarchy, not democracy will be the promise of the new century to a global citizenry of consumers who will be too busy living in the virtual world to notice.
[1] “The New Titans.” The Economist, September 14, 2006.
[2] For a more detailed discussion see, “The Terrorist
Threat is Different Now” in Chapter 9 of Faith in the Future: Christianity’s Interface with Globalization by Patrick Nachtigall (Warner Press April 2008).