The Economics of Family and Faith...

Grand theories about society are by nature imperfect. As any traveler knows, street-level contact with different peoples and cultures has the habit of deconstructing even the most perceptive of abstractions.

Nevertheless, grand theories, or “paradigms” as they are called, are essential targets, without which there can be no focused debate. That is why the nicest compliment one can offer the inventor of an ambitious social or political theory is to accuse him, or her, of a “brilliant failure.” As the creator of one much-critiqued paradigm, “The Coming Anarchy,” let me congratulate Francis Fukuyama and Kenichi Ohmae--inventors of paradigms that compete with my own--of two brilliant failures.

Fukuyama’s new book, “Trust: The Social Virtues and the Creation of Prosperity,” is a sequel to his triumphalist vision written after the collapse of the Berlin Wall, “The End of History and the Last Man.” Fukuyama had argued that history, in the Marxist-Hegelian sense, has been one long argument over which kind of political system works best. The defeat of communism was part of a long process that ended the argument and, therefore, history. While not every place, according to Fukuyama, will accede to an orderly liberal democracy, the places where democracy does take firm root will be where individuals are happiest. And because, as Fukuyama tells us in his new book, “rapid economic modernization is closing the gap between many former Third World countries and the industrialized North,” liberal democracy is poised to conquer the world.

Here I furiously disagree with Fukuyama. With as much as 95% of all human births in the poorest countries, or among the poorest people of wealthier countries, the middle classes of the planet, while increasing in absolute terms, are decreasing in relative terms. Income disparities between rich and poor are likewise rising. Nor do elections guarantee civil societies. While the number of elections increase, the world--faced with more poor people and fewer resources--is becoming less civil.

Rather than congratulate ourselves over democracy, we should worry about what new kinds of authoritarianism will emerge in the 21st Century to manage the growing numbers of desperate people who will lack sufficient soil to till and water to drink. We should keep in mind that 100 years ago, the words fascism and totalitarianism did not yet exist in dictionaries. Marx and Hegel notwithstanding, the Greek etymology of the word history, as any student of Herodotus knows, suggests merely researches or stories. As long as we have stories and conflict we will have history.

At the beginning of his new book, “The End of the Nation State,” Kenichi Ohmae attacks Fukuyama’s “end of history” notion: “Nothing could be further from the truth. In fact, now that the bitter ideological confrontation sparked by this century’s collision of ‘isms’ has ended, larger numbers of people from more points on the globe . . . have aggressively come forward to participate in history.”

But the differences between Ohmae and Fukuyama are, in fact, superficial. Just as the differences between Fukuyama and myself are less substantial than I have just made them out to be. I can only explain this by way of experience:

In 1993 and 1994, in separate trips, I traveled by land from West Africa to Southeast Asia. In many places I visited, the computer revolution was irrelevant because there wasn’t even a reliable electric current to recharge a laptop battery. This lack of electricity, as Fukuyama would know, was but a symptom of deeper social problems. Only when I arrived in Bangkok did I truly enter the world that Fukuyama and Ohmae describe in their new books: a world of middle-class consumers and emerging democratic institutions (rather than mere elections as in Haiti, or in parts of West and East Africa). Though India, Pakistan and Iran had pockets of sophisticated globalization, even in those places it was the poverty and newly emerging sub-proletariats--beyond the nice districts of big cities--that constituted the overwhelming reality.

Because Fukuyama and Ohmae have concentrated on the parts of the world that are economically on top (East Asia, North America and Western Europe), the building volcano of poor people, and how it may throw history (or post-history, whatever you want to call it) off course through massive migrations in the 21st Century remains to them an abstraction. Because Ohmae is an economist specializing in the industrialized world, he sees how nation-states in Europe and East Asia are being withered away at the top by world trade, regional associations and the international consumer class. Because Fukuyama is a generalist who understands how economies and culture are inextricable, he knows that in places where a particular culture coheres with the borders of a nation state--such as in Japan, France and Germany--some nation-states at least are not about to be rendered meaningless. More importantly, not only do both Ohmae and Fukuyama handle their own areas of concentration well, but they make quite a few generalizations that I--as one lonely traveler--can attest are true, however uncomfortable they will make some readers.

Comparing Ohmae’s “The End of the Nation State” with Fukuyama’s “Trust” is unfair to Ohmae. Ohmae has written a small book about one facet of the world economy that is meant, primarily, for others involved in global trade. Fukuyama’s “Trust,” on the other hand, is an intellectual event. I say this because the real test of an intellectual is not to disprove competing theories, but to place those theories in a larger, more understandable context. In “The End of History and the Last Man,” Fukuyama succeeded in rescuing classical and modern philosophy from the dungeons of academe; in “Trust” he rescues economics, by showing how it is little more than the financial and monetary results of culture. And cultures, Fukuyama intones, “are not all created equal.”

Beneath the patina of explanations as to why some areas of the world are richer than others, and why some parts of society are richer than others, lies a stark, unpalatable truth that Fukuyama seamlessly and sinuously reveals: that while we all may be born equal at birth, the way we are brought up makes us profoundly unequal even a few years later, so far as our potential to produce exportable material wealth is concerned. As any traveler or foreign correspondent knows, what you notice about place always is the “national style” or culture: the way things just seem to work or don’t work. And while some places work, others don’t, and perhaps never will.

While “The End of History” produced merely a debate among the elite, “Trust” will produce authentic, visceral controversy. Multiculturalists, affirmative action types and others who believe that all cultures are equal and that the government can force-feed economic results from above should be terrified over this book.

“Trust” is not some superficial neoconservative polemic, but a work of interdisciplinary synthesis that shows a superior mind in action. And while the book is based on many cultural generalizations, Fukuyama does this so openly and so unapologetically, and with sufficient statistical back-up, that he will convince the middle-of-the-road reader, who will quickly realize that cultural generalizations--however crude and sometimes unfair--are necessary if meaningful discussion is to take place. Fukuyama simply won’t play by Edward Said’s rules, whereby, for instance, only Arabs are allowed to criticize Arabs, and so on. Since to play by such rules is to immobilize thought.

“Trust” is so named because, in Fukuyama’s view, the wider the radius of trust within a culture the more material wealth it can produce. People in Germany, Japan and Korea are wealthy because trust in those places extends far beyond the immediate family. Cultures where suspicion reigns cannot create the necessary organizational links that fuel economic growth. Japan’s industrial policy, in other words, derives organically from Japanese culture.

However, while some cultures are better than others at producing wealth, the key factor, according to Fukuyama, is to have a culture. Fukuyama defines inner-city blacks as having been culturally deracinated by slavery. They lack the minimum radius of trust to produce social stability, and thus wealth: unlike in sub-Saharan Africa, where credit associations and other organizations that require great trust among strangers flourish, if not on the same scale and sophisticated level as in East Asia.

Cultures evolve, but they constitute massive, complex forces which change very slowly. Consequently, in “Trust,” Fukuyama expands on his notion of the “end of history:” it means not only the end of “grand ideological projects like communism,” but the doom of more “modest efforts at social engineering--the sort attempted by moderate democratic governments. . . .”

Ohmae, in “The End of the Nation State,” goes even further than Fukuyama in exploring how the falling away of the nation-state will leave all of us at the mercy of own cultural strengths, and weaknesses. Ohmae believes that the nation-state has become little more than “a cloak for subsidy and protection” of those within a geographical space who cannot, as Fukuyama might put it, culturally compete.

Protectionism and subsidies lead, in Ohmae’s view, to an economic hardening of the arteries that will only quicken the collapse of the nation-state: those who can compete without help are in the process of realizing that they have no stake in the survival of the traditional state. Ohmae sees cultures passing through the “brutal filter” of a borderless world, in which only their strongest aspects survive. Rather than a contest of cultures, though, he sees a melding and borrowing process. But he is a prisoner of the success stories he covers. Cultural borrowing may occur at the top levels, but in the broad swaths of the globe where even electricity is a sometime thing, too many are being left behind, in no position to borrow from the cultural experiences of others.

While Fukuyama concentrates on strong nation-states that cohere well with cultures, such as France and Japan, Ohmae concentrates on the emergence of “region states,” such as Hong Kong/Southern China and Research Triangle Park in North Carolina. In either case, the heavy bureaucratic hand of government is weakening, leading to stable, liberal democracy in areas that already have firm economies and tax systems in place, such as Taiwan and the southern cone of Latin America, and to anarchy in places where democracy is attempting to occupy a vacuum, as in Pakistan and the countries of sub-Saharan Africa, where much of the world’s new people are being born.

Fukuyama ends his book by saying that “the preservation and accumulation of social capital will occupy center stage.” In other words, as state control becomes less important, cultures are on their own: either they will develop sufficient radials of trust to produce wealth, or they won’t. There is little in Ohmae’s book that suggests he disagrees on this point. I would add that massive cultural failure in places where resources are scarce will lead eventually, in some cases, to “hard” neo-authoritarian regimes, as part of a last-ditch attempt to manage humanity’s battle with nature. But we all might agree that culture, and some form of competition between cultures, will be paramount. This brings me to yet another maligned, imperfect, yet illuminating grand theory, Professor Samuel P. Huntington’s “Clash of Civilizations.” But I’ll stop here.