Sunday, September 25, 2016

Reframing the world

I listened this morning to a brilliant talk by Danny Quah on what changes in the world during the past twenty years or so portend for the intellectual leadership of the world, or to be more specific, how the political and economic life should optimally be organized given the global changes in economic power that we are witnessing. In the beginning of his speech Danny defines the two tenets of the Western (or as he puts it, American) framing of an optimal society: economic freedom and democracy. This is the well-known paradigm of liberal capitalist democracy that, according to Fukuyama and later Acemoglu and Robinson, represents the end point of human evolution. Danny links it, rightly in my view, in addition to “American exceptionalism”, that is to the belief that America, by its own example, shows to the world how it should be organized, and that ultimately, the way the world will end up by being organized will be as a form of a “Greater America”.

But then Danny  says, something has gone wrong with this approach. First, the economic and military dominance of the Western world is not nearly as overwhelming as it was one hundred years ago, or even fifty years ago. That dominance is being eroded by the growth of other parts of the world organized according to different principles, and obviously so by China. So if the performance of the liberal capitalist model is inferior to another model, then perhaps democratic liberal capitalism is not the best way to organize the mankind everywhere? Second, in responding  to the challenges of globalization and the hollowing out of the domestic middle classes, a significant  part of the Western public opinion shifts to populism, nationalism etc. all the forces that a successful liberal capitalist model should make sure remain marginal. But they are no longer so. Third, Danny raises the issue: should not our thinking about what is the best way to organize economic and political life be influenced not only by who is doing it most successfully but also by where the majority of the world population lives? It is not simply an arithmetical point. It comes from requiring that the modes of (successful) life that many people experience do have a greater empirical validity than the ways of life experienced by smaller groups of people.

All of this points, even if Danny does not say it  so in his speech, to the Chinese experience as a “reframer” of the optimal organization of society. To redefine what best society is, is indeed a huge intellectual undertaking because if an entirely different paradigm of how to organize society becomes dominant, the paradigm built in the West over the past 300 years would be shunted aside and our view of what is a “good society” will undergo a revolution. We are talking here of nothing less than a major intellectual revolution, say similar to the move from paganism to Christianity in the West.

Danny however does not define this new framework. It could be that this is left for another speech or a book. But I do see some problems with the definition of a new framework. Let us take it as self-evident that the Chinese experience of the past half-century has been the most dramatic example of betterment of mankind ever. We should be able, in principle, to learn something from it: on how to organize other societies to replicate the Chinese miracle. But there are problems. Unlike  the Western success, following upon the Industrial Revolution, that was built through a combination of abstract thinking (about free will, property, freedom, role of religion etc.) and practical, if imperfect, application of these principles, the Chinese experience is entirely composed (or so it seems to me) of pragmatic moves without an overall intellectual blueprint. Such pragmatic experiences are difficult to transplant precisely because their success depends on local conditions and on finding the best solutions to very local problems. This extraordinarily success in solving local problems  lacks a general “mode of solving the problems” that could be exported elsewhere. This has been a problem that China has had in influencing the economic organization of the rest of the world for a while: inability to formulate general (abstract) principles that should guide other societies too.

In the political arena, the problem is perhaps even graver. There, in the Chinese model, the good political system means that a well-educated, knowledgeable and non-corrupt elite, selected in a reasonable equitable manner, should make important political decisions. (I am intentionally not saying “rule”.)  Again, while that  approach, applied in Singapore and China, had proven successful, it is difficult to see how it could be transplanted elsewhere. Even the most extractive and self-interested elite will claim to be knowledgeable and non-corrupt. The advantage of the Western democratic model is precisely its focus, not on the ultimate result (“good governance”) but on the process—essentially as in Schumpeter’s definition of democracy “as a system where political parties fight for who will get more votes”. That system does not guarantee a good government, or a “clean” government, does not protect against nationalism, populism or nationalization of property. But it places its faith in the common sense or ability of people to learn from their mistakes, so that ultimately they will tend to choose good and reasonably competent governments to lead them.   

Now, despite these problems of defining an alternative framework, Danny has in my view opened an extremely important issue which will be will us in the foreseeable future.  If the most successful part of mankind is organized according to principles A, and our historical and cultural experience tells us that the best way to organize society is B, how long can this tension persist? Either we shall have to derive some general principles from A and apply them worldwide, or the societies currently applying A may move to taking over B themselves, or B might again become dominant. The one thing that cannot last forever is that we keep on believing that B is the best way to run societies while empirically the most successful societies are run according to A. Theory and practice will have to came closer.  At some point.

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