How the war was won; review of Vincent Bevins’ “The Jakarta Method”

In the speech to the European Youth in Brussels in March 2014, the then-president Obama, speaking of American-led alliances across the world after World War II said the following: 

“And this story of human progress was by no means limited to Europe. Indeed, the ideals that came to define our alliance also inspired movements across the globe… …After the Second World War, people from Africa to India threw off the yoke of colonialism to secure their independence… the iron fist of apartheid was unclenched, and Nelson Mandela emerged upright, proud, from prison to lead a multiracial democracy. Latin American nations rejected dictatorship and built new democracies…

It was a very upbeat image of what American post-World War II foreign policy aimed for. But it was as upbeat as it was false. It was even stranger that this fantasy was peddled by Barack Obama, who thanks to the years he lived in Indonesia and through the fate of his step-father, knew how one-sided it was.  Vincent Bevins’ book “The Jakarta Method” reminds us of reality. In fact, the allies that helped the US win the Cold War were very different from the ones Obama had in mind. They were a rogue gallery, spanning, from Europe, former German Nazis and their collaborators in Eastern Europe, Franco and Greek colonels, Gladio and the Mafia; in Africa, the apartheid regime, Mobutu and the Katanga gendarmes; death squads and latifundistas in Latin America; extreme Islamists, the Taliban, and oppressive kingdoms in the Greater Middle East; corrupt and effete South Vietnamese regime and killing fields dictatorships in Asia—like the one that emerged in Indonesia after Suharto’s coup,  the main topic of Bevins’ book.

They all participated in a worldwide loose alliance pitted against the freedom from colonialism and oppression of the peoples from Asia, Africa and Latin America. The big mistake that the United States made by the 1950s was to regard all movements for the emancipation of the Third World peoples as potential Soviet allies and thus as the enemies of the United States. As Bevins writes, there was absolutely no historical reason for such a policy. The United States herself emerged on the world stage as a country that overthrew British colonial rule. In principle, one would expect that it would support similar aspirations of peoples elsewhere. Further,  many of the leaders of the liberation movements had a high regard for the United States, its war against the fascist powers, and its Declaration of Independence (even when they saw through cynical untruths about slavery contained in it): Hi Shi Minh cited it many times, Sukarno, in an effort to please the United States, linked the leaders assembled in Bandung in 1955 to Paul Revere’s ride for freedom.

None of that made any difference to the American policy makers who from Truman onward considered (with a couple exceptions, including the Anglo-French-Israeli attack on Egypt in 1956) all Third World liberation movements as suspect, both internationally (pro-Soviet) and domestically (too leftist). Bevins’ book zeroes in on two extremely important episodes in that struggle against people’s emancipation: Brazil and Indonesia.

The story of Indonesia takes most of the book. When Indonesia finally succeeded in liberating herself from the Dutch, it was led  by Sukarno, a genuinely popular leader who assembled a broad anti-imperialist coalition that included everybody from moderate Islamists to Communist Party of Indonesia (PKI). But Sukarno’s anti-imperialist foreign polices, his tiermondisme, and his readiness to have good relation with the Soviet Union and China displeased the United States. Bevins very skillfully shows, on the examples of Brazil and Indonesia, how the US Cold War policies in the Third World were fashioned: they were three-pronged.

The sinews were close relations with national Armies and the top echelons of the officer corps. The local generals had often to be weened away from their own instinctive pro-leftism built during the struggle for national independence. They had to be converted into conservative nationalists friendly to US business and political interests and close to US military and security apparatus. This was accomplished through training in the United States and close Army-to-Army contacts. In some cases like Brazil stimulating rightist and conservative instincts among the Army brass was not difficult. The military already played that role historically—even if Bevins rightly points out to the split that did exist even in Brazil between the junior officers who were close to Goulart and those, higher up, who eventually overthrew him.

The second channel of influence was propaganda and misinformation. Here it was through financing of local media and bribery that the objectives were accomplished. But that influence extended also domestically, that is to the opinion-makers in the United States, whose views were then reflected and reported in the Third World countries. Not the least revealing part of Bevins’ book consists of the quotes from the New York Times, including from such journalistic stalwarts like G. C. Sulzberger and James Reston, using what we call today “the fake news”  to support the US-orchestrated overthrow of the Arbenz government in Guatemala in 1954, the 1965 military coup in Brazil, Suharto’s power grab in Indonesia, and anti-Allende coup in Chile in 1973.

The third channel was denial or manipulation of economic support, either through direct aid or access to the World Bank and IMF loans, a topic quite well-known to all students of international relations.

What is interesting in American ideological blindness during the Cold War is that in most cases the leaders overthrown or killed were not even in the broadest sense communists nor beholden to the national communist parties. Jacobo Arbenz in Guatemala, João Goulart in Brazil, and Salvador Allende in Chile were social democrats; Castro’s revolution was not communist at all: it is the US implacable opposition that transformed it into such; and Sukarno was an authoritarian left-leaning nationalist.

Modernization theory (and Walt Rostow’s “The Stages of Economic Growth: A Non-communist Manifesto”) played an important ideological role justifying the three-pronged approach. In direct opposition to what Obama claimed in 2014, the modernization theory (and the US foreign policy) was utterly uninterested in democracy. In effect, it was antidemocratic.  But it held, not unlike its Stalinist counterpart, that the Third World countries needed to develop economically first which they would do best by having US-friendly rightwing (ideally military) regimes and that democratization may be left for the future. With hindsight we know the modernization theory worked in South Korea and Taiwan. It may be even argued that it worked in Brazil to the extent that the return of democracy in Brazil, after a hiatus of 25 years, can be thought to have been helped by strong economic growth the country experienced under the harsh military rule.

One weakness of Bevins’ otherwise excellent book is his underplaying of domestic reactionary forces in the Third World countries. Again, Brazil and Indonesia are perfect examples. In both, US indeed stimulated  the most reactionary forces. But it did not create then. Both coups were largely organized domestically; if one were to give percentages, one could say that 70% of the overthrow was home-grown. Only the rest was foreign-motivated. The Third World was not domestically ideologically homogeneous, nor was everyone likely to benefit from land reforms, broader voting rights (as proposed by Goulart) or by the end of racial discrimination. The extermination orgy (officially termed the “Operation Annihilation”) that enveloped Indonesia after Suharto’s coup was domestically induced while of course US-supported: it led to the killing of about 1 million people, from ordinary workers and students, members of organizations affiliated to KPI, to the rich Chinese (the coup had also an anti-Chinese edge).

Another topic that could have been more elaborated, especially in the case of Indonesia, are all too common mistakes and delusional ambitions of post-independence leaders. Sukarno scrapped elections (in which by the way PKI was doing extremely well, garnering up to 20% of the vote) in favor of nebulous consultation-type of government with himself, of course, as indispensable head. Bevins might have also been more critical of Sukarno’s quasi-imperialist reach for Papua New Guinea, and parts of Borneo that became incorporated into Malaysia. Yes, the British created Malaysia to serve their imperialist interests, but Sukarno’s intentions were not without blemish either.

Finally, I wish Bevins discussed in greater detail the key events surrounding the 1965 Suharto coup. They are, to this day, enveloped in mystery. Was the original left-wing military coup, the trigger for Suharto’s “real deal” coup, a false flag operation or not? What were the objective of the left-wing military in arresting the top generals? Why were they then killed and by whom? What was supposed to have been the next step? It is odd to capture the heads of the various military branches in order to stave off the claimed right-wing coup, and then not to know what to do with them. Or what to do next. Bevins does not want to get involved into the guessing game or counterfactuals, but I think more could have been said even without taking a  position one way or another. That crucial turning point is discussed in three pages only.

This is an indispensable book for all those interested in the Third World during the era of the Cold War, and in the links between various operations of “the Anti-Communist International”, a subject whose importance will I think only increase. It might in effect emerge that the decisive global changes were not the ones that we currently see as such (the fall of the Berlin Wall), but rather what happened in countries like China, India, Vietnam, Indonesia, Brazil.

  

Inheritance, marriage and swindle: the three ways to the top

Inheritance gives a head start advantage. Marriage is the way to share in that advantage. Business swindle is a way to undermine that advantage.

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In my previous post I mentioned that I will review the just published book by Daniel Shaviro’s “Literature and inequality”. Shaviro discusses what nine popular books tell us about inequality of status, class, and income in the societies they describe. The first three books are Jane Austen’s* “Pride and prejudice”, Stendhal’s* “Le rouge and le noir” and Balzac’s* “Le pere Goriot” (with “La Maison Nucingen” in continuation). They describe West European societies during the “Age of Revolutions”. The next three are Dickens’s “Christmas carol”, Trollope’s “The way we live now”, and E M Forster’s* “Howard’s end”. They are set in England during the Industrial Revolution, and just before the World War I. The final three books deal with American inequality: Mark Twain’s and Charles Dudley Warner’s eponymous “Gilded Age”, Edith Wharton’s “The house of mirth”, and Theodore Dreiser’s “The financier” (and “The titan”).

There is obviously a lot to write about the books, their interpretation and Shaviro’s very skillful analysis of societies they describe. Shaviro’s book could set the tone for a new type of social studies that would combine the usual empirical work with archival research and valuable fiction. Indeed all these books of so-called fiction are grounded strongly in the “faction” of their societies and give to an economist many hints of different venues worth exploring.

I have read only four of the nine books dealt with here (indicated by the asterisks above) and obviously my discussion of others depends entirely on what I have learned from Shaviro.

I would like to focus on two themes.

The literature studied here shows us not only the common conflict between the “old wealth” (that could, in the British and French context, be aristocratic wealth, or in the US context, that of comparatively more recent Philadelphia families) and the newly acquired wealth, or between the rich and the poor. The books—all nine—show us that there are only three ways to the top of society: inheritance, marriage, and plunder.

Inheritance is an obvious way in which people can remain on the top. But it is tempered by marriage: if the marriage market were entirely “comonotonic”  the super rich would marry only the super rich, the less rich would marry those just slightly less rich, and so forth all the way to the bottom. The ordinal rankings would not be altered, and wealth and income gaps would get ever wider. But marriages obey to other laws as well: love, sexual attraction, accidents, parental influence, strategic decisions. Thus they introduce an element of entropy in an otherwise hierarchical structure. The social order is often unsettled by marriage. This is discussed in the case of women—most obviously among the books reviewed here by “Pride and prejudice” and other Jane Austen’s novels that revolve around the same question: who is going to marry whom, and how many ₤ of income are respective partners bringing in.

But men’s marriage market is less frequently addressed. Shaviro does not discuss it as such either. Yet it pervades several of the books he reviews. Julien Sorel’s career consists of amorous conquests that gradually allow him to climb to ever higher positions in society, until they also bring him crashing down onto his death. Rastignac likewise in “Le pere Goriot” and “La Maison Nucingen” plans his social ascent entirely on successful secret love relationships and marriages (often simultaneously). In both of these French novels, sexual conquest that we typically  associate with women, is used by men to move from low to high social positions. The same theme reappears in “Howard’s End” where Leonard enters into an ultimately destructive relationship with one of much richer Schlegel sisters. Socially identical is the relationship between Lawrence Selden (aspiring youth) and Lily Bart (well born but struggling) in “The house of mirth”.  Had Shapiro decided to include Scott Fitzgerald’s “Tender is the night” in the American section, he would have had another male hero who uses marriage, consciously or not, as a climbing device.

We thus see that marriage which some associate, and especially so in societies where the role of women was limited, to a instrument of social promotion used by women was in reality used by both sexes. The books reviewed here give us thus—interestingly—a more equal treatment of genders than we may think to have been the case.

The third tool of social advancement is to make money oneself (in this case, however, it is always “himself”). Financial speculators and industrialists are the two favorite occupations: Nucingen in Balzac, Scrooge in Dickens,  Melmotte in Trollope, Sterling in Twain and Dudley Warner, Percy Gryce in Edith Wharton, and Frank Cowperwood in Dreiser. None of them is a sympathetic character. It is remarkable that in all cases the self-made road to the top is described in darkest hues. It is composed of swindles, cheats, cronyism, plunder, and bribery. There is no Horatio Alger or any of Ayn Rand’s heroes here. Even Dreiser’s “The financier”, discussed extensively by Shaviro, while not entirely unsympathetically depicted by Dreiser, owes his success to the readiness to use any means, however sordid, in order to prevail. It is a world similar to what we can see today in any episode of Netflix’s “Succession”.

Now, whether all the climbs to economic power were possible only through bribery and swindle and plunder I do not know. One thinks of Marx’s “primitive accumulation”, of Jane Austen’s Henry Lascelles whose wealth comes from slave plantations in Barbados, or of many beautiful castles and public building (Rockefeller Center in New York?) that were built on the backs (so to speak) of  brutal exploitation or financial malfeasance. It could well be that huge wealth is really impossible to acquire in any other way.

But it could also be that in works of fiction we are likely to be confronted more often by such characters than in real life simply because their lives—the contrast between enormous wealth and dearth of moral qualities—are much more compelling to both writers and readers than a more humdrum success achieved within the confines of legal and ethical rules.

Authors’  uniform emphasis on unethical ways in which wealth is made should give us pause when entertaining a more benevolent view of large fortunes in capitalist societies. Perhaps that most of them were indeed made the way described in this book, and not in the way that Samuelson’s “Economics” (and its various successors) would like us believe.     

Literature and inequality

When I wrote “The haves and the have-nots” which is a book of inequality vignettes linked with three essays (on global inequality, inequality between countries, and inequality within countries), I stumbled upon the idea of representing inequalities in different countries and eras by using the data and stories provided by works of fiction.

The idea arose out of several dinner conversations with my wife who is a great admirer of Jane Austen. I barely knew Jane Austen’s name until 20 years ago. But at my wife’s insistence I started reading her and was thoroughly impressed by her wit, use of irony, and sharp and critical eye for social status and conventions. I read “Pride and Prejudice” first, followed by “Emma” and then “Mansfield Park” (have not read the other two).   

Then, one evening as my wife and I were discussing Elizabeth and Mr. Darcy, I was struck when my wife reeled off the amounts in pounds that Darcy received annually compared to Elizabeth’s parents. Continuing the conversation, I hit upon the idea to include the data from “Pride and Prejudice” in a vignette. This was helped by the fact that a few years earlier I wrote with Peter Lindert and Jeffrey Williamson a paper that used English social tables, including Patrick Colquhoun social table from 1801-3. The table almost exactly coincided with the years when the plot in “Pride and Prejudice” is supposed to happen. I was thus able to very nicely locate Darcy, Elizabeth (in her unmarried status) and Elizabeth if she decides not to marry Darcy but to depend on the inheritance of less than 50 pounds per year—a prospect menacingly dangled by the tactless Reverend Collins as he proposes to her—in the English income distribution at the time.

As the table below shows, the range of options for Elizabeth goes  from being in the top 0.1% of England’s income distribution to being at the median. The income gap between these two options is 100 to 1. (When she marries Darcy, their household per capita income becomes 5,000 pounds; hence: 5,000/50=100.) As I wrote, “the incentive to fall in love with Mr. Darcy seems irresistible”.  The last column shows how much has the gap shrunk today compared to what it was two hundred years ago: being at the equivalent positions in 2004 (which were the most recent data that I had around 2009 when I was writing the book) yields an advantage of 17 to 1 only.

 

I decided also to include the story of Anna Karenina in the second vignette of “The haves and the have nots”. Her social trajectory is fairly similar to Elizabeth’s. We learn from just one Tolstoy’s sentence that her family was around the middling income status. With her marriage to Alexei Aleksandrovich Karenin, with whom she lives in a palatial home, she moved up to the top 1%. But with Count Vronsky, not unlike Elizabeth with Darcy, Anna moves to the rarefied circle of the extremely wealthy, belonging to the top 0.1% of Russia’s income distribution around 1875. Her lifetime gain was 150 to 1, that is, even more impressive than Elizabeth’s.

 

I then considered adding Balzac’s “Le Pere Goriot” which I liked a lot and which was much admired by Marx (see “Karl Marx and World Literature” by S. S, Prawer)  precisely for his impitoyable  depiction of financial capitalism in France. I collected lots of data, but then decided that adding a third very similar vignette may  be a bit of an overkill. So I left it out. (A few years later, Thomas Piketty employed a similar technique in his “Capital in the 21^st century” and drew heavily on Balzac.)

Now, Daniel Shaviro in his new and exciting book “Literature and Inequality: Nine Perspectives from the Napoleonic Era through the First Gilded Age”  has expanded this approach to three epochs and nine books. In the first part of the book  (England and France during the Age of Revolution), Shaviro discusses with the same objective of retrieving the facets of social and economic inequality, but in much greater detail than I, Jane Austen (“Pride and Prejudice”), Balzac (“Le pere Goriot” and "La maison Nucingen") and Stendhal (“Le rouge et le noir”). In the second part (England from the 1840s to the start of the First World War)  Shaviro looks at Charles Dickens, Anthony Trollope and E M Forster. Finally, in the third part, he trains his gaze on the US Gilded age (Mark Twain and Charles Dudley Warner, Edith Wharton and Theodore Dreiser). I will review Shaviro’s book in my next post. I have to say that unlike the first part, I am not familiar with the authors from the second and third parts (with the exception of E M Forster), and I would thus have much less to say about these books. My regret is that Shaviro did not include Francis Scott Fitzgerald in the third part. Scott Fitzgerald is, I think, a perfect writer for the Gilded Age: perhaps even better in “Tender is the Night” than in “The Great Gatsby”. But either would do.

I would like to finish this post with an observation. After publishing “The haves and the have-nots” I became somewhat interested in finding similar sociologically rich but also empirically substantiated (i.e. full of details and amounts of actual incomes) books in other literatures. I looked around myself and asked several of my students from different countries for their suggestions. Interestingly, we came with almost nothing. There are of course books with sociological and anthropological details, but alas no numbers that would allow empirical economists to weave their story and place these individuals in contemporaneous income distributions (assuming, of course, that such distributions for the relevant countries do exist). The writers seemed much less interested in doing this than for example Balzac in his entire “La comedie humaine”.

This is not the result of some dedicated search of various literatures and it could be that I am wrong. But it is an interesting hypothesis: was the European 19^th century literature exceptionally interested in social status, wealth and income? Was it exceptionally well documented? It seemed to me that the 20th century literature provides many fewer empirical details. For example, Proust’s “A la recherche…” is very similar in its study of social conflict and mutual accommodation between the parvenus, bourgeoisie and the aristocratic elite to Balzac. But unlike Balzac, Proust gives no numbers at all. So for an empirical economist (and for this specific purpose) Proust is not of much use. This was my impression with other writers I know, but I hope that there are out there works of fiction in many literatures that one could use as I have used “Pride and Prejudice” and Piketty and Shaviro “Le pere Goriot”. One of the objectives of this post is to stimulate people to look around among the authors they know and to use works of fiction to tease out and trace the contours of inequality in various societies.

Correction: Reverend Collins estimates Elizabeth's income, if she does not marry, at 4% of 1000 pounds = 40 pounds rather than 50  as I wrote here.