Ricardo Pascoe Pierce
The collapse of the Soviet Union in 1991 marked the end of the Cold War. The economic dispute between capitalism and socialism came to an end. Francis Fukuyama celebrated the event, pointing to the “end of history.” For the next 20 years, the world seemed to live not only in a peaceful celebration of capitalism, but also of the unipolar power of the United States. There was no power to counterbalance it. But around the middle to the end of the first decade of the 2000s, that began to change. And the change took everyone by surprise.
US hegemony presupposed the existence and validity of liberal democracy as a political system based on free elections, freedom of speech and ideas, and tolerance for social diversity and plurality. In short, a republic of freedoms was the necessary companion to the development of the capitalist economy. These ideas came from previous decades, when both Adam Smith in the 19th century and John Maynard Keynes in the 20th century postulated that capitalism required free markets for the free supply of goods, services, and labor. The equation of market and freedoms was the sine qua non requirement for capitalism to flourish.
Within the field of capitalist economic theory itself, there were differences. Adam Smith’s laissez-faire contained postulates that were strongly reformulated by Keynesian Welfare State theory. And what about Thatcherite neoliberalism, which looks more to Adam Smith and Hayek than to Keynes? However, despite their theoretical differences, they all agreed on the need for the market and the freedoms that the market requires to advance, innovate, and promote the capitalization of investments.
However, even during the Cold War, atypical phenomena began to emerge within the capitalist camp itself, casting doubt on the central thesis that capitalism and democracy are inextricably linked. The military regimes of South America, especially Augusto Pinochet’s economic laboratory in Chile (1973-1990), implemented extreme neoliberal economic measures under authoritarian military rule. There was economic progress in terms of capital accumulation, but without the presence of democratic practices.
South Korea is another example where, during the rule of an authoritarian regime (1960-80), the foundations were laid for rapid capitalist economic development. Today, South Korea is a thriving democracy with a high degree of technological, scientific, and military development. The Gulf monarchies (Saudi Arabia, United Arab Emirates, among others) are authoritarian regimes with capitalist economies based on oil and financial globalization. Singapore is a City-State formed around an authoritarian political regime, yet it is highly successful as an extraordinary global financial center.
These examples serve to illustrate the idea that long before the fall of the Soviet Union, several countries were already experimenting with sui generis capitalist regimes outside the realm of the democratic liberal model of governance. They were testing the new limits of traditional capitalism and exploring the possibilities of forming autocratic, limited, or diluted democratic political regimes. However, these countries did not pose a challenge to the ideological hegemony of liberal democracy that the United States and Europe promoted as the ideal model for the world.
Everything changed when groups of countries with more powerful economies, due to their size and potential for global influence, began to emerge. Russia began to exert its military influence at the regional level as a nuclear power, as did Israel in the Middle East. At the same time, China became the world’s manufacturer of everything. These new forms of capitalism were a new model.
These countries, along with medium-sized powers such as Brazil, Turkey, South Africa, and Mexico, are beginning to adopt market economies with authoritarian tendencies. What is important about all these examples is that they are at different stages and degrees of rupture with the idea of capitalist economic management from the perspective of liberal democracy. Some of them, such as China and Russia, openly reject liberal democracy as a system, claiming that it is an imposition of Western ideologies.
The case of China is relevant because it is the new power that openly confronts the US economy and rejects its political system. It has a single-party political system and is ideologically aligned with Marxism-Leninism. However, it is a market economy and its interests lie in exploiting the labor force to ensure the accumulation of capital… in the hands of the State and the Party. Due to its role as a central manufacturing hub, China has become a key player in the global economy’s value chain. China, therefore, operates under two logics: the logic of the capitalist market and the logic of the State-Party binomial, which determines national security reasons in its relations with the rest of the world.
The political dispute between the United States and China centers on the definition of the interests surrounding the national security of both nations. That is the backdrop to the recent “trade” clashes between the two countries. But this clash between two capitalist economies with political systems that see each other as adversaries raises fundamental questions. A central question is that for the market to be thriving, it requires the rule of law and legal certainty to protect investments and ensure their profitability. Democracy takes a back seat. History is showing that an authoritarian regime can guarantee stability for investments while repressing dissent.
As was the case with the military juntas in the Southern Cone, Thailand, and the Congo, among many other countries, economic elites may prefer an authoritarian government that protects their interests against the redistributive demands of the majority of the population. The conclusion is that the reconfiguration of political powers in the globalized capitalist market is crucial to understanding the new conflicts of the future. A future of great uncertainty is a world where different types of capitalism come into conflict, the outcomes of which may even become the great wars to come.
Raw materials, water, rare earths, radicalized religions, racial hatred, and social and cultural differences are the fabric of a world entering into new and difficult confrontations. All these factors will align tensions between global and regional powers, armed and with financial resources and alliances with different markets, to determine the new tactics and strategies of diplomacy, politics, and war. What is in retreat is the presence and ideological weight of democracy as a reliable political system.
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