Material trends: democratization, marketization, globalization
Lake’s bumper-sticker summary of America’s new grand strategy never gained the same currency as George Kennan’s notion of “containment,” but it was apt nonetheless. As the post-Cold War era began, the United States set its sights on expanding the scope of what had been a partial, geographically constrained liberal order to include the entire world and, in particular, the swath of Eurasia that extended from Eastern Europe, across the newly independent republics of the former Soviet Union, to China. Here the aim was to “help democracy and market economics take root” where they had not already done so, and to “foster and consolidate” new liberal regimes when they did begin to blossom.33
In dealing with the nations that had arisen out of the wreckage of the Soviet empire in Eastern Europe, the United States and its allies used the promise of incorporation into Western political institutions and the global economy as a tool for encouraging liberal reforms. The states that eventually earned full membership in this way were, at the outset, weak, poor, and, for the most part, eager to change. More challenging and, in the long run, more important were Russia and, above all, China. Lacking sufficient leverage to compel their transformation, the democracies effectively inverted the strategy they had used to such good effect along the periphery of the former Soviet empire. Rather than hold out the possibility of inclusion as an inducement to liberalization, the United States and its allies worked instead to bring Russia and China as fully as possible into the existing order and, in particular, into the open global economy, in the hopes that doing so would help speed their domestic economic, political, and social transformation. Instead of change followed by inclusion, the formula was reversed to inclusion followed by change.
US and other Western policy-makers were highly confident that this approach would succeed. To a certain extent, this attitude reflected an “end of history” triumphalism, a belief that liberal democratic capitalism had finally won a two-hundred-year evolutionary struggle against other forms of political and economic organization and that its superiority over autocracy, fascism, and now Communism had been proven beyond a shadow of a doubt.34 It seemed clear that, as George H.W. Bush put it, the movement towards markets and democracy had become “inexorable.”35
This belief was not merely the product of wishful thinking, of course; there was ample evidence that seemed to back it up. The dramatic scenes in Berlin, the collapse of the Soviet Union, and the evident desire of people in many parts of its former empire to throw off their shackles and join the West all lent credence to the notion that liberalism had triumphed. Further to the east, China had already begun its march towards market-oriented economics. While Tiananmen represented a terrible setback, Americans, in particular, could take comfort from the fact that student demonstrators had quoted Thomas Jefferson, Tom Paine, and Woodrow Wilson and rallied around a papier-mâché “Goddess of Democracy” that resembled their own Statue of Liberty. It was easy for Western observers to believe that those reactionaries in the Communist Party leadership who still opposed liberalization were engaged in a futile effort to hold back the tide of history.
Philosophical speculation about world-historical tendencies aside, recent events appeared to be the product of some more concrete and observable long-term trends. By the early 1990s, the world was already almost two decades into what political scientist Samuel Huntington described in a widely read book as a “third wave” of democratization. As had happened between the early nineteenth and early twentieth centuries, and again from the mid-1940s to the early 1960s, since the mid-1970s the number of democratic states had increased sharply, growing from thirty in 1973 to fifty-nine in 1990.36 Thus, even before the Soviet implosion, 45% of the countries in the world were ruled by democratic governments, the highest proportion since the 1920s. And the trend was clearly global: starting in Western Europe with Portugal and Spain in 1974–5, the democratic wave had traveled west to Central and Latin America, and south to parts of Africa, before propagating east, across Eurasia. Huntington was at pains to point out both that the causes of this phenomenon were varied and complex, and that past waves had been followed by periods of reaction (or “reverse waves”).37 Still, it is not difficult to understand why more casual observers, to say nothing of busy policy-makers, might have been drawn to conclude that the process unfolding before them was linear and irreversible.
Democratization was accompanied by a parallel trend towards what can best be described as “marketization”: an increased emphasis on market mechanisms in national economic policy, as opposed to more statist, interventionist approaches to fostering growth and development. This tendency, too, had become evident well before the end of the Cold War. The so-called “market revolution” or “Reagan–Thatcher revolution” that began in Britain and the United States also reverberated across the global South.38 During the 1980s, often under pressure from international financial institutions to which they owed large sums, many developing countries proceeded to abandon subsidies, state-owned enterprises, and high tariffs in favor of deregulated banks, reduced government spending, privatization of industry, and liberalized trade.39 This package of policies embodied what came to be referred to as the “Washington Consensus”: the agreed wisdom of international lending institutions, backed by the US and other Western governments, on the best way of promoting economic development.40
The evident success of the turn towards markets produced what historian Hal Brands has described as “a powerful sense of triumph” in Washington. Brands quotes a 1991 speech by Secretary of the Treasury Nicholas Brady that illustrates the point. Events in the developing world had proven that “freedom works,” Brady declared. “Free markets work. These simple principles have moved nations; they have altered the course of history.”41 The collapse of Communism across the former Soviet empire and its evident retreat in China strengthened this sense of vindication while at the same time expanding the geographic and political space in which market principles could be applied to include virtually the entire planet.
The increasing integration of market-oriented national economies was the third and last trend that helped convince US decision-makers that the time to complete construction of a liberal international order was finally at hand. This phenomenon was the result of the convergence of mutually reinforcing developments in policy and technology that seemed by the 1990s to have acquired overwhelming momentum. As with marketization, these tendencies became visible first in the advanced industrial West before spreading to the South and finally to the East.
During the opening decades of the Cold War, driven by what political scientist Robert Gilpin has described as “the exigencies of survival” and with Washington leading the way, the members of the Western alliance created an integrated economic system based on “agreed-upon rules and close cooperation.”42 Working through the General Agreement on Tariffs and Trade (the precursor to the WTO), from the late 1940s through the late 1970s the United States and its democratic allies in Europe and East Asia negotiated successive rounds of multilateral tariff reduction agreements. At the same time, a series of post-war technological advances, most notably the invention of containerized shipping, were increasing the speed and cutting the cost of long-distance transportation. These simultaneous changes in technology and policy enabled a dramatic increase in trade among the advanced industrial democracies.43 Falling communications costs (due to the expanding capacity of transoceanic cables and the development of communications satellites) and a relaxation of controls on capital markets made possible an accompanying expansion in international financial flows.44 As the Cold War entered its final decade, the advanced economies were being knit together more closely than at any time in nearly a century, causing Harvard Business School professor Theodore Levitt to coin a new term in 1983 when he declared that “the globalization of markets is at hand.”45
Starting in the mid-1980s, with the spread of the “Washington Consensus,” portions of the developing world began to be swept up in the globalizing trend as dozens of countries in Africa, Latin America, and parts of Asia “moved aggressively to export,
