The Capitalist Manifesto (eBook)

Preface

WHAT HAPPENED TO
REAGAN AND THATCHER?

Twenty years ago I wrote a book in defence of global capitalism. I never thought I would do that. Capitalism, I had thought, was all about greedy monopolists and mighty landlords. But then I began to study the world and realized that it was in the least market-based societies that such elites were protected from the free choice of citizens and therefore had the greatest power. Paradoxically, it was capitalism – in the form of free markets and voluntary agreements based on private ownership – that threatened the powerful. The argument for capitalism is not that capitalists always behave well – if that were the case, we could safely give them monopoly power – but that they often do not behave well unless they have to. And it is freedom of choice and competition that force their hands.

In fact, Marx and Engels were right when they observed in that other manifesto, the communist one of 1848, that free markets had in a short time created greater prosperity and more technological innovation than all previous generations combined and, with infinitely improved communications and accessible goods, free markets had torn down feudal structures and national narrow-mindedness. Marx and Engels realized much better than socialists today that the free market is a formidable progressive force. (Unfortunately, they were not sufficiently dialectically minded to understand that communism was a reactionary counterforce that would bring societies back to a kind of electrified feudalism.)

A century and a half later, global capitalism made it possible for ever more people to free themselves from lords and monopolies. The growth of markets gave them the opportunity to choose, to bargain and to say no for the first time. Free trade gave them cheaper goods, new technologies and access to consumers in other countries. It lifted millions and millions from hunger and poverty.

However, at the turn of the millennium capitalism was under fierce attack. An international anti-capitalist movement wanted the government to take more control of the economy with a barrage of tariffs, regulations and taxes. Huge demonstrations took place against the World Trade Organization’s negotiations for more open markets. Free trade, foreign investment and multinational corporations were accused of making the poor poorer. Attac, a French left-wing protectionist movement, spread rapidly throughout Europe. I saw them as a reactionary counterforce that would deprive poor societies of the freedoms they had just begun to take.

I compiled my arguments against them in the book In Defence of Global Capitalism, published in 2001. It was a classical liberal manifesto about why global justice takes more capitalism, not less. Timing is everything and the book became an international bestseller, translated into more than twenty-five languages, including Arabic, Persian, Turkish, Chinese and Mongolian.

And eventually, the globalization debate began to change. Supporters of open economies started fighting back. The critics were often driven by sincere anger about global poverty and injustice. We free traders could start from this common ground and show – with realistic explanations and clear statistics – that we needed freer markets to fight poverty and hunger. The more we discussed, the more it felt as if the opponents realized that it was not as simple as they had assumed, and parts of the audience began to change their mind. They had associated globalization with the status quo, the EU, the World Bank and the IMF, and were taken aback when challenged by opponents who were equally dissatisfied with today’s injustices and offered radical solutions. Soon, the most common position in the debate was that poor countries need more trade, investment and entrepreneurship to develop economically and socially. As UN General Secretary Kofi Annan stated, the problem was too little globalization, not too much.

Soon, Attac lost its popular appeal and faded away. The British anti-capitalist George Monbiot apologized for his protectionism with an article in the Guardian: ‘I was wrong about trade’. There he explained that a world without the WTO would probably be more unfair. And soon, a major campaign against the EU’s agricultural protectionism was launched by the British charity Oxfam, which usually leans left and has been a critic of free markets.

‘I’ve had an epiphany in recent years about commerce. It has upended everything for me,’ declared Bono, the Irish rock musician and activist against global inequality. ‘In dealing with poverty here and around the world, welfare and foreign aid are a Band-Aid. Free enterprise is a cure. Entrepreneurship is the most sure way of development.’ It was a conversion that surprised not just his fans but himself too: ‘Rock star preaches capitalism. Sometimes I hear myself and I just can’t believe it.’1

It goes without saying that this was not just my doing. There were many others who fought day and night and there were many other factors that came into play, especially the simple fact that globalization delivered. Poverty declined in countries that integrated themselves into the global economy, faster than ever before. Oxfam even publicly denied that their new stance was a result of having been converted by me. And Bono has surely listened to me less than I have listened to U2.

The end of globalization was called off, but there was to be no happy-ever-after ending. The twenty years since I wrote my book have been a rough ride for the planet. We experienced the greatest financial crisis of modern times in 2008–9, a major pandemic that shut down the world and killed millions, chaos in the Middle East, terrorist attacks, the migration crisis, geopolitical tensions and the return of large-scale wars of aggression, as Putin invaded Ukraine. During the same period, global warming’s calamitous effects on the planet began to make themselves felt for real.

This has all contributed to a new sense of vulnerability and a renewed suspicion of an open world economy. It inspired a longing for strong men and big governments to protect us from a dangerous world. WTO negotiations stalled completely, its dispute settlement mechanism was undermined by the US and, after the financial crisis, trade’s share of GDP stopped increasing for the first time since World War II. Global economic freedom stagnated and the wave of democratization was ended by an authoritarian backlash.

In China, a thirty-year reform process was reversed, and the state began to regain lost ground. In the Western world, once again it was said that globalization has gone too far and that businesses must be controlled. Where international summits previously talked about opening up, deregulating and liberalizing (even though it was not always translated into action), language was suddenly blurred and fuzzy code words such as inclusivity, sustainability, strategic autonomy and ‘partnership’ between this and that pushed out concrete reform agendas.

Shortly afterwards, a peculiar intellectual swap took place. After the leftist offensive against globalization stumbled, the opposition suddenly migrated to the right. Fighting protectionism is like fighting a skin disease, as the US economist Paul Samuelson once said: no sooner do you cure it in one place than it appears somewhere else. A new generation of conservative politicians now sound very much like Attac did in 2001: the world is dangerous, there is no longer anyone in charge and free trade is destroying local traditions and good jobs. A ‘globalist’, US president Donald Trump explained, is a person ‘frankly not caring about our country so much’.

The rapid progress in poor countries may have shown the West that those countries could benefit from globalization, but since the myth persists that the economy is a zero-sum game that assumes that someone’s gain is always another one’s loss, many have concluded that we in the rich world must be the losers. The worldview is the same, the roles are just reversed – twenty years ago free trade was considered bad because we exploited them, now it is considered bad because they exploit us. Twenty years ago, capitalism was wrong because supposedly it made the world’s poor poorer. Now it is wrong because it makes the poor richer.

When I originally presented my pro-market, pro-trade and pro-immigration arguments I was often attacked for being on the ‘crazy right’. When I express the same arguments today, I am sometimes accused of being ‘woke left’. I’m not the one who’s changed. But since right-wing nationalists do not have much more of an economic agenda than the urge to stop the world so that they can get off (and to throw out immigrants), their rage against globalization has created a new front for what used to be a classic left-wing programme of government intervention. To provide us with a false sense of security, governments have made trade, migration and construction more difficult, all but ensuring slower growth, hurting the very people politicians claim to be protecting.

Today’s dominant narrative about global capitalism – shared by right-wing and left-wing populists but now also, in a milder form, by large sections of the political and economic establishment – does not...