Putin’s Invasion and Neoliberalism

As the war in Ukraine continues into its third week and the slaughter of innocents grows apace, it’s hard to look at anything but its day-to-day trauma, the astonishing courage and resiliency of the Ukrainian soldiers and people, and the dicey behavior of the Biden Administration.  How the war will turn out and its long-term ramifications for Russia, Ukraine, Europe and the U.S., I can only guess at now.  Still, it’s possible to stand back and try to glimpse the bigger picture that’s been mostly overlooked in post-invasion discourse.   

Much of that larger picture is the long-term impact of Russia’s invasion on the neoliberal world order that gradually gained ascendancy after World War II and has prevailed more or less since the collapse of the Soviet Union in 1991.  Put simply, it’s a significant, but far from fatal blow to the neoliberal world view and optimism about humanity’s future.

Although never precisely defined, neoliberalism has always emphasized free markets, capitalism, limited government, low taxes and, more recently, free trade.  That last was greatly encouraged by the demise of the Soviet Union in 1991 and China’s freeing of its economy during the 80s under Deng Zhou Ping and subsequent governments.  In a neoliberal world order, capital must be free to flow to areas with the lowest labor costs, but the fear of expropriation and central economic planning by communist governments discouraged it from doing so.  With the Soviet Union out of the way, the U.S. soon entered into the North American Free Trade Agreement with Canada and Mexico and other similar agreements followed.

A far bolder and further-reaching effort was the establishment, in 1993, of the European Union.  With its single currency, free flow of capital and people across national borders, multiple overarching treaties and regulations plus courts to enforce them, the EU is neoliberalism writ large. 

Meanwhile, one hoped-for consequence of a neoliberal order is a reduction in the number and severity of wars.  After all, why go to the trouble of taking another country’s resources by force when you can simply trade for them to the benefit of both parties?  Needless to say, a Europe whose states and peoples have been at war with each other for millennia hopes the end of war to be one of the bi-products of its member-state integration. 

All of that means (and requires) the diminution of the traditional power of nation states.  Over many centuries, nation states displaced city states and small individually-ruled fiefdoms.  Generally speaking, that was progress.  Nations proved themselves at least as able to protect citizens as were their predecessors and the greater the area ruled, the more uniform could be the laws governing same. Moreover, each of those small jurisdictions tended to impede the movement of goods and people via the imposition of tariffs, feudal duties, etc.  Nation states ruled by monarchs swept those aside opening the door to increased capital formation and greater prosperity.

I suspect that, like it or not, the thrust of human history will involve a continuation of that process, only larger in scope, i.e., a move toward governmental entities ruling ever-larger numbers of people, greater economic integration, fewer borders, fewer competing sets of laws, etc., perhaps, in the far-distant future, a single world government.  It's not too much of a stretch to conclude that, with the dramatic increases in our ability to travel, move goods and communicate over great distances in short periods of time, the long-term future of humanity’s path leads toward, if not a one-world government, then a world of integrated trading blocs described mostly by trade and tariff structures and more traditional cultural and regional differences.  Think of a bloc comprised of the U.S., Western Europe, Scandinavia, Canada, Australia, New Zealand, Japan, South Korea and possibly Mexico, Brazil, Argentina and Chile.  Think of China and perhaps Russia as another.

If I’m right, then current neoliberalism can be seen as a natural step in that direction. 

And, for at least 30 years, it’s worked spectacularly well!  The non-belligerence required for trade seems to have dramatically reduced war.  In 2017, there were 1/13th the number of people killed in international wars as in the 1970s.  And the increase in surplus value occasioned by more prevalent capitalism and freer markets has dramatically improved the standard of living of people around the world.  According to the World Bank, world GDP in 2019 was almost four times what it was in 1990 and per capita GDP was about 2.7 times the 1990 level.  That happened in just 29 years. 

Also according to the World Bank, in 1980, about 45% of the world’s population lived in poverty; by 2015, that number had dropped to under 10%.  Over that same time, world malnutrition was halved.  Infant mortality rates have plummeted and life expectancy has increased by about 10 years on average.  Violent crime is down, availability of clean water and sanitary facilities is up, etc.  (Sources: Johan Norberg, Progress, 2017; Steven Pinker, The Better Angels of our Nature, 2011; Ian Morris, War, What is it Good For?, 2014) 

Those amazing improvements to human well-being can’t be attributed solely to neo-liberalism, but it also can’t be an accident that prosperity has dramatically increased and war decreased coincident with its dominance.  Remember, Europeans have been making war on each other for millennia, but have remained almost entirely at peace with each other since 1945 and the chance of war between any of the EU’s member states looks vanishingly small.  That too is progress.

But neoliberalism is also an attempt to radically alter the way the world has done things for centuries.  As such, it runs against the tide of traditions, cultures and peoples.  Whatever benefits it’s brought, and they are many, humankind isn’t necessarily ready to abandon old ways and adopt new ones and, like all human endeavor, neoliberalism is far from an unalloyed good.  Which is where Vladimir Putin, Donald Trump and Brexit come in.

More on that next time.


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