Jihad vs. McWorld (60 page)

13.
Robert Kuttner,
The End of Laissez-Faire: National Purpose and the Global Economy after the Cold War
(New York: Alfred A. Knopf, 1991), p. 18. Kuttner notices, of course, that “oddly enough, for a decade the U.S. has preached an ever more devout adherence to laissez-faire while practicing a perverse, unacknowledged Keynesianism”—namely its bankrupting support of the dollar as the international medium of exchange, its economy-overheating defense spending, and Reagan’s deficit-enlarging tax cuts (p. 18).

14.
The Economist
, March 13, 1993, p. 21.

15.
See Bruce Rich,
Mortgaging the Earth: The World Bank, Environmental Impoverishment and the Crisis of Development
(Boston: Beacon Press, 1994); also Andrew Cohen’s review essay “Potemkin Environmentalism,”
The Nation
, July 18, 1994, pp. 101–103. On its fiftieth birthday, the World Bank (aka, the International Bank for Reconstruction and Development) is vowing to do better on environmentalism at least. In its 1994 statement “Embracing the Future,” it claims to be as interested in human development programs and the environment as in pure economic development and markets. See Thomas L. Friedman, “World Bank at 50, Vows to Do Better,”
The New York Times
, July 24, 1994, p. A 4.

16.
Kuttner,
End of Laissez-Faire
, p.24.

17.
Thomas L. Friedman, “When Money Talks,”
The New York Times
, July 24, 1994, p. E 3.

18.
Advertisement for “The Czech Republic,”
The New York Times
, January 7, 1994, p. 6.

19.
Holmes, “Drawing Board.”

20.
Walter B. Wriston,
Twilight of Sovereignty
(New York: Scribner’s, 1992), p. 12.

21.
Friedman, “When Money Talks.”

22.
It may be worthwhile citing in full Jeffrey Sachs’s prescription for economic reform in Poland (which appeared as the “Balcerowicz Plan” in honor of Leszek Balcerowicz, Poland’s Deputy Prime Minister for the economy in the government Sachs advised). The five “main pillars” of his
reform were, first, macroeconomic stabilization aimed at cutting the rate of credit expansion by tightening of domestic credit via monetary and fiscal measures; second, liberalization including the end of all central planning, price controls, and regulation of international trade; third, privatization with the transfer of ownership of state assets to the private sector; fourth, the construction of a social safety net including unemployment compensation; and fifth, mobilization of international finance assistance. (Sachs,
Poland’s Jump
, pp. 45-46). Pillar four was never built and pillar five never provided much subsidy, so pillars one through three quickly became the essence of shock therapy. This plan, in which civil society is ignored and political reforms are taken for granted, has been a prescription for disaster almost everywhere.

23.
Ludwig von Mises,
Human Action: A Treatise on Economics
(New York: Van Nostrand, 1949), p. 2. Andrew Bard Schmookler in his effective if overwrought internal critique of market economics perfectly captures the delusions of the marketeers in his title:
The Illusion of Choice
. Carl Kaysen, whom Schmookler cites (p. 37), is typical in his confounding of consumer choice with civic freedom: “People have preferences in respect to what kinds of goods they buy; where they live and work, what kinds of occupations they pursue … what kinds of mortgages, automobile loans, bank loans they owe. The working of the market, provided that it is competitive, makes the best possible reconciliation of these preferences with the technical possibilities of production, which in combination with these preferences … determine what jobs, goods, services are available.” But “preferences” do not determine anything except what consumers happen to “want” at a given moment. Social and political choices are not the expression of preferences but of deliberative choices made in the setting of common debate with fellow citizens trying to figure out what their communities value and need (see below).

24.
Felix Rohatyn, cited in T. Friedman, “When Money Talks, Governments Listen,”
The New York Times
, July 24, 1994, p. E 3.

25.
Just try to talk about citizens or comrades or neighbors or brothers in the lands that have finally rid themselves of communism. In too many of these countries, the failure of the Communist “we” has extirpated hope in the possibility of a democratic “we.” Back in 1990, then mayor Gavriil Popov of Moscow, at that time an “economic reformer” under Gorbachev, wrote: “If economic transformations are to work, we must create an effective apparatus for management, yet the masses have an intense hatred of any bureaucracy.” Since then, they have permitted that bureaucracy to cripple their democratic capacity to act in common to curb wild capitalism. Or, when fed up, have fallen into a nostalgia for governmental bosses who can fix everything (in return for the resurrender of recently won liberties).

26.
Robert McIntyre, “Why Communism Is Rising from the Ash Heap,”
The Washington Post
, National Weekly Edition, June 20-26, 1994, p. 24. Too
familiar with Stalinist government, many of Lenin’s abused children have come to regard democratic government as just one more variation on totalitarianism, the more dangerous because it wears the mantle of popular legitimacy. A cartoon by Margulies hits the mark when it depicts one Solidarity veteran standing in front of a Warsaw market after the 1990 elections in which Solidarity won overwhelmingly, and saying to another: “I’ve had it with bread lines, food shortages, and scarce housing … It’s time we got rid of this rotten government,” only to be reminded by his comrade, “WE ARE the government!” In the days of the Solidarity government; from
The Houston Post
, reprinted in
The Washington Post
, National Weekly Edition, January I—7, 1990.

27.
Critics like Schmookler and Kuttner find markets wanting in their own right and by their own measures. Regardless of whether they are correct, it is when markets usurp political functions that they must necessarily fail.

28.
Both quotes from Guillermo O’Donnell, “The Browning of Latin America,”
New Perspectives Quarterly
, Vol. 10, Fall 1993, p. 50.

  1.
Peter Reddaway, “Instability and Fragmentation,” in the aptly named symposium “Is Russian Democracy Doomed?”
Journal of Democracy
, Vol. 5, No. 2, April 1994, p. 16.

  2.
Michael McFaul, “Explaining the Vote,” ibid., p. 4.

  3.
John H. Fairbanks, Jr., “The Politics of Resentment,” ibid., p. 41.

  4.
Padma Desai, “Ease Up on Russia,”
The New York Times
, December 10, 1993, p. A 35. In the same vein, Saul Estrin introduces his careful conceptual and economic analysis of privatization by admitting that “privatization of the former state sector is, however, not the only way, and may not be the best way to ensure successful transition to the market economy,” although he does not raise (and could not be expected to raise) the question of whether the market economy is the only alternative to the Communist command economy. Saul Estrin,
Privatization in Central and Eastern Europe
(New York: Longman, 1994), p. 4.

  5.
Because so many American progressives and liberals supported Gorbachev, Yeltsin relied in the early days on more conservative advisors including the Heritage Foundation. Cold War veteran Richard Perle is currently involved in joint ventures with new Russian enterprises aimed at the conversion of military facilities! See Jim Hoagland, “The New Guest in Moscow,”
The International Herald Tribune
, April 1, 1992.

  6.
Margaret Shapiro and Fred Hiatt, “The Agony of Reform,”
The Washington Post
, National Weekly Edition, March 14–20, 1994, p. 6.

  7.
Michael Specter, “The Great Russia Will Live Again,”
The New York Times Magazine
, June 19, 1994, p. 31.

  8.
Celestine Bohlen, “Russia’s New Rich on a Giant Buying Spree,”
The New York Times
, August 31, 1993, p. A 1.

  9.
AP report, “Russia’s Reckless Capitalism,”
The Berkshire Eagle
, August 4, 1994.

10.
Specter, “Russia Will Live,” p. 32.

11.
David M. Kotz, “The End of the Market Romance,”
The Nation
, February 28, 1994, pp. 263–265.

12.
Melvin Fagen, “Russia: Shock Therapy Isn’t the Way to Promote Democracy,”
The International Herald Tribune
, May 12, 1992.

13.
James Sterngold, “Summit in Tokyo: Yeltsin Arrives in Tokyo as Aid Plan Is Prepared,”
The New York Times
, July 9, 1993, p. A 7.

14.
Joseph Blasi, “Privatizing Russia—A Success Story,”
The New York Times
, June 30, 1994, p. A 23.

15.
See Louis Uchitelle, “In the New Russia, an Era of Takeovers,”
The New York Times
, April 17, 1994, p. C I. This is “a world of investors still more interested in buying ownership of Corporate Russia for a fraction of its value than in improving what they own.”

16.
Liesl Schillinger, “Uneasy Rider,”
The New Republic
, April 19, 1993, pp. 9–11.

17.
Michael Dobbs and Steve Coll, “The Free Market’s Ugly Face,”
The Washington Post
, National Weekly Edition, March 1–7, 1993. Also see “From Russia with Cash,”
The Washington Post
, National Weekly Edition, February 15–21, 1993. The polite version of this phenomenon is given by Alexander Bim, D. Jones, and T. Weisskopf in their soothingly economistic account of “Privatization in the Former Soviet Union and the New Russia,” where they write: “The predominance of insider control of privatized enterprises in Russia at the present time reflects not only problems in the tactics of the radical reformers … (but) the strong desire of a large proportion of the Russian people for stability and security.” Estrin,
Privatization,
p. 274.

18.
Bill Gifford, “Art of the Zdyelka,”
The New Republic
, February 28, 1994, p. 12. Gifford describes how the ruble exchange rate leapt in January 1, 1994, from 1,250 a dollar to, just three weeks later, I,800 a dollar, with the July 1994 ruble futures contract selling at 2,174 a dollar. The original Russian voucher plan offered every Russian vouchers worth 10,000 rubles each, or two weeks of a miner’s salary or ten bags of potatoes or three cases of vodka or in dollars, ten cups of coffee in the West. The total voucher offer was for an estimated fixed capital of I.4 trillion rubles divided by 150 million people. Companies with over one thousand employees or fixed capital of 50 million rubles were required to privatize. Bill Gifford, “Russian Citizens to Get Share,”
The New York Times
, October 1, 1992, p. A 1.

19.
See Wendy Carlin and Colin Mayer, “The Treuhandanstalt: Privatization by State and Market,” Paper Presented at the National Bureau of Economic Resources Conference on Transformation in Eastern Europe, Cambridge, Mass., February 26–29, 1992. Carlin admits, for example, that Germany’s office of privatization (Treuhandanstalt—see below) also shed jobs to control their own expenditures. No one seemed much interested in the impact of labor-shedding practices on the millions of East German workers who were supposed to be socialized into West Germany’s democracy.

20.
The results of the December 12, 1993, elections were:

21.
Only Albania, Armenia, the Czech Republic, Estonia, and Latvia have kept their Communists completely out of their governing circles.

22.
“Every Man a Tsar,”
The New Yorker
, Vol. 69, December 27, 1993, p. 8.

23.
For the environmental costs of the transition see Murral Feshbach and Alfred Friendly, Jr.,
Ecocide in the USSR: Health and Nature Under Siege
(New York: Basic Books, 1992), pp. 565-566. The problem is less ongoing despoilation than the economic inability to clean up the mess left by the Soviet regime. Chernobyl, still operating, and Lake Baikal, among the world’s largest freshwater bodies (still dead for all practical purposes), are perhaps the best known examples of the economic disincentives to ecologically sound policy produced by the new market economy.

24.
Michael Specter, “Climb in Russia’s Death Rate,”
The New York Times
, March 6, 1994, p. A i. Falling life expectancy reflects the reemergence of diseases like cholera and tuberculosis as well as the swath being cut by crime and alcoholism through the Russian male population. Vodka, a Russian sop under commissars and tsars alike, is the one consumer item available at a realistic price (about a dollar a bottle).

25.
For a check on these generalizations, readers may wish to consult the United Nations Children’s Fund’s
Crisis in Mortality, Health and Nutrition
, a survey of health conditions from 1989 to 1994 in Russia, Albania, Bulgaria, the Czech Republic, Slovakia, Hungary, Poland, Romania, and the Ukraine. UNICEF director James P. Grant states: “This health crisis is unprecedented in the peacetime history of Europe in this century,” and is “obviously … eroding political support for the reforms that are under way.” Barbara Crossette, “U.N. Study Finds a Free Eastern Europe Less Healthy,”
The New York Times
, October 7, 1994, p. A 13.