A foreign “subversive” journalist, driven by fevered idealism, publishes reams of leaked internal documents from an Authority that, beneath its carefully positioned mask of civility, honor and justice, views the whole world – of both friend or foe – as its own playground, and engages in the most corrupt and underhanded wheelings and dealing to maintain its lofty pretensions to hegemony. Though the Authority is entirely comfortable with selectively using the material contained therein to legitimize its ideological-imperialist projects to the public, its minions in the Mainstream Media and even its most prominent Archons experience no cognitive dissonance in calling for that accursed fiend, the revealer, to be branded with the number of the Beast that is “terrorist”, and to be henceforth sentenced to eternal imprisonment, or the death penalty, or the most apocalyptic of all, a Perunian thunderstrike from the skies. Now if this were real life as allegory, what would it it refer to?

Perhaps its the Mooslims? Nah, the Islamists aren’t that well organized or articulate. More to the point, they don’t leave extensive paper trails. The Rooskies? But when Russian officials make shady threats, their targets at least tend to be Russian Federation citizens and real traitors. No – as usual, it’s the West and its hypocrisy at its finest.

Now let’s make some things clear, first. As Defense Sec. Robert Gates correctly points out, the real impact of Wikileaks is modest. For instance, one of the ostensible “shocker” cables, revealing the support of the Arab elites for a US strike on Iranian nuclear installations, was well known in geopolitical circles well beforehand (heck, I mentioned this back in August and earlier). Even the impact of these official revelations on the “Arab street” are likely to be minimal, given that (1) polls show a (slight) majority of Arabs in Egypt and Lebanon willing to resort to military force to prevent an Iranian nuke and (2) alleged censorship of Wikileaks in the region.

Nor is Wikileaks – at least as of now – causing major tensions, or repressive attempts at censorship, in countries like Russia. (PLEASE READ: Throwing Down the Gauntlet on Wikileaks & Russia). This is in stark contrast to the claims of the Western MSM in the prelude to Cablegate, e.g. Christian Science Monitor:

Wikileaks ready to drop a bombshell on Russia. But will Russians get to read about it? Wikileaks is about to release documents on Russia, but the tightly-controlled Russian media is unlikely to report them the way Western media attacked the documents about Afghanistan and Iraq.

Which is of course why state news agency RIA and Gazprom-owned Kommersant both reported it on the same day. And as of now, there are literally thousands of results in the Russian news on Cablegate. Way to fail LOL!

Then Simon Shuster writing for TIME took an anonymous FSB comment (to Russian website LifeNews) and ran with it to make all kinds of fantastical insinuations about how the Kremlin would poison Assange or crash the Wikileaks site. Of course the Pentagon’s / CIA’s war against Assange is hardly mentioned (remember the 100-strong anti-Wikileaks unit set up by the Pentagon? The honey trap & rape accusations against Assange in Sweden?), but the funniest quote is this one:

So the most likely Russian reaction, at least at first, would be to undermine the authenticity of the alleged secrets. “That is the main tool, to filter it through the state-controlled mass media, which would discredit WikiLeaks and put into question the reliability of its sources,” says Nikolai Zlobin, director of the Russia and Eurasia Project at the World Security Institute in Washington, D.C. “This would limit any public debate of the leak to the Russian internet forums and news websites, which reach a tiny fraction of the population.”

Guess what, I agree! The only problem is that Russia would just be ripping a page straight out off the Western playbook!

• The war on WikiLeaks and why it matters
• Fact-free accusations about WikiLeaks
• More on the media’s Pentagon-subservient WikiLeaks coverage
• NYT v. the world: WikiLeaks coverage

As of now, Russia is surviving the Wikileaks storm in pretty good shape. What have we got so far? The absolutely shocking kompromat on the Kremlin-ideologist-without-an-ideology Surkov, who apparently has an Obama portrait in his office and likes Tupac; Ramzan Kadyrov clumsily dancing with a gold-plated Kalashnikov stuck in his jeans at a Daghestani wedding that might as well be out of a modern day Prisoner of the Caucasus novel; the Russian account of the South Ossetia War is if anything further confirmed, the picture being one of US diplomats willing to believe anything their Georgian intermediaries told them about the evil imperialist Rooskies; oh, and the matter of Russia being a “mafia kleptcracy”, at least as per US diplomats channeling marginal Russian oppositionists.

González said the FSB had two ways to eliminate “OC leaders who do not do what the security services want them to do”. The first was to kill them. The second was to put them in jail to “eliminate them as a competitor for influence”.

Erm, isn’t this what security forces anywhere are SUPPOSED to do?? (And I’d note there’s no shortage of historical examples of the CIA working hand in hand with organized crime to reach desired political outcomes in foreign countries, e.g. see Operation GLADIO). And, I mean, sure, it’s no secret to anybody who doesn’t live underneath a rock that there’s lots of shady and rather nasty people in the Russian bureaucracy; but without any names, there’s nothing new and all this diplo gossiping is all rather useless. Former Moscow Mayor Luzhkov is a centroid of corruption? You don’t say… (and perhaps soon to be forgotten with his recent ousting and move into the opposition).

As with Russia, there is – as of now – nothing truly compromising in the US files. Just some uncomfortable moments, and assessments of foreign leaders: e.g. see right, and the characterization of Azeri President Ilham Aliyev as being “Michael (Corleone) on the outside, Sonny on the inside”, and his alleged use of criminal slang. Remember the  walkout on Ahmadinjad’s UN speech? Wikileaks reveals that it was an American initiative. The Swedish ambassador was supposed to leave the hall when Ahmadinejad came to the keyword “Holocaust” (and presumably its denial as he is wont to do). But this time Ahmadinejad refrained. So the poor Swede was left in a fluster when Ahmadinejad actually failed to mention the H-word, and could only frantically consult the Americans on what to do next. And so the circus goes on…

But none of this is the real point. Up till now, Wikileaks is just not that big of a game changer. The real point is the reaction to them in the West. And what that reaction says about the erosion of civil liberties in the past decade in the name of the holy “war on terror.” Regrettably, it is at this point that #cablegate is no longer a laughing matter. It becomes a mirror on the degenerating Western political soul.

Now I don’t know about you, but when an adviser to Canadian PM Harper openly calls for the assassination of Julian Assange (with no apparent consequences); when in actions reminiscent of China’s iron grip on its Internet, US politicians presume to demand – and get – American servers to pull Wikileaks; when there is serious consideration at the highest political levels of charging foreigners with treason against the US (a contradiction in terms); when former and potential future US Presidential candidates like Sarah Palin* – not to mention prominent commentators and numberless freepers – call for Assange to be “pursued with the same urgency we pursue al Qaeda and Taliban leaders”, and assassinated without charges, trial or due process; when all this happens, I become concerned about the future sustainability of the liberal political system in the face of the creeping advance of the national security-cum-surveillance state.

I don’t want to be melodramatic, but the right’s reaction to this affair is eerily totalitarian. Dehumanization? Check – see the rape charges, the classic intelligence agency smear against inconvenients everything.

On the issue of the Interpol arrest warrant issued yesterday for Assange’s arrest:  I think it’s deeply irresponsible either to assume his guilt or to assume his innocence until the case plays out.   I genuinely have no opinion of the validity of those allegations, but what I do know — as John Cole notes — is this:  as soon as Scott Ritter began telling the truth about Iraqi WMDs, he was publicly smeared with allegations of sexual improprieties.  As soon as Eliot Spitzer began posing a real threat to Wall Street criminals, a massive and strange federal investigation was launched over nothing more than routine acts of consensual adult prostitution, ending his career (and the threat he posed to oligarchs).  And now, the day after Julian Assange is responsible for one of the largest leaks in history, an arrest warrant issues that sharply curtails his movement and makes his detention highly likely.

If I had to make a guess, I’d say Assange’s impropriety was limited to a one-night stand, in a culture where awkwardly lengthy dating and mating rituals are the apparent norm. Presumably, he failed to “satisfy” the ladies – not due to any lack of his own efforts, if it was a CIA sting – and thus got himself screwed several months later.

After the smear, as chronicled by Glenn Greenwald, comes “the increasingly bloodthirsty two-minute hate session aimed at Julian Assange, also known as the new Osama bin Laden“:

The ringleaders of this hate ritual are advocates of — and in some cases directly responsible for — the world’s deadliest and most lawless actions of the last decade.  And they’re demanding Assange’s imprisonment, or his blood, in service of a Government that has perpetrated all of these abuses and, more so, to preserve a Wall of Secrecy which has enabled them. To accomplish that, they’re actually advocating — somehow with a straight face — the theory that if a single innocent person is harmed by these disclosures, then it proves that Assange and WikiLeaks are evil monsters who deserve the worst fates one can conjure, all while they devote themselves to protecting and defending a secrecy regime that spawns at least as much human suffering and disaster as any single other force in the world.  That is what the secrecy regime of the permanent National Security State has spawned. …

In this latest WikiLeaks release — probably the least informative of them all, at least so far — we learned a great deal as well.  Juan Cole today details the 10 most important revelations about the Middle East.  Scott Horton examines the revelation that the State Department pressured and bullied Germany out of criminally investigating the CIA’s kidnapping of one of their citizens who turned out to be completely innocent.  … British officials, while pretending to conduct a sweeping investigation into the Iraq War, were privately pledging to protect Bush officials from embarrassing disclosures.  Hillary Clinton’s State Department ordered U.N. diplomats to collect passwords, emails, and biometric data in order to spy on top U.N. officials and others, likely in violation of the Vienna Treaty of 1961 (see Articles 27 and 30; and, believe me, I know:  it’s just “law,” nothing any Serious person believes should constrain our great leaders).

And there’s no shortage of that freeper and neocon carrion awaiting the feeding frenzy with baited breath.

First we have the group demanding that Julian Assange be murdered without any charges, trial or due process.  There was Sarah Palin on on Twitter illiterately accusing WikiLeaks — a stateless group run by an Australian citizen — of “treason”; she thereafter took to her Facebook page to object that Julian Assange was “not pursued with the same urgency we pursue al Qaeda and Taliban leaders” (she also lied by stating that he has “blood on his hands”:  a claim which even the Pentagon admits is untrue).  Townhall’s John Hawkins has a column this morningentitled ”5 Reasons The CIA Should Have Already Killed Julian Assange.”  That Assange should be treated as a “traitor” and murdered with no due process has been strongly suggested if not outright urged by the likes ofMarc Thiessen, Seth Lipsky (with Jeffrey Goldberg posting Lipsky’s column and also illiterately accusing Assange of “treason”), Jonah Goldberg, Rep. Pete King, and, today, The Wall Street Journal.

The way in which so many political commentators so routinely and casually call for the eradication of human beings without a shred of due process is nothing short of demented.  Recall Palin/McCain adviserMichael Goldfarb’s recent complaint that the CIA failed to kill Ahmed Ghailani when he was in custody, or Glenn Reynolds’ morning demand — in between sips of coffee — that North Korea be destroyed with nuclear weapons (“I say nuke ‘em. And not with just a few bombs”).  Without exception, all of these people cheered on the attack on Iraq, which resulted in the deaths of more than 100,000 innocent human beings, yet their thirst for slaughter is literally insatiable.  After a decade’s worth of American invasions, bombings, occupations, checkpoint shootings, drone attacks, assassinations and civilian slaughter, the notion that the U.S. Government can and should murder whomever it wants is more frequent and unrestrained than ever.

Those who demand that the U.S. Government take people’s lives with no oversight or due process as though they’re advocating changes in tax policy or mid-level personnel moves – eradicate him!, they bellow from their seats in the Colosseum — are just morally deranged barbarians.  There’s just no other accurate way to put it. These are usually the same people, of course, who brand themselves “pro-life” and Crusaders for the Sanctity of Human Life and/or who deride Islamic extremists for their disregard for human life.  ….

It didn’t have to be this way. The ultimate significance of Wikileaks is limited: it gives the peons a glimpse into high diplomacy (and underlines the US need for greater information control in this sphere); as Craig Willy points out, it enables a convergence of history and political science, and hence a “contemporary history” (the same point is made by Timothy Garton Ash); and it underlines the rather colonialist, entitlement-ridden, and frequently culturally challenged (just consult the Moscow cables in which diplomats repeat the MSM journalists on Russia virtually verbatim) mindset of the US diplomatic corps. But little of it is can be considered truly malevolent**.

No, what’s really damning about this affair is the elite’s uniform propaganda against an organ committed to finding and leaking their darkest and most sordid secrets. The compliance of the “exceptional” and “constitutional-loving” Western sheeple in further promoting their already abysmal ignorance. And funniest of all, the Fourth Estate’s own screeds against government openness and unaccountability: “uncritically passing on one government claim after the next — without any contradiction, challenge, or scrutiny”, and their sole complaint being that the glorious State isn’t restrictive enough. As I wrote about the Western MSM years back:

Control is all about imposing your view of reality on the minds of others. Since overt political persecution is no longer widely accepted, the elites have resorted to fighting wars over hearts and minds. Western media manipulation is not readily noticeable, since if that were the case the simulation’s plausibility would fall apart immediately (as was the case in the Soviet Union)…This makes them far more insidious and dangerous to freedom than any repressive dictatorship; for in the latter one knows one is a slave, while too many Westerners continue to be believe they are free, whereas in fact they are also slaves, like the rest of us.

It’s truer than ever, as Westerners shun or smash the last mirrors available to them, and Orwell continues spinning in his grave.

* I left the message “I support Sarah’s righteous demand to hunt down Assange in close cooperation with our North Korean allies” at Sarah Palin’s Facebook Page. It was a reference to a recent gaffe of hers (or more likely a demonstration of political cluelessness). A few hours later, I discovered that my comment had been removed and censored, and that I was also blocked from making further comments on Sarah Palin’s Facebook page

** I must also stress that these cables are far from the most highly classified secrets. The real juicy bits can only be accessed by the President and a dozen others, but the chances of them ever being Wikileaked are really, really low.

Drawing on Goodin’s work, let us clarify the definition of the democratic welfare state. First, welfare states are explicitly market-based (ranging the gamut from America’s relative laissez-faire to Belarus’ “market socialism”) – according to Marshall, it “did not reject the capitalist market economy, but held that there were some elements in a civilized life which ranked above it and must be achieved by curbing or suppressing the market”[3]. Second, it does not (necessarily) aim for radical economic or social transformations; its goals are more modest – “the characteristically welfare statist approach is to opt for readjusting final distributions [primarily to relieve those in the most distress through direct provision of basic needs like food, shelter, etc], rather than altering the pattern of property rights in productive resources that gave rise to undesirable distributions in the first place”[4]. Third, welfare is enshrined in law and viewed as a universal civil right for those deserving of it, in contrast to private charities and the “public charity” embodied in the English Poor Laws (their aid being viewed as gifts and humiliating to have to accept).

This concept of a welfare state, contractually obliged to succor the destitute while retaining its capitalist market-based infrastructure, was disparaged by the right and scorned by the left. Classical liberals and the neoliberal “New Right” abhorred the welfare state for what they saw as its encouragement of indolence, forced redistribution of wealth, and disincentives to hard, honest labor. Social conservatives in this category also lambasted it for contributing to family breakdown. On the other side of the spectrum, Marxists regard it as both a window dressing for capitalism and proof of its  inferiority, since it needs to be patched up so in order to survive its internal “contradictions”[5].

Now we will examine the validity of the arguments for and against a welfare state from the perspectives of Robert Goodin[6], Milton Friedman[7] and Roland Huntford[8]. Goodin believes there is a case to be made for at least a minimal welfare state on ethical grounds, namely as a device for shielding the poor and vulnerable from exploitation by those who have discretionary power over the resources they need. His thesis is that “the problem to which the welfare state is the solution is the risk of exploitation of dependencies”, which could occur both in “the course of interactions in ordinary markets” and “between benefactor and beneficiary in the context of old-style public or private charities”. By using legislative power, the state can mitigate the former by “removing a wide range of interactions from the market” and the latter by “tightly defining the legal rights and duties of welfare claimants and welfare dispensers”. In other words, the market is part of society and likewise market power inevitably seeps into social and political power, and hence a Leviathan is needed to check the worst depredations.

The classical liberal and libertarian Milton Friedman, unsurprisingly, disagrees[9]. Though not an anarchist – he believes government has an essential role as a ‘rule-maker and umpire’ (based of course on the democratic consent of the population), he strongly opposes its interference in all but the most pressing cases (e.g. madmen, children). However, a liberal like himself has difficulty accepting government action on paternalistic ground for “responsible” people, since it involves “the acceptance of a principle – that some shall decide for others – which he finds objectionable in most applications and which he rightly regards as a hallmark of his chief intellectual opponents, the proponents of collectivism in one or another of its guises, whether it be communism, socialism, or a welfare state”. It undermines the “free man’s belief in his own responsibility for his own destiny”

Furthermore, Friedman stresses the importance of guarding against creeping complacency about government intervention, quoting Dicey, “the Mental Deficiency Act is the first step along a path which no sane man can decline to enter, but which, if too far pursued, will bring statesmen across difficulties hard to meet without considerable interference with individual liberty”. Growing acceptance of government intervention on economic liberties is self-sustaining and may spill over into the restrictions on political and social rights that are necessary to enforce the economic regulations which are in the ostensible service of welfare and egalitarianism. These arguments are not dissimilar from Schumpeter’s (Capitalism, Socialism and Democracy, 1942) fears – and prediction – that a welfare state is but a stepping stone to socialism, and even Hayek’s (The Road to Serfdom, 1944) argument that soft forms of collectivism have a tendency of evolving into totalitarianism.

In comparing Goodin’s and Friedman’s arguments, it becomes obvious that the main debate is about two choices – to have a welfare state (Goodin) or not to have one (Friedman), for the moment discounting any gradations between them. However, this is a simplification, for there are numerous flavors of welfare state. We will list the three major ones[10]. First, there is the “liberal welfare state” (the US, Australia), which regard markets as the primary guarantors of welfare with government only stepping in to restrict un-competitive practices, streamline market distortions and assume only minimal relief obligations from private charitable and religious groups. This setup, based on the “freedom to choose” (or “freedom to lose” according to left-wing critics), is one Friedman would have probably been at peace with as a compromise, even though he argues private monopolies are preferable to public monopoly or public regulation and considers many arguments for state support on the basis of “neighborhood effects” to be just special pleading. On the other hand, Goodin would defend this system as the absolute minimum mandated by societal and humanitarian ethics.

Second, there is the “corporatist welfare state” prevalent in continental Europe (France, Germany), a socially conservative philosophy in which the provision of welfare is tied to the imperative of maintaining social stability. According to Mahmud, Goodin and Parpo[11], “corporatists see freedom in more Hegelian terms, in which people are freed to realize their true nature as fundamentally social beings living in organic groups (first and foremost, the family)”. Third, and the most radical one, is the “social democratic welfare state” (Sweden), which completely eschews the negative liberties of non-intervention embodied in classical liberalism, and instead aggressively pushes (self-defined) social progress and egalitarianism through state institutions and regulations – they define economic freedom not as “to choose” (liberals) or “to lose” (leftists), but as “freedom from [want]” rather than “freedom to [do almost whatever you want]”. Friedman would regard the former system as corrupt and the latter as outright dangerous and quasi-Orwellian. Speaking of which, Huntford makes this argument explicitly, asserting that “welfare [is] an instrument of control”[12].

In his book The New Totalitarians, Huntford points a rather dystopian, “Brave New World” picture of Sweden, the social democratic welfare state par excellence. He acknowledges that welfare has not undermined the Swedes’ industriousness, since it’s geared towards “[dispelling] need without crossing the threshold of prosperity”; near full employment is attained, because “social security will guarantee bread and butter, but you must earn the jam yourself”. He argues its effects are far more pernicious in a social, psychological and spiritual sense. Swedes regard social security as a hallowed privilege bestowed unto them by a beneficent state, requiring the adoption of a “serf mentality” and homage in return. Citizens’ behavior is supervised by social workers for their own good, and their rights can be restricted if deemed necessary (e.g. in the case of alcoholism) for society’s – and their own – good. “Social security, having been turned into a component of the collective and individual personality, is a channel of subconscious manipulation”, to keep the Swedes intimidated into conformity, like clerical threats of hellfire of old; the Swede, made docile by a long statist tradition – “he is like a man who, never having stood against a blizzard, hides from a flurry of snow” – easily succumbs. Crime is a sickness, as is dissidence, but a transgressor can be redeemed because it is all a product of the environment, and hence they are personally not responsible. Furthermore, the Swedish welfare state continues to metastasize, from a mechanism designed to give basic help if asked when incepted in the 1930’s, to the idea that welfare is a right in the 1960’s, and the active propagation of welfare onto people by the 1970’s, with architects now optimizing town plans to make welfare offices maximally accessible. Emigration stats are concealed, for in the “new totalitarianism”, apostasy is “the only sin”.

Considering the dramatic language Huntford uses, it is not hard to decipher his opinions about the welfare state. In this polemical book, he emphasizes how Sweden is the most efficient of totalitarian states because its population of slaves is not coerced, as in Nazi Germany or Stalinist Russia, but conditioned into acceptance of the collective will; Sweden’s positive achievements in building a fairer and economically stable society are neglected (even as early as 1936, the commentator George Soloveytchik wrote in The New Statesman and Nation that Sweden had found a “middle way between collectivism and individual free enterprise”, forming a “unique example of a controlled capitalism that works[13]). Second, as an example of his hyperbole he claims that sexual libertinism only emerges as liberty recedes, using Sweden as an alleged example – however, this isn’t backed by the historical evidence, since Nazi Germany and 1930’s Russia were far more socially, including sexually, conservative, than their respective predecessors – Weimar Germany, the country of Cabaret, and the early USSR, which was the first state to legalize abortion in 1920[14]. Third, Sweden substantially liberalized its economy during the last two decades (although it retained a comprehensive welfare system) and has been classified as a full democracy every year from 1946 to 2008[15], both of which would be surprising if Sweden really were the totalitarianism of the collective Huntford portrays it as.

In conclusion, the modern welfare state is a construct designed to harness the power of markets, while buffering society’s indigents from their excesses. However, it is criticized as an infringement on personal liberties by classical liberals, condemned as an enabler of indolence and immorality by social conservatives, and scorned by the hard left which sees it as a bourgeois ploy to alleviate capitalism’s “contradictions” while preserving the essence of exploitation. This reaction is almost all down to the commentator’s own, subjective values.

Friedman’s belief in the autonomy of the individual, the near-untrammeled power of markets to reach Pareto-optimal outcomes, and in the perniciousness of big government colors his attack on the welfare state. Huntford is a champion of individualism, risk-taking and moral upstanding – and the perceived absence of this in Swedish society, along with its alleged Brave New World of collective consensus, surveillance, conditioning, weaponized psychiatry, licentiousness, etc – causes him to hyperbolically label it as a new totalitarianism. Goodin is an ethicist who believes society has an obligation to feed, clothe and educate its neediest, if nothing else, so he confines himself to defending the moral foundations of at least a minimal welfare state, and does not believe it necessarily leads to tyranny (Friedman, Hayek, etc) nor makes an issue about its supposed effects on society’s morality (Huntford, Limbaugh, Mark Steyn, etc).

Establishing the real linkages between freedom, democracy and welfare in an objective way is really difficult, if at all possible. It is further muddled by which definitions to use. Freedom can be either negative (freedom from restraint) or positive (freedom to achieve one’s potential). The welfare state, by requisitioning a large portion of the population’s resources and having to rigidly enforce transparency and punish corruption (given the greater size of government, corruption is far more damaging than in a classical liberal state), obviously impinges on negative liberty. There is however evidence that welfare enables greater positive liberty – although poorer than the US, most European countries have lower absolute poverty rates and much lower relative poverty rates[16], and a 2005 LSE report concluded that “Britain and the United States have the lowest levels of cross-generation mobility, lying well below Canada and the Nordic countries”[17] – mostly thanks to better education opportunities for the poor in welfare states.  This may constitute a rather damning indictment of the continued relevance of the “American Dream” for ordinary Americans. On the other hand, the US can still pride itself on having one of the world’s best conditions for doing business[18] and extensive civil liberties – a fact not lost on the millions of immigrants who continue coming to its shores.

Democracy is an altogether trickier concept to define and analyze. Although today it implies a society holding frequent, fair elections to choose its representatives in an atmosphere of rule of law, commentators from Plato to de Tocqueville described it as either anarchy or tyranny of the majority[19]. A provocative thought-experiment: in early 2008, President Putin ruled over a Russia that was less-developed in terms of civil and political rights than the US and was portrayed as an old-style autocrat by the Western media, yet his approval ratings in Russia (c.70%) were higher than those of Bush (c.30%). So who was the more democratic? By the modern definition, Bush; by the older, Putin. I will take the latter view (because the modern definition of democracy is rather similar to the concept of negative liberty we already discussed – both imply an existence free from the depredations of the state), hence the relationship between democracy and welfare will be neutral. The community itself, to its maximum possible ability, will exert its will on the political system as to the amount of welfare it wants. Though one may add the caveat that historically democracies tended to increase social welfare (see Schumpeter’s attempted explanation for it), there are also significant reverses like Reagan in 1980’s America and Germany’s 2009 election that reinforced fiscal conservatism; in contrast, during the recent economic crisis the US opted for a candidate leaning towards greater welfarism.

Finally, we should note that these election results – an increase in support for welfare in the US, a shift to the right throughout most of Europe[20] – reflects a deeper and far more consequential implication for the welfare state than theoretical discussions about its effects on freedom and democracy. Much of the continent, especially in Central Europe, Eastern Europe and the Mediterranean, is wracked by very low fertility rates and rapidly aging populations. To take Germany as an example, its total fertility rate (TFR), the number of expected children per woman in a lifetime, fell below the replacement level rate of 2.1 in the early 1970’s and hovered at around 1.2-1.5 since, which decimated the amount of new laborers entering the workforce today. Meanwhile, its high and rising life expectancy will impose a huge burden in pensions and medical costs[21]. Projecting to 2050, it would need annual immigration of 487,000 people just to keep the labor size constant and 810,000 to maintain a 3:1 ratio between workers and retirees (UN), which is politically unfeasible (furthermore, in recent years Germany’s net immigration rate was much less than 100,000). Facing a declining consumer base, falling demand for exports from a US which needs to save more, soaring sovereign debt, an aging population, and an uncertain energy future[22], Germany is facing great economic uncertainties – and much the same analysis could be extended to the rest of the European Union. The European electorate may have subconsciously realized that.

Napoleonic France introduced pensions for civil servants, Bismarck’s Germany invented the social security system, and Sweden developed the social-democratic welfare state in the 1930’s. The modern welfare state reached its apogee on the European continent on the back of the post-war economic miracle and demographic expansion. Both have come to an end, and so too may the modern welfare state as we know it.

[2] Goodin, Robert, Reasons for Welfare: The Political Theory of the Welfare State (1998: Princeton University Press).

[3] Marshall, Thomas, Class, Citizenship and Social Development (1963: University of Chicago Press).

[4] Goodin, Robert, Reasons for Welfare: The Political Theory of the Welfare State (1998: Princeton University Press).

[5] http://marxists.org/glossary/terms/w/e.htm#welfare, accessed 15^th Oct 2009.

[6] Goodin, Robert, Reasons for Welfare: The Political Theory of the Welfare State (1998: Princeton University Press).

[7] Friedman, Milton, Capitalism and Freedom (1962: University of Chicago Press).

[8] Huntford, Roland, The New Totalitarians (1971: Allen Lane).

[9] Friedman, Milton, Capitalism and Freedom (1962: University of Chicago Press).

[10] Rice, James Mahmud; Robert E. Goodin, Antti Parpo (September-December 2006). “The Temporal Welfare State: A Crossnational Comparison Policy 26 (3): 195″. Journal of Public–228 (http://www.jamesmahmudrice.info/Welfare.pdf).

[11] Ibid.

[12] Huntford, Roland, The New Totalitarians (1971: Allen Lane).

[13] Hale, Frederick, Brave new world in Sweden? Roland Huntford’s The New Totalitarians, published in Scandinavian Studies, volume 78, issue 2, pp. 167(24), (2006: Thomson Gale).

[14] The Soviet Encyclopedia (http://slovari.yandex.ru/dict/bse/article/00000/17000.htm, accessed 15^th Oct 2009).

[15] Polity IV Project: Political Regime Characteristics and Transitions, 1800-2008 (http://www.systemicpeace.org/polity/swd2.htm, accessed 15^th Oct 2009).

[16] Bradley, D., Huber, E., Moller, S., Nielson, F. & Stephens, J. D. (2003). Determinants of relative poverty in advanced capitalist democracies. American Sociological Review, 68(3), 22-51.

[17] Blanden, Jo, Paul Gregg, and Stephen Machin. Intergenerational Mobility in Europe and North America. Department of Economics, University College London, Centre for Economic Performance, London School of Economics, University of Bistrol, London School of Economics. London, 2005. 1-20.

[18] See the World Bank’s Ease of Business ratings (http://www.doingbusiness.org/EconomyRankings/).

[19] Janos, Andrew, Authority and the Political System, PS 2 reader.

[20] A conservative result in the European elections, The Economist (July 11^th, 2009).

[21] Demographic statistics at http://www.mortality.org/.

[22] Germany’s Energy Watch Group (http://www.energywatchgroup.org/) and several other commentators believe the world is close to or has already passed “peak oil” production.

The Big Questions

1. Demographic problems: aging, low fertility and Eurabia?
2. The unsustainability of the modern welfare state?
3. Cultural decline & reaction against liberal rationalism?
4. The return of Great Power politics? (e.g. Mearsheimer 1990), & the decline of the EU and growing centrality of Franco-German relations, – or will the EU survive, and if so in what form?
5. National trends: a secure, “flourishing” France; a troubled but powerful Germany; Poland beset on two fronts; marginalized Britain, Spain & Italy, all in decline; Sweden as preeminent Baltic power; on the outskirts, both Russia and Turkey increase their power – realistic?
6. The retreat into authoritarianism and militarism? Europe as a Black Continent?

European Trends

Without much exaggeration, demography is Europe’s central issue for the foreseeable future. Just to keep the labor force constant, the EU needs 1.6mn immigrants annually (current population: 500mn); to maintain a 3:1 ratio of labor force to retirees, it will need 3.1mn immigrants yearly to offset the aging of the population. These kinds of numbers are probably unrealistic due to (justified?) European xenophobia, especially in the east and center.

The root explanation is Europe’s post-1970 fertility collapse, especially pronounced in Germania, the Mediterranean (Spain, Italy, etc), and the Visegrad region (East-Central Europe). It is most severe in Germany and Austria (both TFR = 1.3), where the total fertility rate (TFR) fell below the replacement-level rate of 2.1 children per woman in the early 1970′s; since the Germans have not been reproducing themselves for a full generation now (and have no desire to start doing so, as even the desired TFR is at a low 1.8), they will inevitably fall into a death spiral.

The situation is similar in the Mediterranean nations and Visegrad (TFR around 1.3), with the exception that their fertility falls came a decade and two decades after Germany’s, respectively. However, much like Russia, Visegrad still has chances of effecting a demographic recovery, assuming their fertility collapse was primarily a result of “transition shock” instead of “social modernization”. Much better off are France (TFR = 2.0), the UK (TFR = 1.9), and the Nordic countries like Sweden (TFR = 1.7), whose fertility rates are all within a manageable distance of the replacement level rate.

However, conservatives who fear the coming of a Muslim Europe – “Eurabia” – are going to be happy. That theory rests on the assumptions that a) the size of the Muslim minority in Europe is severely underreported, b) the Muslim minority retains its extreme religiosity, c) “reversion” to Islam will increase, and that d) the high fertility rates of first-generation Muslims and e) high levels of Muslim immigration will continue indefinitely in the face of rising European xenophobia. All of these assumptions are very much open to question. The far likelier possibility is that the trans-European Muslim community will be scapegoated by a declining continent rediscovering its old geopolitical faultlines.

Napoleonic France introduced pensions for civil servants, Bismarck’s Germany invented the social security system, and Sweden developed the modern welfare state in the 1930’s – a system that reached its apogee on the European continent on the back of the post-war economic miracle and demographic expansion. Both have come to an end, and so too may the modern welfare state as we know it.

Due to their fertility crises, Europeans will find it increasingly difficult to maintain their generous welfare states. Sweden will likely soldier on with its “social-democratic welfare state”, given that it lies at the heart of its identity (social mobility, egalitarianism, progressivism); a (relatively) youthful France will also find it manageable to retain the extensive perks, privileges, and niceties of its dirigiste system. Though demographically healthy, Britain has an array of other critical problems that will force it to strip down the bloat and return to its traditionally minimal “liberal welfare state”. In low-fertility Europe, raising the retirement age and cutting down the “corporatist welfare state” to the spartan standards of the earlier 20th century is now the only realistic solution, the alternatives being one or two more decades of decay followed by fiscal and social collapse. The rightist wave sweeping the European elections of 2009 may be a subconscious realization that it’s time for taking responsibility.

The wealth, social solidarity, and geography of European nations means that overpopulation, pollution and climate change will not have quite the same critical impact as in other regions like the Middle East or China – though an inundating Holland, desertifying Spain and burning Greece may beg to differ. (This applies to the period until 2030; after that, all bets are off everywhere).

European Regions

Germany has a robust industrial ecosystem manned by a well-educated population, powered by a triad of coal, natural gas and renewable sources of energy, and underpinned by advanced technologies and a potent machine-building sector. It constitutes Europe’s economic and commercial powerhouse. However, it is artificially reliant on exports to provide the savings needed for its rapidly aging population – short of a mortality crisis, an irreversible problem compounded by the most intractable demographic crisis of any major European nation. This reliance is dangerous, given the imminent waning of globalization. Facing a subpar energy future, the loss of global export markets, and the rediscovery of a conservative nationalism bizarrely married to environmentalism, Berlin will again turn its baleful gaze to East-Central Europe.

In addition to the manifold soft power tools at its disposal, Germany is already beginning to unshackle itself from its post-WW2 military constraints. Though the Bundeswehr is of Cold War vintage with minimal power projection capabilities, Germany has the technologies and industrial potential to once again become a leading European land power. Its status as a “virtual nuclear weapons state” means it has the capability to develop and field a small arsenal of deliverable nuclear weapons within months of commencing a crash program. Thus, Germany has both the dormant potential and the incentives to return to the Reich, expanding into Visegrad to acquire captive markets and to guarantee Russian hydrocarbons supplies – and reigniting its old, paranoia-fueled duel with France for European hegemony.

Unlike in the first half of the 20th century, it is France that will be the more potent competitor this time around. Its fertility rates are the healthiest on the European continent – though its population of 62mn is smaller than Germany’s 82mn, it already has a higher number of annual births. Though they have a restive 10% Muslim minority in the deprived banlieues, French Muslims are culturally more integrated than their co-religionists in Germany or Britain. The French economy is versatile, productive, and robust, suffering little during the 2008 economic crash – though scolded for dirigisme and S&M business regulations that stymie employment, its dirigisme is arguably superior to Germany’s export dependency, the Mediterranean’s fiscal holes, and Britain’s bubble economy.

On the strategic level, France is a powerful independent actor. With 80% of its electricity generation coming from nuclear power, its industrial and residential infrastructure is invulnerable to gas disruptions – be it Russian “energy blackmail” or Ukrainian intransigence. The country is underpopulated relative to the rest of Western Europe. France possesses Europe’s sole fully-autonomous military-industrial complex, producing the whole panoply of weapon classes from helicopter carriers to fighter jets; it has substantial power projection capabilities; and its extensive nuclear infrastructure supports the world’s third largest strategic nuclear stockpile, the bulk of its 300 warheads mounted on MIRVed SLBM’s held on four ballistic missile submarines.

All these factors put it in good stead for a symbiosis with its former North African colonies. Algeria is a major oil and gas producer, while Morocco has 2/3 of the world’s rock phosphate reserves – “a critical component in global fertilizer supply”. Facing a demographic “youth bulge” and shrinking agricultural yields under the stress of global warming and an advancing Saharan desert, the Maghreb nations may feel compelled to offer energy & phosphate supply guarantees to France in exchange for its commitment to a high immigration quota and protection of Muslim rights. Further afield, it has a strong military and neo-colonial presence in energy-rich West Africa. Occupying an enviable geostrategic location from a position of immense strength – demographic, economic, and strategic – there can be little doubt that France will be the predominant European power of the next decades.

On the surface, Britain appears to be a strong contender for European preeminence in the coming decades. It has respectable demographic indicators and, at least so far, a relatively low level of sovereign debt. The island nation occupies the most strategically secure location on the European continent – it has never been successfully invaded since 1066, largely thanks to its efforts to maintain a continental balance of power, spoiling attacks on potential European hegemons, and as a last resort, the English Channel. The island nation hosts significant power projection capabilities and a robust SSBN-based nuclear deterrent (much like France); furthermore, it also maintains a “special relationship” with a United States that shares its fundamental goal of stymieing the rise of a European hegemon. At the same time, London is not averse to profiting from European markets and the pursuit of its neo-colonial interests further abroad, as befits the descendant of an empire on which the sun never set. As the sun sets on Pax Americana, could its British satrapy continue its legacy on the old continent?

The answer is almost certainly not. Despite its ostensible strength and vigor, the United Kingdom faces a set of imminent, interlinked challenges – economic, fiscal, energy, and nationalities – that could not only preclude its rise to preeminence, but put at peril its very existence as a federated state.

Britain has seen accelerating deindustrialization since the neoliberal revolution of 1980′s Thatcherism, culminating in the false boom of the 2000′s driven by construction and finance. At the same time, government spending increased as Britain moved to implement a social-democratic welfare state – partly because of the need to satiate the emerging victims of market fundamentalism, and partly because of a general expansion of state power relative to the citizenry (surveillance, databases, etc). However, it should be noted that unlike in Scandinavia, this development did not lead to higher socio-economic mobility, which remains the lowest in Europe.

Even before the current crisis, government spending (purchases and transfers) was approaching 50% of GDP, with the figure rising to 56% in Scotland, 72% in Wales and 78% in Northern Ireland. With the discrediting of the neoliberal model, soaring budget deficits (12%+ of GDP), plummeting foreign investor confidence, and widespread indebtedness stymying a consumer-led recovery, Britain finds itself locked into a predicament, between the Scylla of inflationary fire and the Charybdis of a painful fiscal retrenchment and deflationary “debt trap”. Though on current trends the former seems to be the more prevalent, the likely triumph of the Conservatives in the 2010 elections may herald a sea change in favor of the fiscal restraint championed by their middle-England electoral base.

This fiscal predicament is compounded by its energy woes, in which the absence of a long-term energy policy, mindless liberalization, and above all the rapid depletion of the North Sea gas and oil fields, may see it enter a period of Third World-style blackouts by the mid-2010′s. Britain’s growing need for gas imports will necessitate costly investments in LNG terminals, put its current account further into the red, and even develop a German-style dependence on Russia. This could be the straw that breaks the camel’s back – forced into buying expensive energy supplies and suffering from power disruptions, the British economy will go into stagnation or outright decline. This cannot be squared with the level of requisitions needed to support the metastasizing British welfare state, and it will have to give.

Finally, Britain’s latent separatist pressures will come to the forefront – no one wants to remain on a sinking ship. Scotland is a viable nation with a substantial industrial base and still significant North Sea hydrocarbons deposits – given independence, it will resurrect its Auld Alliance with France. Similarly, there will be less enthusiasm for maintaining Northern Ireland on the English dole; once ditched, it will inevitably drift to the hearty embrace of the Republic of Eire. Only Wales is likely to remain within the new Republic of England & Wales (the Queen will have moved to Scotland). Though England will retain the vast bulk of the UK’s population, economic, and military assets, their general degradation during this time period will have relegated it to the status of a secondary European Great Power like Italy or Spain. However, its longer-term prospects are slightly brighter due to its relatively healthy (current) demography and preparedness for global warming.

Not even that can be said about the Mediterranean nations, however, which suffer from all the challenges facing Germany, France and the UK – collapsed fertility rates (TFR = 1.3), social immobility, sclerotic economies, unsustainable welfare states, debt traps, and imminent fiscal collapse thanks to the ECB depriving them of the ability to engineer a currency depreciation (their traditional solution to fiscal crises).

Italy is sinking back into political cronyism, the level of corruption is astounding for a First World nation, and its artisanal manufacturing is being destroyed by Chinese competition. There remain huge gaps between the advanced Nord and the Mafia-riddled, poverty-stricken Mezzogiorno – thus, opportunities for domestic tensions abound. As for Spain, it is facing an excruciating bust as the foreign credit flows pumping up its construction-fueled economy subside; furthermore, it faces an uncertain energy future (despite its impressive expansion into renewables, the scale is still far too small), exponentially-rising damage from global warming, and separatist tensions from the Basque region.

The performance of their education systems (both basic and tertiary), spending on R&D, and levels of corruption, are all far behind their north European neighbors. Too preoccupied with their manifold domestic challenges and isolated by the Alps and the Pyrenees from the North European Plain, these two nations have neither the incentive nor the capability to play a major role in future European power politics. They are likely to succumb to an accelerating, self-reinforcing decay, eventually culminating in the emigration of millions of young Spaniards and southern Italians to France and the US (being whites, xenophobia will not play a big role).

Finally, there are two European nations that are currently marginal, but may assume a much more prominent role in future decades – Poland and Sweden. Let us start with the former. Poland has a balanced, protected, and fast-growing economy that was little affected by the 2008 crisis (relatively speaking); a strong sense of national unity; and although it suffered from a sharp fall in fertility from the early 1990′s along with the rest of the socialist bloc, it may have a chance of recovery for the same reasons as Russia, i.e. because there is evidence to suggest its demographic decline was a result of the “transition shock”, i.e. not permanent. However, the likelihood of that occuring is smaller because a) its desired fertility (around 2.1) correlates with those of the low-fertility Med nations, whereas Russia’s is higher (around 2.5), and b) its transition shock was much less pronounced than Russia’s, but unlike Russia from 2006 it has yet to see any firm signs of demographic recovery. And although it does not have Russia’s mortality crisis, the main impact of that will be to put more pressure on the Polish pensions system, on which it already spends more than 10% of GDP (i.e. a figure similar to the rest of “old Europe”).

As such, it is hard to give credence to credence to George Friedman’s (Stratfor) prediction that Poland will become a Great Power any time soon. That said, as the strongest barrier between Germany and Russia – and hence a bulwark against the emergence of a European hegemon – much of the rest of the continent, especially France, England, and Sweden, as well as the US, will find it in their interests to extend technical and military aid. And should the resurgent Russia Empire collapse and wither back into its Muscovite heartlands, the recreation of a modern Polish-Lithuanian Commonwealth, encompassing much of Visegrad and western Ukraine, beckons.

With its cold climate and poor internal communication lines, the Scandinavian Peninsula’s population was always concentrated along the southern coasts. This is where Sweden first emerged as a maritime Power based on riverine trade within the Hanseatic / Baltic region – and that is where its modern interests lie. It naturally dominates energy-rich Norway and its maritime traditions enable a flexible military posture in Europe, while Finland serves as an excellent buffer against Russian expansionism. Sweden exerts financial domination over the Baltic nations, maintains friendly relations with NATO, and hosts an advanced military-industrial complex. As such, Swedish power is incommensurate with its small population, though overall it remains, and will remain, a minor player. Global warming will open up more of its lands to sustainable settlement, which coupled with its respectable demography and immigration from climatically-stricken zones from Europe and farther abroad will ensure the continued growth of its relative power. Finding a natural ally in Poland to contain German ambitions and Russian revanchism, the two could prove to be a potent combination.

Above is a rough table summarizing my view of the current relative strengths (mostly 1-5) and future prospects (+ and -) of the current European Powers in population / demographic structure; economic-technological strength; energy reserves, sustainability and/or security of supply; climate effects; and overall hard power. For obvious reasons these are very rough estimates and subject to a wide degree of error.

Europe’s Geopolitics

Having outlined the general trends and regional idiosyncrasies of the European continent, I am now going to try to bring it all together and paint a picture of how European geopolitics and metapolitics are going to develop in the decades ahead.

First, a word about the European Union. It is the quintessential “end of history” project – as Fukuyama himself noted, its “attempt to transcend sovereignty and traditional power politics by establishing a transnational rule of law is much more in line with a “post-historical” world than the Americans’ continuing belief in God, national sovereignty, and their military”. This utopian pursuit is, however, dependent on social stability, which is what underpins Europe’s historically recent embrace of liberal democracy and rules-based mechanism for resolving disputes.

But considering the interlinked and growing economic, energetic, demographic, and climatic challenges to this social stability covered above – and bearing in mind that for all its pomp and splendor, the EU remains weak and peripheral relative to the twenty-seven European nation-states that will collectively decide its destiny – the EU’s disintegration, “withering away”, or “expansion into irrelevancy”, is almost inevitable. Powerful Eurosceptic elements in Britain, Poland and the small European states do not want to give away their national sovereignty and are suspicious of European federalism, which they perceive to be nothing more than a new, covert hegemonic project. Nor is it likely that it will be replaced by a “Europe of two speeds” based on accelerated Franco-German integration; the interests of these nation-states are simply too divergent for that to happen.

As for NATO, if it can be undermines by an issue as small as Afghanistan now – it has no chance of surviving the coming earthquakes in any meaningful form. Britain, France, and Poland will likely remain closely allied with the US, but beyond that the dominant paradigm will be a return to 19th century-like Great Power politics. Facing a subpar energy future, the loss of export markets in a more protectionist world, a rapid demographic decline, and an unprecedented fiscal crisis, Berlin will again look east, as it usually does in times of national stress. It is in its strategic interests to draw closer to Moscow, given the mutual desirability of setting up a bilateral relationship based on trading Russian commodities (natural gas) for German machine tools and technology, as occurred so often in the past. (For instance, in the Treaty of Rappallo (1922), the two international pariahs signed a peace agreement, forgave each other’s debts and signed a free trade accord. Russia also helped Germany circumvent the Treaty of Versailles by allowing Germany to use its territory to continue military-related R&D and weapons testing, far from the prying eyes of Western observers). Furthermore, Russia could make use of a neutral-to-friendly Germany as a shield to consolidate its power over the post-Soviet space.

Once again, Poland will stand in the way of this Russo-German relationship. Russia is interested in pushing American influence out of East-Central Europe, converting the region into a neutral buffer for its empire. Germany will be interested in 1) furthering its economic penetration of the region, given the losses of many of its other export markets, and 2) in preventively blocking Russia’s further expansion into Europe proper, which in the end would seriously endanger German national security. In addition, there’s also its traditional craving for Lebensraum.

The region of Visegrad will therefore become a vortex of geopolitical competition between Germania, Eurasia, Scandinavia, and the Atlanticists. Poland will be supported directly by France, which has a direct interest in guaranteeing Polish sovereignty in order to prevent the rise of a German-dominated Europe (or of a contiguous Russo-German bloc, which would amount to the same thing). Despite its likely retreat from active Eurasian power politics in the face of mounting domestic crises, the US too will likely contribute to Polish security, since preventing the rise of a Eurasian hegemon will still figure amongst Washington’s priorities. Interestingly, a weakened Britain (or England) will probably try to maintain neutrality and good relations with all sides: its desire to support France and Poland in order to preempt the rise of a united European hegemon will be partially counterbalanced by its growing energy dependence on Russia.

However, the alliance between Germany and Russia will be far from rock-solid, considering that it is based exclusively on shared interests. Germany does not want a Russia that is too strong, and as such will try to maintain a modicum of good relations with the Atlantic powers as a hedge, as well as making geopolitical inroads and alliances beyond Europe proper. Boxed in by seas to the north, a powerful France to the west, the Alps to the south, and an Atlanticist-supported Poland to the east, Germany will push its influence into the Balkans in conjunction with Turkey, a country with which it will resurrect its traditional alliance, and more importantly, a country that will be able to keep Russia’s attention diverted to its unstable south (the Caucasus, Central Asia, and the Balkans – areas where Turkey already has substantial cultural and economic influence). Furthermore, Turkey would provide Germany with an additional supply of gas independent of Russian control sourced from Azerbaijan, Central Asia (if they remain outside Russia’s overt control) and possibly even Iran (if it reconciles with the West), and assuming that the necessary pipelines get built. In exchange, Germany will transfer the technologies Turkey needs to build a self-sufficient military-industrial complex that will complement its already formidable military power.

France will seek a close alliance with the Visegrad nations and Sweden to keep Germany and Russia occupied, while focusing most of its energies on securing its regional dominance. Flooded with younger immigrants from Spain and Italy – and perhaps the Maghreb, should it agree on the energy-for-immigration deal mooted above – its population will grow even more rapidly than projected, perhaps reaching 80-90mn souls by the 2030′s. This will result in the division of its electorate into three major groupings – the French conservatives and nationalists; the internationalist moderates; and the hard left, which will include the Islamist groups.

These internal divisions will be the cracks through which its weaker neighbors, especially Germany, will try to undermine it; however, ironically, those same divisions may lead to the long-term survival of multiculturalism and liberal democracy on French soil, even as Germany returns to the Reich, Italy reverts to its regionalistic capo governing traditions, Turkey revives its Ottoman imperial legacy, and Russia reacquires its Eurasian empire. Along with the British isles and various enclaves (Sweden, Switzerland, Czechia, Ireland, Poland?, etc), France will remain a light in a continent rapidly turning black with fascism, militarism, collapse – and perhaps war. War? Yes, I’m serious. Once effective ABM shields are developed and proliferate – and that’s not especially far off – the deterrence power of nuclear weapons will fall dramatically.

As mentioned above, both of the major Mediterranean powers will be too absorbed by domestic affairs to give serious heed to geopolitical jockeying. Though they might try to revive their colonial-era relations with North Africa – Spain in Morocco, Italy in Libya – they do no have the carrots to enjoy sustained success, and will be outmanoeuvred by France. Though Poland holds some promise, it is locked into a geopolitical vice and will remain too weak to play a truly independent role in Europe. And though Sweden is a formidable and growing Baltic power, its population and industrial base is simply too small to play a true Great Power role.

[A possible future European alliance / categorization system. Black - the expansionist Germans, Turks and Russians. Dark gray - France and its allies, Poland and Sweden. Gray - the relatively weak "balancing powers": Britain will lean more towards France, Italy more towards Germany, but none want to see a European hegemon. Light gray - too weak to really matter].

Conclusions

As a result of the epochal shifts in the global balance of power brought on by peak oil and the waning of Pax Americana, within the next decade the geopolitical structure of Europe will experience a profound transformation. The post-historical EU project will die when history returns to Europe. As Britain weakens and splinters into its constituent parts, and as the Mediterranean powers retreat under the weight of their manifold demographic, fiscal, and economic problems, the old struggle between France, Germany and Russia for European hegemony will resume.

This will entail a complex balance of power system. A powerful France will seek to encircle an ailing but still formidable Germany by allying itself with Visegrad and Sweden, while maximizing its own power by asserting itself in its Mediterranean backyard. Germany will make a wary alliance with Russia, and try to break free of its encirclement by threatening Poland, undermining France, and hedging with a Turkish alliance. Meanwhile, Russia and Turkey may come into intense geopolitical competition over the fate of the Balkans, Caucasus and Central Asia; however, should Turkey focus its expansion into the Middle East, their relations will likely be quiescent. (But this issue is for the Eurasia SSR). As the world energy and climate crisis worsens with every passing decade, Europe will return to its future – the Black Continent.

Chang, Ha-Joon – Kicking Away the Ladder: Development Strategy in Historical Perspective (2002)
Category: economy; history; industrial policy; Rating: 5/5
Summary: Kicking Away the Ladder:How the Economic and Intellectual Histories of Capitalism Have Been Re-Written to Justify Neo-Liberal Capitalism (Ha-Joon Chang)

Much has been said of the smug arrogance, cultural aloofness and end-of-history conceit characterizing the neoliberal Washington Consensus, the philosophy that a one-size-fits-all set of “good policies” (e.g. privatization, liberalization, deregulation) and “good institutions” (e.g. patent and IP protection system, etc) can – and must – be transplanted onto any country, irrespective of its historical or cultural traditions, if it were to ever join the developed “international community’. The general bankruptcy of this approach is evident from the facts on the growth, with global GDP growth during the 1960-1980 period of “bad policies” substantially higher than during the “good policies” 1980-2000 period. After seeing high growth during the earlier period, Latin America stagnated, and Africa and Eastern Europe declined during the latter; the major exception was mercantilist China. Though always disabused by reality, from 1998 Russia to the 2008 crisis, the neoliberals retain their intellectual underpinnings by continuing to claim, like Marxists, that history itself is ultimately on their side – after all, did not Britain and the United States, the world’s greatest economic successes, rise to global preeminence through the virtues of minimal government and free trade? Not at all, argues Ha-Joon Chang in this excellent book.

Britain: From Mercantile Struggle to Kicking Away the Ladder

Take the example of Britain, alleged to be the historical laissez-faire state par excellence, in stark contrast to the stultifying dirigisme of Colbertist France. This is actually an inversion of the truth, for the French state was generally laissez-faire and backward-looking in the period between the end of Napoleon’s Continental System and the post-WW2 years (after which the state began large-scale interventions in the French economy, which experienced burgeoning growth that saw it overtake Britain’s GDP by the 1970′s). On the other hand, Britain was highly protectionist up until it established and cemented its global industrial predominance by the middle of the 19th C.

British protectionism has a long history, stretching back to medieval import substitution designed to foster an indigenous wool manufacturing industry, instead of being reliant on raw wool exports to Europe. Henry VII tried to change this by taxing raw wool exports and poaching skilled workers from the Low Countries. This kick-started the industry that would come to constitute the key element of British industrial supremacy in the 19th C.

In 1721, Walpole expanded on previous Navigation Acts to encompass mercantile measures like lower tariffs on raw materials imports, duty drawbacks on the imported raw materials used for exports, the removal of export duties, the raising of duties in imported manufactures, export subsidies and a system of quality control to maintain the reputation of British exports. The colonies were treated as captive markets and resource appendages to fuel the commerce and industry of the mother country, by measures such as the 1700 ban on (better-quality) Indian calicos, which (possibly) stifled an incipient Indian industrialization. Britain fine-tuned the terms of trade between the US colonies itself to discourage industrialization in the latter, even resorting to overt illiberal measures like outlawing rolling and slitting steel mills on the American continent.

This is how Friedrich List, a leading economist of the German Historical School, described Britain’s rise to industrial dominance in his The National System of Political Economy in 1841:

Having attained to a certain grade of development by means of free trade, the great monarchies [of Britain] perceived that the higher degree of civilization, power, and wealth can only be attained by a combination of manufactures and commerce with agriculture. They perceived that their newly established native manufactures could never hope to succeed in free competition with the old and long-established manufactures of foreigners… Hence they sought, by a system of restrictions, privileges, and encouragements, to transplant on to their native soil the wealth, the talents, and the spirit of enterprise of foreigners. …

It is a very common clever device that when anyone has attained the summit of greatness, he kicks away the ladder by which he climbed up, in order to deprive others of the means of climbing up after him. In this lies the secret of the cosmopolitical doctrine of Adam Smith, and of the cosmopolitical tendencies of his great contemporary William Pitt, and of all his successors in the British Government administrations.

Any nation which by means of protective duties and restrictions on navigation has raised her manufacturing power and her navigation to such a degree of development than no other nation can sustain free competition with her, can do nothing wiser than to throw away these ladders of her greatness, to preach to other nations the benefits of free trade, and to declare in penitent tones that she ha hitherto wandered in the paths of error, and has now for the first time succeeded in discovering the truth.

Even the 1846 repeal of the Corn Laws protecting domestic agriculture were justified by its British supporters on protectionist terms, e.g. Robert Cobden of the Board of Trade:

The factory system would, in all probability, not have taken place in America and Germany. It most certainly could not have flourished, as it has done, both in these states, and in France, Belgium, and Switzerland, through the fostering bounties which the high-priced food of the British artisan has offered to the cheaper fed manufacturer of those countries.

It was only in 1860, by which time Britain’s status as the workshop of the world was unquestioned, that it truly transitioned to a free-trade regime with the Cobden-Chevalier Treaty with France. Yet during the next fifty years it was undermined by German technological prowess and American economies of scale, and was obliged to reintroduce substantial tariffs in 1932 under the stress of the Depression-era protectionism scramble.

[International tariff rates 1820-1950, taken from Google Books].

The Protectionist Roots of Pax Americana

What about the US, then, today’s champion of free trade? This is an ironic position for it to take up, given that in the years after the Civil War and prior to the Second World War, America was the protectionist nation par excellence.

The “infant industry” theory was invented by Alexander Hamilton, the first Treasury Secretary, and the American economist Daniel Raymond. With its history of being held as a resource appendage and captive market by the British and spurred on by the War of 1812, protectionism was firmly established from 1816. A US Congressman, a contemporary of Friedrich List, said of British liberal trade theory, “like most English manufactured goods, [it] is intended for export, not for consumption at home”. President Ulysses Grant, a Civil War hero, remarked of it, “within 200 years, when America has gotten out of protection all that it can offer, it too will adopt free trade”. So the populist right-wing politician Pat Buchanan makes a perfectly valid point when he condemns free trade as being un-American.

Ha-Joon Chang stresses the importance disputes over the proper level of tariffs played over the start of the US Civil War. The crux of the matter was that northern industrial interests wanted high tariffs to protect themselves from British competition, whereas the South, which had no industries of its own and an idle, rapacious elite, wanted lower tariffs to make British goods more affordable. There were frequent spats on this matter from the 1830′s; slavery only provided the fuse. (Chang points out that Lincoln was deeply racist by modern standards and only emancipated the northern slaves in 1862 as a strategic move against the South). Lincoln’s top economic advisor, Henry Carey (described by Marx as the only American economist of any significance), argued that British free trade was an imperialist ploy to consign the US to a future of primary production.

Following the North’s political and military triumph, US tariffs between the Civil War and World War Two remained the highest amongst those of any industrial power, with the sole exception of Russia. As with its British imperial predecessor, the American superpower only ditched free trade once it achieved a global industrial dominance made possible by the wartime devastation of its European competitors. Though tariff rates are now very low, the US somewhat compensates with voluntary export constraints, (textiles) quotas, agricultural subsidies, and unilateral sanctions against countries suspected of dumping, so it remains far more protected than Britain was during the Victorian Golden Age of globalization. Likewise there is extensive state support for R&D, which enabled US success in hi-tech areas like computers, the Internet, aerospace, and biotech.

State Intervention Critical to Economic Sovereignty

The vast majority of other now-developed countries (NDCs) also employed extensive protectionism and state intervention during their periods of successful economic convergence. Though Germany eschewed the kind of “blanket protectionism” used in mercantile Britain and the pre-superpower US, the state was far more active in promoting modern technology, industrial espionage, technological “demonstrations”, teaching science at its world-class universities, and pioneering social welfare by the late 19th C to defuse social tensions. Though Japan was actually forbidden from raising its tariff rates above 5% in the first decades following the Meiji Restoration, it compensated by investing heavily in infrastructure, education, and the acquisition of foreign technologies and institutions. Sweden had high tariff rates (especially in the early 20th C), an unrivaled record in public-private cooperation, and “strategically used tariffs, subsidies, cartels, and state support for R&D to develop key industries, especially textile, steel, and engineering”. It also preserved social harmony through the Saltsjöbaden agreements of 1936, in which labor committed to restraining wage demands in return for the employers committing to building one of the world’s most comprehensive welfare states. As for some of the smaller nations:

There were some exceptions like the Netherlands and Switzerland that have maintained free trade since the late 18^th century. However, these were countries that were already on the frontier of technological development by the 18^th centuries and therefore did not need much protection. Also, it should be noted that the Netherlands deployed an impressive range of interventionist measures up till the 17^th century in order to build up its maritime and commercial supremacy. Moreover, Switzerland did not have a patent law until 1907, flying directly against the emphasis that today’s orthodoxy puts on the protection of intellectual property rights (see below). More interestingly, the Netherlands abolished its 1817 patent law in 1869 on the ground that patents are politically-created monopolies inconsistent with its free-market principles – a position that seems to elude most of today’s free-market economists – and did not introduce another patent law until 1912.

Contrary to the conventional wisdom, it was the open economies that failed to develop rapidly. Not much chance for European colonies / captive markets to develop an indigenous industrial base under the constant, unchecked pressure of superior European competition. Semi-independent countries like China and the Ottoman Empire were paralyzed by “unequal treaties” capping tariffs at a 5% flat rate and loss of tariff autonomy (Ha-Joon Chang points out that today the World Bank recommends a maximum 15-25% tariff rate, low and uniform, despite that the development differential between today’s poor and rich countries are vastly greater than they were a century ago). Finally, industrial leader nations (like Britain) tried to stymie the growth of competitors by preventing the outflow of skilled workers in the 18th century, machines in the 19th century, and enforcing intellectual property rights in the 20th century.

Institutions aren’t Everything

The author also points out that institutions today are far better in the developing world today, in most cases, than of NCDs at an an equivalent stage of development. For instance, despite the fact that Britain in 1820 had a similar level of development to India in 2000:

[Britain] did not have universal suffrage (it did not even have universal male suffrage), a central bank, income tax, generalised limited liability, a generalised bankruptcy law, a professional bureaucracy, meaningful securities regulations, and even minimal labour regulations (except for a couple of minimal and hardly-enforced regulations on child labour).

As such, the rich would should moderate their unrealistic demands for the developing nations to instantaneously reform their institutions to world standards. It is a difficult process that took centuries in the NDCs themselves, and besides in some cases the poor countries would be better off spending that money on other things. For instance, would it be better for Gabon to spend its (very limited) resources on hiring legions of (foreign) intellectual property lawyers to ensure a modern IP environment, or should it spend them on training its own primary school teachers? Tough choice, right?

As Tainter teaches us in The Collapse of Complex Societies, complexity isn’t always all it’s cracked up to be.

Conclusions & Lessons for the Present

The “official history” of capitalism has been highly distorted by neoliberals with little appreciation of economic history, either maliciously, or because of their ideological blinkers. The reality is that even today’s stalwarts of free trade and liberalization only got to the top though blanket protectionism and intelligent state intervention, a tradition that has been carried on by the East Asian tigers (Korea, Taiwan, etc) – the only major non-Western nations to successfully industrialize after Japan. After they had industrialized, the new leader nation – in modern times, the US – has an interest in creating a global free trade system which could reinforce its hegemony. The poachers become the gamekeepers. The climbing followers become leaders kicking away the ladder.

However, uninterrupted free trade does eventually undermine even its guarantors. Last century, it was Germany challenging Britain. Today, it is China challenging the US.

Leveraging its cheap, docile and decently-educated labor force, China used the window of opportunity thrown open by US trade policy to build up the world’s premier industrial base – as of now, it produced around half the world’s steel and cement. Though it’s economy is ostensibly relatively free-wheeling, China having ditched central planning three decades ago, in practice the state remains extremely active in building up infrastructure, improving human capital and industrial espionage. It couldn’t care less about intellectual property rights, given that it has almost none of its own to protect (you don’t need innovation when you’re at the point when you can just buy or steal the next technological levels), giving it a further competitive advantage. The sheer comparative advantage it has built up in manufacturing means that overt protectionism is simply unnecessary for it.

Open trade has led to the steady deindustrialization and “hallowing out” of the US industrial base, which no longer maintains a positive balance of trade in any manufactured goods category, with the marginal exception of (heavily-subsidized) aerospace. (The effects in some European countries have been as bad, e.g. Italy’s traditional artisanal manufacturing destroyed by cheaper Chinese competition). The US machine tool industry, the heart of any industrial ecosystem, has been decisively buried by European and Asian competition. From 1999 to 2008, US automobile production declined from 13.0mn to 8.7mn units, while in the same period this figure rose amongst its main competitors like Japan (9.9mn to 11.6mn), Germany (5.7mn to 6.0mn), Korea (2.8mn to 3.8mn), and China (1.8mn to 9.3mn).

The shifting winds of history are steadily unraveling Pax Americana‘s center of gravity, threatening to send the global system into a chaotic tailspin. The paradox is that though globalization sustained US hegemony, it also contained within it the seeds of its own destruction. America has overstayed in laissez-faire land, blinded by its own instruments of success to the dangers they pose to itself.

Russia has an exceptionally strong need for protectionism and state intervention, on account of its traditional economic backwardness, highly unfavorable geography, and innate tendencies towards illiberal anarchy (in which nothing gets done at all). Hence the reason for the forward-looking, dirigiste industrial policy pursued under the Putin administration (special economic zones, clauses obligating foreign automobile companies to source a percentage of their parts from Russian suppliers, nanotechnology, etc) - and the likelihood that the state will resume its old rule as the main driver of the Russian economy in the unstable decades to come.

(Also, Russia would do well to renationalize some industries, in particularly hydrocarbons).

A few criticisms of the book. It makes the blanket statement that growth was higher during the “statist” 1960-1980 period than the “open” 1980-2000 period, but fails to consider other possible factors behind it, such as: a) the end of hyperbolic growth in oil extraction, and more generally, energy production (energy and natural resources are indispensable and highly-neglected factors of economic growth) – i.e. the appearance of limits to growth to the global economy, b) the ebbing of the electro-mechanical / petrochemical cycle and c) the end of the Flynn effect (end of IQ rise), especially pertinent given that education is the elixir of growth. In other words, the scope of the book is rather narrow – state industrial policy as the be all and end all of economic development. That said, his arguments are intuitive and convincing, if not fully complete; though then again, I doubt comprehensiveness would have been one of his aims in a book of just 140 pages.

The ultimate conclusion is clear. The wretched of the earth must resist this economic imperialism of the North, as surely as Nikolai Trubetzkoy urged us resist Western cultural imperialism.