Reading notes on John Gray's False Dawn
John Gray. FALSE DAWN: The Delusions of Global Capitalism. New York: The New Press, 1998. Ursinus College Library: 338.9/G793
BIBLIOGRAPHIC AND BIOGRAPHIC
John Gray provided intellectual support for the conservative revolution in Britain under Margaret Thatcher. He then abandoned his support of free market capitalism. This book exemplifies that shift of position.
He has written Isaiah Berlin among other books. In his book, Two Faces of Liberalism (The New Press, 2000), Gray shows his alignment with Berlin's notion of pluralism and his antipathy to visions of a universal civilization.
CONTENTS
1. From the Great Transformation to the global free market (1-21)
Engineering the free market in early Victorian England (7-16)
The false dawn of the global free market (17-21)
2. Engineering free markets (21-54)
The Thatcherite experiment (24-34)
The undoing of conservatism (35-38)
The New Zealand experiment: a second Great Transformation in miniature (39-44)
Market reform versus economic development in Mexico (44-53)
The consequences of engineering the free market (53-54)
3. What globalization is not (55-77)
Globalization before 1914, and today (61-63)
Scepticism about globalization (63-67)
Hyperglobalization: a corporate Utopia (67-70)
Globalization and disordered capitalism (70-74)
Anarchic capitalism and the state (74-77)
4. How global free markets favour the worst kinds of capitalism: a new Gresham's Law? (78-99)
How bad capitalism drives out good (79-81)
Unregulated global free trade and international mobility of capital (81-83)
Global free markets and falling wages (83-87)
Global free markets and the passing of social democracy (87-92)
The global free market versus European social markets (92-99)
5. The United States and the Utopia of global capitalism (100-132)
The neo-conservative ascendancy in America (103-110)
The new American economic insecurity (110-114)
Rising inequality and the American majority (114-116)
America's great incarceration (116-119)
Why history hasn't ended (119-121)
"The clash of civilizations" versus the evanescence of "the West" (121-124)
The late twentieth-century reality--America versus the rest (124-128)
America as an emerging post-western nation (128-130)
Is the American free market reformable? (130-132)
6. Anarcho-capitalism in post-communist Russia (133-165)
Soviet war communism and post-communist shock therapy (135-141)
Shock therapy: another western Utopia (141-147)
Social costs of Russian shock therapy (147-151)
Anarcho-capitalism in post-communist Russia (151-159)
Eurasian Russia (159-163)
The resources of Russian capitalism (163-165)
7. Occidental twilight and the rise of Asia's capitalisms (167-193)
Indigenous modernization: the paradigm case of Japan (168-175)
China's failed modernization: Mao's Soviet model (175-182)
Chinese capitalism (182-186)
Economic modernization in China, 1979 onwards (186-190)
Modern Asia and western backwardness? (191-193)
8. The ends of laissez-faire (194-208)
Can global laissez-faire be reformed? (196-200)
The end of the Washington consensus? (200-205)
After laissez-faire (205-208)
Postscript (209-235)
The argument of False Dawn (211-218)
Asia's depression and America's bubble economy: the beginning of the end for global laissez-faire? (218-226)
Can Japan preserve its distinctive economic culture? (226-230)
Is there a future for European social market economies? (230-234)
Can anything be done? (234-235)
Notes (236-256)
Index (257-262)
SUMMARY NOTES ON THE TEXT
Gray criticizes the free trade rationale of globalization, which he believes is unsustainable. The free trade agenda is, in his view, the latest effort to achieve a universal civilization founded on 17th century Enlightenment principles of Reason. The US holds itself up as the exemplar of globalization but is changing into a third-world nation without the will or strength to lead the world. Gray sums up the argument of False Dawn in a postscript, registering the following key points:
1. Contrary to the prevailing doctrine of political conservatism, "the free market is not...a natural state of affairs which comes about when political interference with market exchange has been removed." (211) Gray argues the opposite--that free markets cannot rise without the exercise of state power.
2. Contrary to the doctrine that free markets help develop democratic institutions, "democracy and the free market are competitors rather than partners." (213) Gray presents evidence to suggest that a "humane and balanced relationship between government and the market economy remains a distant aspiration." (214)
3. "Socialism as an economic system has broken down irretrievably" and varieties of capitalism are the only option for the foreseeable future. (214)
4. The implosion of Marxian socialism "has not been followed in most formerly communist countries by the adoption of any western economic model." (214) "Indigenous types of capitalism" have replaced socialism in Russia and China. Since Marxian socialism was a western ideology, its disintegration is "a defeat for all western models of modernization." (215) [This takes some thinking!]
5. Despite their alignment with different economic systems, Marxism-Leninism and free market economic rationalism have common bonds--their "Promethean attitude to nature" and their "scant sympathy for the casualties of economic progress." (215) "Both are variants of the Enlightenment project of supplanting the historic diversity of human cultures with a single, universal civilization. A global free market is that Enlightenment project in its latest--perhaps last--form." (215)
Technologically driven globalization does not tend to universalize Western Enlightenment (American) civilization. Instead, it creates anarchic markets that "destroy old capitalisms and spawn new ones, while subjecting all to unceasing instability." (216)
US is wrong to think of itself as the leader of a Western project to universalize Enlightenment civilization. It is uniquely different from the Old World and is ceasing to be a western, European-based nation. (216-217)
6. "The global free market is an American project." (217) Gray sees this as a tragedy that pits the "hubristic ideology" of free market against "enduring human needs" for security and social identity. (217)
7. Free market late capitalism creates "chronic insecurities" that "corrode some of the central institutions and values of bourgeois life" such as "the career" (217) and state-sponsored social safety nets. (218)
8. If the US does not decide to abandon its commitment to global free markets (and its implicit commitment to a universal civilization), "the world economy will fragment as its imbalances become insupportable." (218) Trade wars will lead to warring regional blocs, especially over oil resources. "As global laissez-faire breaks up, a deepening international anarchy is the likely human prospect." (218)
Gray aligns himself with Isaiah Berlin's view of the plurality of cultures that inherently differ while a few universal human characteristics cut across them--mainly the ability to empathize with someone different from you.
Gray's characterization of the United States dominates this book. He identifies our "exceptionalism" (belief in our destiny to lead the world) growing out of our origins in Enlightenment ideology. We see ourselves, he says, as the instruments of universal reason. We exemplify the rights of man to the world. We seek to implant our values on the world because we believe they are right and universal.
This American stance, Gray argues, is wrongheaded on various grounds. But the most egregious American error is to have transmuted Enlightenment principles into an economic ideology. We equate Enlightenment political principles of democratic freedom with the economic ideology of globalizing free markets, as he sees us.
Our globalizing free market ideology has two disastrous effects, in Gray's view.
First, free trade destroys the social cohesion and destabilizes the authority of nation states (as they withdraw services to society and instead serve the market in the role of "courtesan," to use a term from James Mittelman).
Second, the US is gutting its own social cohesion and stability by its espousal of free market ideology. Middle American values since Reagan's revolution have eroded. The US is polarized into rich and poor. We are controlling the poor through an unprecedented policy of incarceration. Fundamentalist religious allegiances have emerged as a reaction to social disintegration. We are becoming, in Gray's view, a non-Western nation, ill-equipped and unwilling to carry the universalist message of globalization or to regulate the world system as a sole superpower might be expected to do.
Gray's root argument is that "the freedoms of the market are not ends in themselves. They are expedients, devices contrived by human beings for human purposes. Markets are made to serve man, not man the market. In the global free market the instruments of economic life have become dangerously emancipated from social control and political governance." (234)
Gray opposes the Enlightenment-based belief that a rational economic system can apply everywhere. He insists upon the cultural component of individual economies, which will never be commensurate in a globally uniform system. But he affirms that globalization, of a kind, is a reality. It is the technologically driven compression of space and time, not dependent for its existence on a global free market system (which he argues is unsustainable). (235) Globalization so defined is thus a given in his vision of an alternative future that moves beyond an absolutist free market system steered by the US. That future, he believes, must value the environment, social cohesion, and viable statehood. Failure to pursue these values will lead to sustained global crisis.
QUOTABLE QUOTES
COPYING OF AMERICAN BUSINESS CULTURE: "The growth of global markets does not mean...that American business culture will be copied throughout the world. The American belief that corporations are above all else vehicles of shareholder profits is not shared in most other types of capitalism." (59)
SOCIAL IRRESPONSIBILITY OF GLOBAL FREE TRADE: "...[T]he economic argument for unregulated global free trade involves a wild abstraction from social realities....maximal productivity achieved at the cost of social desolation and human misery is an anomalous and dangerous social ideal." (83)
US UNPREPAREDNESS FOR "THE RETURN OF HISTORY": "The central problem the United States faces today is that its institutions and policies are predicated on an early modern ideology that has little purchase on late modern conditions....Resurgent religions, ancient ethnic enmities and territorial rivalries, the use of new technologies for purposes of war rather than wealth-creation do not accord well with Enlightenment expectations of secularization and the propagation of peace through trade." (102)
U.S. AN ENLIGHTENMENT RELIC: "The free market ideology which America is presently propagating is not...a vehicle of modernization. It is a relic of the seventeenth-century Enlightenment....Its assertion of universal human rights rooted in the dictates of a Christian deity, its insistence that American folkways are a deliverance of natural law and its regime of limited government and private property--these Atlantic pieties mask the plural world in which the United States must live." (106)
"THE WEST" IS GONE: "The identification of 'the West' with modernity is being severed. The very idea of 'the West' may already be archaic--the old polarities of East and West do not caputre the diversity of cultures and regimes in the world today." (193)
"The inexorable growth of a world market does not advance a universal civilization. It makes the interpenetration of cultures an irreversible global condition." (193)
Marx and Mill believed that "modernity and the evolution of a single-world civilization were one and the same." (195)
EVALUATION, SIGNIFICANCE, RELATION TO OTHER WORKS
I am writing this on 25 September 2001, exactly two weeks since the fall of the World Trade Center and the damage to the Pentagon. Like so much said before 11 September 2001, Gray's assessment of the US now looks oddly off the mark.
The day of terror galvanized the feelings and resolve of Americans under the leadership of President Bush as Gray—or anyone else--could never have imagined when he wrote. Having suddenly sacrificed so many lives, Americans clearly are ready now to sacrifice more in the interest of stamping out terrorists. This instantly reverses the perception that we were weak-willed and unwilling to mobilize beyond our perimeter of comfort.
The Bush campaign against terrorists will have a number of effects that will make Gray's characterization of the US look obsolete.
For one, it will put political and military priorities ahead of economics, something that few expected to see. Free trade issues will go onto the back burner as Bush forges a global coalition to combat terrorists. The nation as such suddenly has a new place and purpose in the global scheme.
This will put the Administration's platform for "compassionate conservatism" on hold, along with its program to shrink government and cut taxes. The national government will be focused on the anti-terrorist campaign. We will have a national debt and be glad of it.
Of course the Administration also will be pushing for an economic recovery and that to a degree will keep globalizing policies alive. However, the underlying resistance to globalization in the Middle East will receive new attention in Washington. The US will pay more attention now to the resistance among the masses because it bred and fed the extremism that led to the terrorist actions. This will legitimate a newly critical approach to free market policies. The importance of nurturing social stability and civil society over sheer competitive openness will rise in the judgment of US policymakers. Globalization will never return to "business as usual." Pre-attack assessments of the US role in globalization such as Gray's will never shed the taint of irrelevancy that settled on them like the dust that settled over lower Manhattan.
It should be useful, nonetheless, to capture here the thread of Gray's thought as a touchstone for whatever assessment is to come of globalization after 11 Sep 01. It is much too early to be sure of the direction of events. Gray's insights, colored though they will be by those events, like those of other students of globalization, should still be useful tools for analysis.
***
I find basic problems with Gray's characterization of global conditions and American values.
He writes as if globalization, pushed by the US, is upsetting a desirable alternative system from the past. Global free trade policies did not initiate much of the widespread hunger and misery and political instability in the underdeveloped regions of Africa and Asia or in the former Soviet Empire. Behind Gray's critique of globalization, a shadow of a presumed pre-existing stability hovers but never quite comes into the open. Social disintegration and the fragmenting of civil society have been going on in regions of the world because of the decline of the iron discipline of the Cold War, among other things, not just because of the effects of global free trade policies.
By 1973, the economic arrangement that followed World War II was unstable. The rise of transnational free trade policies did not occur in an historical vacuum. It occurred in response to a decline in productivity and the economic unsustainability of democratic socialism. In his zeal to condemn free market globalization, Gray ignores the dysfunctions that created a climate for it to flourish.
Admittedly, however, his prescription is not to return to 1973, for he acknowledges the emergence of globalization since then. He favors the growth of "national capitalisms" that retain the cultural coloration of their origins.
Another problem: Gray's assessment of American values is fascinating in its bite; but he lacks an understanding of the endless self-creation at the center of the American experience. The pragmatic tradition in our culture enables us to absorb contradictions and forge new futures in the light of circumstances. He underestimates the power of the Enlightenment idea of universal freedom to move our national agenda, even as we become more culturally complex. The exceptionalism that he condemns may survive as a problem of self-perception; but it is not driving us to pound the world into a monolith.
***
As the campaign against terrorists takes shape, we have seen the Bush Administration make an exceptional effort to differentiate them from the world Muslim community. This suggests that one of the gains to come out of the Manhattan ashes may be a new American understanding of the need to affirm cultural pluralism as a global value.
This could be a first step toward a re-evaluation of the ends of global free market policies pursued by the US. That would alter the course that Gray sees America following at present. It would turn us toward his vision of what could save us from the "false dawn" of unsustainable economic globalization.
***
Gray wrote in his postcript that it will take a crisis equal to the Great Depression and WWII to unseat the currently dominant laissez-faire doctrine. (235) The terrorists handed the US and the world a crisis on 11 September 2001 of a kind that Gray did not anticipate any more than the rest of us. Will "Operation Enduring Freedom" change America's commitment to a universalist doctrine of free trade? Everything is up for grabs. We won't know for some time how the world will realign in the aftermath of 11 Sep 01. However, I don't see how the globalization agenda can remain the same.
Gray's American history may be out of focus. His economics may be driven by his newly found ideological antipathy to his former free trade colors. His book, though, does lend support to an argument that the current phase of globalization is a mere starting point toward some other human arrangement around the globe. We have miles to go before history sleeps.
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Editorial Review by Amazon.com [copied from the Amazon.com website 23 September 2001]:
"Back when Margaret Thatcher was prime minister of Great Britain, John Gray was an influential conservative thinker, whose writings helped influence the revitalization of the laissez-faire market in that country. Now, as free-market champions seek to make over the (mostly) postcommunist world in their own image, Gray has experienced a moment of apostasy. False Dawn argues that, far from bringing about economic paradise, global capitalism, left unchecked, "could well destroy liberal civilization." Gray is careful to distinguish "global capitalism" from "globalization," which he identifies as a broader tendency encompassing "the increasing interconnection of economic and cultural life in distant parts of the world." That societies around the world are coming into closer contact with each other is inevitable; that they will have to do so in a free market, particularly one largely shaped by Anglo-American economic values, is not. In fact, Gray says, pointing to the recent economic crises in Asia and Russia, such a model will not bring societies together, but may well tear them apart. "A worldwide free market," he warns, "is no more self-regulating than the national free markets of the past.... Unless it is reformed radically, the world economy risks falling apart in a replay, at once tragic and farcical, of the trade wars, competitive devaluations, economic collapses and political upheavals of the 1930s."'
9 October 2001 Copyright © 2001 Richard P. Richter