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| AEI Henry Wendt Lecture
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Empires have undeservedly got a bad name, particularly in America since President Woodrow Wilson proclaimed the end of the Age of Empires and ushered in the Age of Nations. But this was not always so. I would like to begin this lecture in the defense of empires by quoting from a letter that King Bell and King Acqua of the Cameroons River, West Africa, wrote on November 6, 1881, to William Gladstone the Liberal Prime Minister of the UK:
Dear W. Gladstone,
We both your servants have met this afternoon to write you these few lines of writing trusting it may find you in a good state of life as it leaves us at present. As we heard here that you are the chief man in the House of Commons, so we write to tell you that we want to be under Her Majesty’s control. We want our country to be governed by British Government. We are tired of governing this country ourselves, every dispute leads to war, and often to great loss of lives, so we think it is best thing to give up the country to you British men who no doubt will bring peace, civilization, and Christianity in the country. Do for mercy sake please lay our request before the Queen and to the rulers of the British Government. Do, Sir, for mercy sake, please to assist us in this important undertaking. We heard that you are a good Christian man, so we hope that you will do all you can in your power to see that our request is granted. We are quite willing to abolish all our heathen customs. No doubt God will bless you for putting a light in our country. Please to send us an answer as quick as you can.
King Bell and King Acqua
of the Cameroons River, West Africa
6 November 1881
Gladstone demurred, and Germany snapped up the offer instead.
This example provides both the major justification that can be provided for empires, while the reasons for Gladstone’s refusal provide the main and still resonant arguments against empire.
The major argument in favor of empires is that, through their pax, they provide the most basic of public goods–order–in an anarchical international society of states. This is akin to maintaining order in social life. The three basic values of all social life, without which it cannot exist, and which any international order should seek to protect, were cogently summarized by the late Hedley Bull in his magisterial book The Anarchical Society as: first, to secure life against violence which leads to death or bodily harm; second, that promises once made are kept; third that, ” the possession of things will remain stable to some degree and will not be subject to challenges that are constant and without limit.”
Empires–which for our purposes can be simply defined as “multiethnic conglomerates held together by transnational organizational and cultural ties”–have historically both maintained peace and promoted prosperity for a simple reason. The centers of the ancient civilizations in Eurasia–where sedentary agriculture could be practiced and yielded a surplus to feed the towns (‘civitas’–the emblem of civilization)–were bordered in the North and South by areas of nomadic pastoralism: the steppes of the North and the semi-desert of the Arabian peninsula to the South. In these regions the inhabitants had kept up many of the warlike traditions of our hunter-gatherer ancestors, and were prone to prey upon the inhabitants of the sedentary ‘plains’ and at times attempted to convert them into their chattel like cattle. This meant that the provision of one of the classical public goods–protection of its citizens from invaders–required the extension of territory to some natural barriers which could keep the barbarians at bay. The Roman, Chinese, and various Indian empires were partly created to provide this pax, which was essential to keep their labor intensive and sedentary forms of making a living intact. The pax of various imperium has thus been essential in providing one of the basic public goods required for prosperity.
These empires can further be distinguished as being either multi-cultural or homogenizing. The former included the Abbasids, the various Indian empires, the Ottoman, Austro-Hungarian, and the British, where little attempt was made to change ‘the habits of the heart’ of the constituent groups–or if it was, as in the early British Raj, an ensuing backlash led to a reversal of this policy.
The homogenizing empires, by contrast, sought to create a ‘national’ identity out of the multifarious groups in their territory. The best example of these is China, where the ethnic mix was unified as Hans through the bureaucratic device of writing their names in Chinese characters in a Chinese form, and suppressing any subsequent discontent through the subtle repression of a bureaucratic authoritarian state. In our own time the American ‘melting pot’ creating Americans out of a multitude of ethnicities by adherence to a shared civic culture and a common language, has created a similar homogenized imperial state. Similarly, the supposedly ancient “nations” of Britain and France were created through a state-led homogenizing process. India, by contrast is another imperial state whose political unity is a legacy of the British Raj, but whose multiethnic character is underwritten by an ancient hierarchical structure which accommodates these different groups as different castes.
A simple thought experiment will help to show that, despite nationalist rhetoric, an imperial pax has usually succeeded in providing this essential public good–of order–in the past. Consider an ordinary citizen of any ethnic and religious origin of either of the two supposedly benighted Nineteenth Century empires–extinguished by President Wilson at Versailles–the Austro-Hungarian and the Ottoman, who is contemplating the likelihood of his grandchildren living, surviving and passing on their property to their children. Now consider a similar citizen of the post-imperial successor states during the last century considering the same prospect. There can be no doubt of the great deterioration in life chances that has befallen the average citizen of the successor states. The situation in many ways, is of course even worse in Africa with its millions of refugees and ethnic slaughter, even if we consider the inhuman and brutal regime of Leopold’s Belgian empire in the Congo. In many parts of the post-imperial world, the main beneficiaries of the Age of Nations have been the “nationalist” predatory elites who have failed to provide even the most elemental of public goods–law and order–for human thriving.
The imperial pax or order has also historically been associated with globalization–which is not a new phenomenon–and the prosperity it breeds. This is for two important reasons. First, in the language of institutional economics, transactions costs were reduced by these transnational organizations through their extension of metropolitan property rights to other countries. Second, by integrating previously loosely linked or even autarkic countries and regions–through free flows of goods, capital, and people–into a common economic space, they promote those gains from trade and specialization emphasized by Adam Smith, leading to what I label Smithian intensive growth. Thus the Graeco-Roman empires linked the areas around the Mediterranean, the Abbasid empire of the Arabs linked the worlds of the Mediterranean and the Indian Ocean, the Mongol empire linked China with the Near East, the various Indian empires created a common economic space in the sub-continent, while the expanding Chinese empire linked the economic spaces of the Yellow River with those of the Yangtze. It was the British who for the first time knit the whole world through their empire. But most of these empires have ultimately declined.
Given the existing technology and the inevitable predatoriness of the state, most of them overextended themselves. Though, as Table 1, from the late Sam Finer’s magisterial History of Government shows, most of them lasted for longer than the ex-colony has existed as an independent state. The decline of empires was followed by a disintegration of the enlarged economic spaces they had created. As Finer notes about the disintegration of the Roman empire:
“If a peasant family in Gaul, or Spain, or northern Italy had been able to foresee the misery and exploitation that was to befall his grandchildren and their grandchildren, on and on and on for the next 500 years, he would have been singularly spiritless–and witless too–if he had not rushed to the aid of the empire. And even then the kingdoms that did finally emerge after the year 1000 were poverty-stricken dung heaps compared with Rome. Not till the full Renaissance in the sixteenth century did Europeans begin to think of themselves as in any ways comparable to Rome, and not till the ‘Augustan Age’ of the Eighteenth Century did they regard their civilization as its equal”
The Chinese have always been aware of the disorder that resulted periodically when the Mandate of Heaven was taken from an existing imperial dynasty as evidenced by the ancient Chinese curse: “May you live in interesting times.”
In our own times, the death of the Nineteenth Century liberal economic order (LIEO) built by Pax Britannia on the fields of Flanders led to a near century of economic disintegration and disorder which has only been repaired in the last decade, with the undisputed emergence of the United States as the world hegemon. But is the U.S. willing and able to maintain its pax, which will underwrite the resurrection of another LIEO like the British in the Nineteenth Century, and if it is not what are likely to be the consequences? These are the central questions I want to raise in this lecture.
Gladstone’s reasons for not acceding to the request of Kings Bell and Acqua of the Cameroons river are resonant today, not least in the hearts of many of my classical liberal friends. For, though Adam Smith did not have much to say about empire–per se, his followers Cobden and Bright, who were the leaders of the anti-imperial party along with Gladstone as the leader of the Liberals, maintained correctly–following in the master’s footsteps–that, the arguments used by the imperial lobby that empire was in the economic interests of the general British populace were flawed. Even today economic historians are unable to agree on whether or not the benefits of retaining and expanding the formal British empire after 1850 exceeded its costs. The Nineteenth Century classical liberals rightly maintained that, as foreign trade and investment were mutually advantageous (a non-zero sum game) no empire was needed to obtain these gains from trade. All that was required was free trade and laissez-faire.
Also as they, unlike their American cousins, believed in the correct free trade doctrine, that despite other countries’ protectionism, unilateral free trade was in the national interest, they did not want an empire for other countries to be forced to free their foreign trade and investment. They rightly urged and succeeded in Britain’s unilateral adoption of free trade with the repeal of the Corn Laws in 1846. By contrast, the current hegemon–the U.S.–has never accepted the case for unilateral free trade, and insisted on reciprocity, based on the erroneous doctrine that foreign trade is a zero sum game. This , as we shall see has poisoned the wells of the nascent new imperium.
But these classical liberals went further, in believing that, the interdependence resulting from a world knit by mutually advantageous trade and investment would also lead to universal peace. They were projecting the spontaneous order of a market economy in which seemingly conflicting interests are unintentionally harmonized, onto the international arena. This was of course the view of the Enlightenment as codified in Kant’s Perpetual Peace. The apotheosis of this English Liberalism was the pacifist book written by Sir Norman Angell in 1910 called The Great Illusion, which in 1933 won him the Nobel Peace Prize. In the liberal tradition he argues that war is economically irrational as it impose excessive fiscal burdens, defeated powers seldom pay indemnities, colonies do not provide a profit and “trade cannot be destroyed or captured by a military power.” But, “what is the real guarantee of the good behavior of one state to another? It is the elaborate interdependence which, not only in the economic sense, but in every sense, makes an unwarrantable aggression of one state upon another react upon the interests of the aggressor.”
But, the liberals did not altogether eschew empire, for as Angell states: “Where the condition of a territory is such that the social and economic cooperation of other countries with it is impossible, we may expect the intervention of military force, not as the result of the “annexationist illusion,” but as the outcome of real social forces pushing to the maintenance of order. That is the story of England in Egypt, or, for that matter, in India. And if America has any justification in the Philippines at all, it is not that she has “captured” these populations by force of conquest, as in the old days a raiding tribe might capture a band of cattle, but that she is doing there a work of police and administration which the natives cannot do for themselves.” This is the “white man’s burden” argument for empire which meant that even liberals were in favor of an empire to maintain a pax.
It was Woodrow Wilson who questioned this “policing” justification for empire. He was a Utopian whose world view was a strange mixture of classical liberalism, Burkean conservatism, Presbyterianism and socialism. According to Knock he referred to himself as an imperialist on two occasions, but this was to be a form of economic imperialism, in line with his former student Fredrick Jackson Turner’s frontier thesis which “implied that the U.S. required greater foreign markets in order to sustain its prosperity.” But “for every sentence he uttered on commerce, he spoke two on the moral responsibility of the United States to sustain its historic idealism and render the service of its democracy. . .” During his campaign for the Democratic presidential nomination in1912 he said: “I believe that God planted in us visions of liberty. . . that we are chosen and prominently chosen to show the way to the nations of the world how they shall walk in the paths of liberty.” The instrument for achieving this Utopia was to be the League of Nations, maintaining collective security with transgressors being brought into line through sanctions. The traditional notion of “national interest” which had governed the European balance of power system was eschewed, to be replaced by a community of nation states in which the weak and the strong would have equal rights. In his new world order, said Wilson, the only questions would be: “Is it right? Is it just? Is it in the interest of mankind?”
This Wilsonian moralistic universalism was countered by the isolationist Jacksonians, and for the past century U.S. foreign policy see sawed between these two extremes except during the Second World War and the cold war when they were by and large allied to defeat what was seen as the immoral threat by foreign dictators to U.S. security and values.
But, these threats can in part be seen to have arisen because the U.S. failed to establish its hegemony in 1918. On October 16, 1916, Keynes saw that financial hegemony has passed irrevocably across the Atlantic. He wrote in a memorandum to the British Treasury “the policy of this country towards the USA should be so directed as not only to avoid any form of reprisal or even active irritation but also to conciliate and please.” For by then the British were completely financially dependent on the U.S.
Nor, as Keynes bitterly complained in his brilliant The Economic Consequences of the Peace, did Wilson succeed in fulfilling the pledge in his Fourteen Points, whose acceptance by Germany ended the war, that no Carthignian Peace as demanded by the victors, particularly France, would be imposed on Germany. Keynes believed that this was because he was bamboozled by the “Welsh witch,” Lloyd George, into acceding to Clemenceau’s desire to dismember German military and economic power, by believing that they were in accord with his fourteen points. By the time Lloyd George realized his mistake he could not “in five days persuade the president of error in what it had taken five months to prove to him to be just and right. After all it was harder to de-bamboozle this old Presbyterian than it had been to bamboozle him; for the former involved his belief in and respect for himself.” But, Skidelsky rightly notes that “Keynes’ criticism of Wilson’s character hinged on a mistaken assessment of the president’s priorities. Wilson conceded on points that Keynes thought important, but which Wilson did not.” For his main purpose was to get his League of Nations. “From Wilson’s vantage point, if this League were incorporated into the general settlement, then he could feel confident that he had kept his faith, that the most important objective of the Great War had been consummated, and that any injustices done by the treaty of peace itself could be redressed later with relative ease.” Of, course, with the failure of Wilson to persuade the Senate to accept the treaty setting up the League, and the turn to isolationism of the U.S., the flawed treaty did as Keynes feared lead to “the bankruptcy and decay of Europe. . . will affect everyone in the long run, but perhaps not in a way that is striking or immediate.”
The most trenchant criticism of Wilsonian universal moralism and the whole idealist theory of foreign relations was provided by E. H. Carr in his The Twenty Year’s Crisis in 1939, just before the beginning of the Second World War. The League of Nations–as the realists had always maintained–proved a broken reed to maintain the peace–the pax which the British empire had maintained when it still had the economic and military preponderance to do so in the Nineteenth Century.
But this Wilsonian universal moralism was resurrected after the Second World War with the United Nations. Once again, the anthropomorphic identification of states as persons, and the presumption of an essential harmony of interests between these equal world “citizens” was proclaimed, with those breaking international norms being brought into line through collective economic sanctions. These , as the detailed study by Gary Huffbauer and his associates shows have been ineffective and inefficient in serving their foreign policy goals. By contrast, the Nineteenth Century British pax was not maintained through economic sanctions to change state’s behavior. Direct or indirect imperialism was used instead. The contrasting lessons from the last two centuries are clear and are of obvious relevance in the current confrontation with the countries in the “Axis of Evil” and the global “war on terror”–on which more below.
A second extremely important aspect of the pax maintained by empires is the transnational legal system they create for the protection of property rights, in particular of “foreigners.” This as Lipson in his magisterial study Standing Guard shows was due to the commercial treaties signed by European states in the mid Nineteenth Century. These treaties provided rules for protecting international property rights which “hardened into general principles of international law.” These international standards built on the system of commercial law that had been created as a result of Pope Gregory VII’s papal revolution in the Eleventh Century, which established the church-state, and a common commercial law for Christendom. The treaties of Westphalia (1648) and Paris (1763) further strengthened the economic rights of foreigners and their property abroad. The Nineteenth Century saw a culmination of this process with the security of foreign persons and their property guaranteed by every European state, by the U.S. soon after its independence and by the new Latin American states after their wars of independence. Crucial in understanding this extension of the international rule of law is that it covered what was previously Christendom in Europe and in the new world, and the role of the medieval Catholic Church in providing the first “international” legal system.
As legal systems are in part derived from people’s cosmological beliefs, as I have denoted them in my Unintended Consequences, it is not surprising that this common international standard was readily adopted in the lands where the people shared this common cosmological heritage. Matters were very different when it came to the areas with very different cosmological beliefs in the Middle East, and in Asia and Africa. Even there, the principle of reciprocity which had partly led the European states of the Middle Ages to accede to various international standards, was also behind the acceptance by the Ottoman Empire of various ‘capitulation’ treaties dating back to the 1500s. Through these treaties the Ottomans granted commercial privileges to the states of Christendom and in return Muslim merchants and other subjects of the Porte received protection for their goods and persons abroad. The Ottoman treaty of 1540 had the principle of reciprocal protection directly written into it.
With its growing economic strength in the Nineteenth Century, and worried about Russian expansion in the Eastern Mediterranean, Britain signed the Anglo-Turkish convention in 1838, which effectively opened up the Ottoman empire to European trade and investment. With the growing enfeeblement of the Ottomans, in time new arrangements arose concerning disputes with foreigners, whereby “international property rights were effectively guaranteed by the extra territorial application of European and American laws.”
As the legal and political systems of different countries depend to a substantial extent on their cosmological beliefs, the European powers under British leadership found that, for the subsequent knitting together of an LIEO in parts of the world where the European cosmological beliefs were alien, to expand trade and investment they had to create systems of foreign concessions and extraterritorial laws as in the treaty ports of the Far East. Where, as in Africa, political arrangements were fragile the creation of political and legal structures that would serve commercial expansion led to difficult choices for the Victorians in integrating the agricultural periphery with the dynamic industrialism of the center. “Their policies naturally aimed at a vast, global extension of commerce. At the same time, they tried to limit the direct imposition of political and military controls, which were expensive and difficult to manage.”
It was this global network of law protecting foreign capital which allowed the worldwide expansion of the “gentlemanly capitalism” of the City of London, which Cain and Hopkins have persuasively argued, was the hallmark and the real motive force behind the British Empire. This legal framework was an integral element of Pax Britannia. Together with the economic integration through free trade and an international payments system based in the City of London, it allowed the Empire to fulfill a: “wider mission which can be summarized as the world’s first comprehensive development program.” After 1815, Britain aimed to put in place a set of like-minded allies who would cooperate in keeping the world safe from what Canning called the “youthful and stirring nations,” such as the United States, which proclaimed the virtues of republican democracy, and from a “league of worn out governments” in Europe whose future lay too obviously in the past. Britain offered an alternative vision of a liberal international order bound together by mutual interest in commercial progress and underpinned by a respect for property, credit, and responsible government, preferably of the kind found at home.
And compared with the previous millennia, the results were stupendous. It was at the height of this Nineteenth Century LIEO from 1850–1914 that many parts of the third world for the first time experienced intensive growth for a sustained period. Lloyd Reynolds in his survey of the economic histories of forty-one developing countries dated the turning points when developing countries entered the era of intensive growth–with a sustained rise in per capita incomes, as compared with the ubiquitous extensive growth of the past when output growth just kept up with that of population–as shown in Table 2.
The First World War marked the beginning of the end of this Nineteenth Century LIEO. From Fig. 1, which charts the relative economic strength of various potential–and actual–imperial contenders from the Nineteenth Century to the 1950s it is clear that by the U.S. was by far the dominant economic power. But after the First World War it retreated into isolationism, and during the Great Depression, which was in part caused by its faulty monetary policy, it failed to do what Britain in the depression of the 1870s had done as the economic hegemon, maintain open markets for trade and finance. The Smoot-Hawley tariff and the Blue Sky laws in effect ended the LIEO.
Much worse the turmoil of the interwar period also unraveled that complex web of international law and practice the British had woven in the Nineteenth Century to protect foreign capital. From the start of the First World War till 1929 (when international capital markets effectively closed down) the United States was the largest lender, with U.S. foreign investments increasing six fold in the period so that by 1929 its stock of foreign investment equaled that of Britain. But the weakening of British hegemony meant that the enforcement of the international rules created in the Nineteenth Century became problematic. As Lipson notes: “Before the war, the United States had assumed responsibility for enforcing property rules only in Latin America. Elsewhere, sanctions were either British or collective. Now, however, Europe was weak and divided , and Britain was unable to act alone. The most obvious solution was condominium between the two largest investors, the United States and Great Britain. Yet President Wilson’s defeat excluded that hypothetical solution. Even though U.S. economic interests continued to expand, the state flatly refused to assume commensurate political and military responsibilities outside the Western hemisphere. That refusal and Britain’s shrunken power diminished the capacity of advanced capitalist states to enforce traditional property rules.”
Moreover, it is doubtful that, even if Wilson had won, he would have enforced international property rights, given his sympathies with socialism and ambivalence towards the Mexican and Russian revolutions, and his promotion of national self-determination (on which more below). For it was the Mexican and Russian revolutions and the explicit introduction of statist policies by Attaturk in Turkey–the successor state to the Ottoman empire, extinguished at Versailles–which led to the questioning of the legitimacy of these rules. Subsequently, there was a worldwide erosion of public acceptance of the sanctity of private property rights when faced with social policies designed to promote the nationalist weal.
Even though the U.S. after the Second World War, chastened by the global disorder its interwar isolationism had caused, sought a partial restoration of these nineteenth century international rules, it did not extend to the newly decolonized third world, which experienced an explosion of economic nationalism. The “embedded liberalism” as Eichengreen (1996) has called it–but which is just another label for democratic socialism–promoted by both Wilson and then Roosevelt within the U.S., also meant that the sanctity of property rights which the classical liberals had always sought to further, no longer had much resonance in the domestic politics of either the United States or the United Kingdom, and given the anti-imperialist moralism which became a part of U.S. foreign policy after Wilson, attempts like the ill-fated Suez adventure of the British and the French in 1956 to prevent Nasser’s nationalization of the Suez canal was scuttled by the U.S. There was no way in which anyone could thereafter stand against the new nation-states to assert their rights of national sovereignty against any purported international property rights. There was no bulwark against this disintegration of the international legal order. Most developing countries (and many European ones too) being both nationalist and dirigiste, sought to regulate, tax, or nationalize particular foreign investments on the grounds of national social utility rather than any particular antagonism to private property. This made it difficult for the U.S. to identify expropriation of foreign capital with a socialist ideology , as the nationalization of foreign oil companies in the 1960s and early 1970s by right wing governments in the Middle East proved. This as we shall see has cast a long shadow on the present.
But, the U.S. did try after the Second World War, at Bretton Woods to resurrect the three pillars on which the Nineteenth Century LIEO has been built–free trade, the gold standard, and free capital mobility. But, whereas the British Empire had fostered these by example, treaties and direct and indirect imperialism, the U.S. instead created transnational institutions–the General Agreement on Tariffs and Trade followed by the World Trade Organization, the International Monetary Fund, and the World Bank. This is not the place to go into the details of the success and failures of this attempt. But, a few points can be made.
Rather than following the correct British policy of adopting unilateral free trade and then allowing its hegemony to spread the norm, the U.S. has chosen the extremely acrimonious route of multilateral and, more recently, bilateral negotiations to reduce trade barriers. This is due to the fact that unlike the British who have correctly seen free trade as a non-zero sum gain and since the repeal of the Corn Laws adhered to it and its close cousin laissez faire throughout the Nineteenth Century–despite various attempts by politicians like Joseph Chamberlain to stir the pot by demanding protection in the name of “fair trade”–the Americans have never accepted the classical liberal case for free trade. They have always looked upon trade as a zero sum gain. They have been protectionist. Only for a relatively brief period between 1846 and 1861 was there a relatively liberal trade policy and even then the average ad valorem tariff on the fifty one most imported categories of goods was 27 percent. The original justification for protectionism was provided by Hamilton’s flawed argument for “infant industry” protection. But once U.S. industry had caught up with and even overtaken European industry by 1890, this argument was no longer persuasive, and the U.S. argued for the principle of reciprocity as the central principle of its trade policy. In his 1901 message to Congress, Theodore Roosevelt said: “Reciprocity must be treated as the handmaiden of Protection. Our first duty is to see that the protection granted by the tariff in every case where it is needed is maintained, and reciprocity be sought so far as it can be safely done without injury to our home industries.”
This principle of reciprocity has been the central tenet of U.S. trade policy ever since, and the Twentieth Century hegemon has sought to achieve free trade through reciprocal concessions in GATT and the WTO. But as the antiglobalization riots from Seattle onwards demonstrate, by perpetuating the myth that trade is a zero sum game, and that removing tariffs can only be done on the basis of reciprocity has meant that issues of domestic policy will inevitably spill over into trade policy.
The attempt to resurrect something similar to the gold standard based on a quasi-fixed exchange rate system policed by the IMF also foundered on its basic premise that while freeing trade and maintaining convertibility on the current account, the capital account could be controlled and managed by distinguishing between long term (good) and short-term (bad) capital flows. With the freeing of trade such capital controls were shown to be ineffective as capital could be moved through the process of “leads and lags” in the current account. With the gradual and long drawn move to floating exchange rates the need for the policeman of the Bretton Woods system–the IMF–also disappeared. This is not the place to go through the various and continuing changes in role it has sought, but clearly this new international monetary system which has been dubbed a “non-system,” has the advantage for international relations that, being decentralized, it does not require international cooperation, and the potential for discord that creates, of a fixed exchange rate system.
The World Bank, was the instrument chosen to resurrect the international capital market which had been closed in particular to developing countries, with their defaults in the 1930s and the passage of the “Blue Sky” laws by the U.S. which forbade U.S. financial intermediaries from holding foreign government bonds. But, the financial intermediation role of the Bank was soon overtaken by its role as a multilateral foreign aid agency, in part to play its part in the cold war, both by tying the “nonaligned” to the free world, and by promoting economic development. This was to be the instrument to be used to create another international development program, analogous to what the British had promoted in the Nineteenth Century through the propagation and enforcement of rules concerning international property rights, and through direct and indirect imperialism. As these routes were eschewed for the reasons already discussed, the only instrument available was the use of “conditionality” tied to these flows to promote the appropriate development policies in the third world, by changing state behavior. But, as with sanctions to serve foreign policy goals, this ever more stringent “conditionality” has–as shown by the detailed study by Collier et al.–been unsuccessful. So the current development “mantra” is that “good governance is all.” But, now the stark choice which faces the successors of Wilsonian idealism in foreign policy also faces them in international economic policy: Can the order required for prosperity be promoted except through direct or indirect imperialism?
The third purpose empires served was to put a lid on ethnic conflicts. President Wilson’s invoking of the principle of national self-determination, as he proclaimed the new moral Age of Nations to replace the immoral old Age of Empires, let the ethnic genie out of the bottle. As Dean Acheson noted in a speech at Amherst College on December 9, 1964, this high sounding principle “has a doubtful moral history. He [Woodrow Wilson] used it against our enemies in the First World War to dismember the Austro-Hungarian and Ottoman Empires, with results which hardly inspire enthusiasm today. After the Second World War the doctrine was invoked against our friends in the dissolution of their colonial connections. . . . On the one occasion when the right of self-determination–then called secession–was invoked against our own government by the Confederate States of America, it was rejected with a good deal of bloodshed and moral fervor. Probably you will agree it was rightly rejected.”
From the viewpoint of global order the most common form of deadly conflict today is a civil war in the name of cultural self-determination Some interesting recent research by Paul Collier of Oxford and his associates on the causes of civil wars finds that the relationship of ethno-linguistic fragmentation in a state and the risk of a civil war is an inverted U in shape. The most homogenous as well as the most fragmented are least at risk of civil war. Thus there is likely to be a bipolarity in the institutions best able to deal with ethnic diversity. One (complete fragmentation) is to be found in empires. The other (homogeneity) is surprisingly a course advocated by Keynes during the Second World War when speculating about the ideal political postwar order in Europe. Skidelsky reports on one of Keynes’ fancies:
A view of the postwar world which I find sympathetic and attractive and fruitful of good consequences is that we should encourage small political and cultural units, combined into larger, and more or less closely knit, economic units. It would be a fine thing to have thirty or forty capital cities in Europe, each the center of a self-governing country entirely free from national minorities (who would be dealt with by migrations where necessary) and the seat of government and parliament and university center, each with their own pride and glory and their own characteristics and excellent gifts. But it would be ruinous to have thirty or forty entirely independent economic and currency unions.
But as Skidelsky notes “this pleasing picture of a re-medievalised Europe did not survive in later drafts.” This homogenized solution, which as Keynes recognized could involve ‘ethnic cleansing,’ has clearly been eschewed by the West–as witness its actions in Bosnia and Kosovo. This reflects the hopes of much progressive thought over the last two centuries stemming from the Enlightenment that, transnational and ‘modern’ forms of association such as ‘class’ would transcend primordial forms of association such as ‘ethnicity’ and ‘culture’–of which nationalism is an offshoot. But, contemporary history continues to show the power of these primordial forces. The much derided socio-biology provides some cogent reasons for their survival.
Evolutionary anthropologists and psychologists maintain that, human nature was set during the period of evolution ending with the Stone Age, since there has not been enough time for further evolution. One salient feature of this Stone Age environment was that, rapid ‘species’–relevant judgments had to be made on the basis of quick impressions. Our brains, according to the evolutionary psychologists, have been hardwired to deal with the problems faced in the primordial environment–the savannahs of Africa. Here it was a matter of life and death to judge from whatever signs were available that a dangerous member of a predatory species was at hand. The decision moreover had to be instantaneous, without any time being spent on sampling to confirm one’s conjecture that a yellow shape with stripes in the distance was indeed a tiger. This has meant, say the evolutionary psychologists, that we are naturally primed to make instantaneous ‘species’ judgments.
Given, the divergence between different human groups in physiognomy and culture, once our ancestors spread throughout the world and then rarely came in contact with their genetic cousins–as with the ending of the Ice Age, the ice bridges linking the continents melted–it is hardly surprising that when we do come across another ethnic group we are primed to look upon it as a different species. Intermarriage and long familiarity might change these natural instincts, but as the bloody outcome in the successor states of Yugoslavia demonstrate this might be a very long run. This provides one important reason, rooted in our biology, why the Enlightenment hopes of the reduction–if not ending–of ethnic differences and conflicts have not been fulfilled.
So, at least in principle, the Keynes solution seems to be in keeping with human nature. As, in a globalized economy, size does not matter for prosperity–demonstrated by the shining examples of the city states of Hong Kong and Singapore–it would also be feasible, as long as there is someone to maintain a global pax.
However, the events in Bosnia and Kosovo, show that in fact the United States and its allies have, rightly in my view, chosen to impose a regional pax by partially reconstructing parts of the Balkan Austro-Hungarian empire. Paddy Ashdown, the high representative of the UN in Bosnia, and the chief administrator of Kosovo, are the equivalent of British viceroys in areas of direct and political agents in those of indirect imperialism. Similarly the recent Afghan peace is underwritten by an Allied police force and another form indirect imperialism, much as the British sought to do through their residents in Afghanistan during their imperium.
But even if there is a case for Pax Americana to maintain global peace between states, international property rights, and to prevent ethnic conflicts, would it not lead, as Paul Kennedy argued in the late 1980s, to “imperial overstretch” and the nationalist backlash which has undermined past empires and which U.S. foreign policy has tolerated if not promoted?
On the first question, I have put together some figs on the share of military spending in GDP of the U.S. and other potential great powers from the late 1980s together with their total military spending in PPP dollars for 1990 and 2000. (Table 3 and Figure 2). The first of these tables shows that if there was any imperial overstretch it was in the former Soviet Union, and that even currently its share of military expenditure in GDP remains much higher than anyone else’s. I then, examined what the growth rates of GDP the other great powers would have to be, to achieve parity with the U.S. in terms of military PPP dollars at various dates, assuming that the U.S. PPP GDP continued to expand at the average rate of 3.3 percent as it has done over the last twelve years, and that the shares of military expenditure in GDP of each country remain unchanged from those for 1990–so that none of these countries (apart perhaps from Russia) has to choose between guns and butter. It is apparent from Table 4 that, on past and current performance and future prospects, the only potential competitors to U.S. military power are the Chinese (by perhaps mid-century) and the Indians by the end of the century. Given the U.S. technological lead, these potential dates for catch-up are likely to even later. So that for at least this century it is unlikely that U.S. military power is likely to be challenged. The question of whether there is nevertheless,a danger of an American imperium being challenged by a coalition of these potential great powers is a question I will take up later.
We can also provide some rough idea from the experience of the British empire of the administrative cost of running an empire–based on both direct and indirect imperialism. At the end of the second world war, “the elite administrative division of the colonial service in Africa, including district officers and central secretariats but not railway, agriculture, or other specialist departments numbers slightly more than 1200 men. These were spread over more than a dozen colonies covering nearly two million square miles, with an estimated population of 43 million. The Sudan Political Service, which reported to the Foreign Office, had some 125 senior officials for a territory twice the American state of Texas. For a population of 353 million, the Indian Civil Service had a maximum strength of 1250 covenanted members, whereas the relatively well-manned Malayan Civil Service possessed some 220 elite administrators for a mere 3.2 million people.” That is a total of less than 3000 civil servants from the metropole to run the empire. This can be compared with the huge numbers of nonclerical officials in the transnational organizations–the UN, the World Bank, the IMF and WTO–(Table 5–which does not include the 2000 World Bank officials outside Washington and the 65,000 UN officials outside its headquarters) currently seeking to run the post war Wilsonian international political and economic order.
These small number of metropolitan civil servants were supplemented by a large army of English speaking “Creoles.” In India, in his famous minute on education, Macaulay stated that, the English wished to create an English educated native middle class “who may be interpreters between us and the millions whom we govern; a class of persons, Indian in blood and color, but English in taste, in opinions, in morals, and in intellect.” He did also foresee that this could in time lead to the creation of the class which would contest and replace British rule. Thus in the Charter Debate in 1833 in the British Parliament he said: “It may be that the public mind of India may expand under our system till it has outgrown that system, that by good government we may educate our subjects into a capacity for better government; that, having become instructed in European knowledge, they may, in some future age demand European institutions. Whether such a day will ever come I know not. But never will I attempt to avert or retard it. Whenever it comes, it will be the proudest day in English history.”
It was these “Macaulay’s children,” as we may call them, who were to overthrow the empire. Their nationalist revolts were part of that “creole nationalism” which, as Benedict Anderson argued, overthrew colonial rule in the Americas. The major complaint of the “creoles” against the peninsulares was that, even though in every respect–language, descent, customs–they were indistinguishable, they had an inferior status because of the accident of their birth. In India, Macaulay’s children too had an inferior status, despite being English in every respect except in “blood and color.” It was this racism of the British empire which was ultimately to undo it, by fueling creole nationalism. But in its early phase the British Raj had behaved like a traditional Indian power. The notions of racial exclusiveness which came to characterize its late imperial phase were alien to India’s early British rulers who exhibited a more robust delight in both the country’s mores and its women. It was the shock of the Mutiny of 1857, and the arrival of English women in India which turned the British in India from “nabobs” to “sahibs.”
But there was another route to prevent the rise of “creole” nationalism and this was the example of Rome, where in 212 Caracalla declared all free men were citizens of Rome. This meant that the Romanized elites in the provinces not only could but did form part of a common Roman political and social elite, with some of these non-Romans also becoming emperors. This Caracallan threshold as it has been called was never crossed by the British Empire, because of their racial exclusiveness.
One of the strengths of the U.S. is that, in its public and increasingly private philosophy, racism no longer plays a part–witness that two of the leading lights dealing with foreign policy today are Afro-Americans. Moreover, the U.S. has now moved to recognizing dual citizenship, as have many other countries–with even the most nationalist like India planning to follow. With the growth of a cosmopolitan class of primarily U.S. trained technicians and executives, culturally and often personally linked, at work in many different countries, there is already in existence the core of a global “Roman” political and economic elite–open to the talents–which could run this new U.S. imperium.
But even granted all this, as Christopher Layne from the Cato Institute argued recently, will not a U.S. imperium lead to a coalition forming against it? He claims that the historical record shows that hegemonic powers are likely to be challenged by a coalition of other states as “when one state becomes more powerful–becomes a hegemon–the imbalance of power in its favor is a menace to the security of all other states.” But I am not sure of the implications. Envy, jealousy, even hatred are the inevitable and unenviable consequence of disparities in economic and military power. But ,should the dominant economic and military power then actively seek to become poorer and weaker so it maybe loved, or to prevent other powers “ganging up” against it in the future? Or should it instead try and use its hegemony to bring along the other great powers into a concert maintaining the global pax as the British did in the Nineteenth Century, recognizing that its dominance will lead both to emulation by many–the “soft power” idealists so often talk about–but also fear and loathing among others. Preventing the latter from spilling over into global disorder has in fact been one of the essential tasks of imperial statesmanship. But to undertake it sensibly one has to recognize that one is an imperial power. “Empires come before imperialism.” The nub of my case is that, the U.S. like any other economically and militarily dominant powers in the past has acquired an empire, but it is reluctant to face up to the resulting imperial responsibilities because in its domestic discourse it refuses to face up to the reality. This would involve developing a theory for the beneficent exercise of its imperial power. Wishing the empire would just go away, or it can be managed by global love and compassion is not only to bury one’s head in the sands but to actually promote global disorder.
In fact, if we look at the current threats to global or regional political and economic order, there would seem to be a convergence rather than divergence in the interests of the U.S. and other potential great powers. There are clearly two major regions of the world where disorder rules. First, the vast region spanning the Islamic world in the Middle East and Central Asia, and secondly, the continent of Africa.
We can be brief in dealing with Africa, because (sadly) with the ending of the cold war, it does not represent a strategic challenge to any of the potential great powers we had identified earlier. Its strategic importance in the Nineteenth Century lay in guarding the sea lanes to India–the jewel in the British imperial crown. That reason no longer applies. Apart from justified humanitarian concerns about the plight of its people, there is little that the rest of the world has to lose or gain from engaging or disengaging from Africa. Given the dismal failure of the Western development program in Africa, based on conditional aid channeled through governments run by predatory elites, little short of costly direct imperialism is likely to provide that good governance which everyone now maintains is the prerequisite for the economic advancement of the continent.
I would expect, therefore, that increasingly, as is already evident and lamented by these African elites, Africa will be marginal to the world economy and polity. Perhaps in their pursuit of ethical imperialism–as a British foreign policy advisor to Tony Blair has recommended as the future foreign policy of the EU–the EU, or its old imperial countries, the UK and France will be willing to spend men and materiel to establish and maintain an imperium. This would allow Africa the period of peace and good government it needs for prosperity. But I fear that in the changed circumstances, any contemporary plea similar to that of Kings Bell and Acqua is likely to fall on deaf ears. In any case there is no danger of any great power coalition forming against the U.S. on Africa. For the U.S. and the world, the best policy towards Africa, if direct imperialism is ruled out as being too costly, is to keep markets for African goods and capital flows to Africa open, and leave it to the Africans to sort out their own problems.
The Islamic world poses a more serious challenge. In rightly trying to distinguish the direct threats posed to national and global security after September 11 from Islamists as distinct from Islam–in no small measure to protect the substantial Muslim minorities in many Western countries–many commentators and world leaders have gone out of their way to say that, in the “war of terror,” the enemy is not Islam. At one level this is true. As the doyen of Middle Eastern studies Bernard Lewis once remarked to me the Islamist threat is greater for other Muslims than it is for the West. But, once one seeks to understand the reason for the rise of Islamic fundamentalism, and its seeming attraction to large numbers in Muslim countries, it is difficult to escape the conclusion that it has something to do with the nature of Islam itself.
The best way to see the problem is to go back in time before the rise of the West. At the end of the first millennium, the dominant world civilization was that of Islam. Al-Muqaddasi, the Syrian geographer surveying the world at the turn of the millennium described the Islamic world thus: “The strict political unity which had once characterized Islam had been shattered in the tenth century. . . yet a sense of comity survived, and travelers could feel at home throughout the Dar al-Islam–or to use an image popular with poets–in a garden of Islam, cultivated, walled against the world, yielding for its privileged occupation, shades and tastes of paradise.”
This paradise was shattered by the rise of the West, and though it was not till the Ottomans were turned back after the siege of Vienna in 1683 that this Islamic world went into relative decline, by the end of the First World War and the dismemberment of the Ottoman Empire, it was clear that Islam was a defeated civilization. This, of course, had also been true of the other great Eurasian civilizations when they encountered the West–the Indian, the Chinese, the Japanese. There were two responses of these civilizations to the Western onslaught in the Nineteenth Century. The first was that of the oyster, which closes its shell. The other was to modernize, to try to master foreign technology and way of life, and to fight the alien culture with its own weapons. Japan is the prime example of a country, which chose the latter route. India and China see-sawed between the two responses and took nearly a century to truly come to terms with modernization. Some Islamic countries, in particular Attaturk’s Turkey and Mehmet Ali’s Egypt also took the second route, but only partially. The other remedy, of the oyster–whereby Muslims sought to purify Islam from all its corruptions that have crept in over the centuries into Muslim lives and thereby regain Allah’s favor–has had much greater resonance. For deep cultural reason I cannot go into on this occasion, while the other civilizations have come to realize that modernization does not entail westernization, and hence ancient cosmological beliefs can be maintained even when material beliefs have to change to modernize, it was, as William McNeill notes, Islam’s misfortune–unlike the Japanese–that, despite many voices (eg. Sir Sayed Ahmad in Nineteenth Century India) stating that modernity could be reconciled with Islam, “the two remedies seemed always diametrically opposed to one another. Reformers efforts therefore tended to cancel out, leaving the mass of Muslim society more confused and frustrated than ever.”
Until the Muslim world wholeheartedly embraces modernization, recognizing this does not involve westernization and the giving up of its soul, there is little hope of the Islamist threat to other Muslims and the rest of the modern world being eliminated. But how is this to come about?
Here, we have briefly to go back to the world created in the Middle East with the dismemberment of the Ottoman empire. Apart from Egypt, Turkey, Saudi Arabia, and Iran, the rest of the states in the Middle East today are the artificial creations of the victorious powers which dismembered the Ottoman empire. Thus Iraq, instead of being–as Saddam Hussain has claimed–the successor state of Nebuchadnazzer, was put together as a unit containing Kurdish, Sunni, and Shia tribes in the region by Britain. This artificial tribal confederation has always been brittle, and its unity has been maintained not by any national feeling but by tribal deals and most recently by terror.
The Kingdom of Saudi Arabia is also not the descendant of any ancient Arab state, but the result of a religious movement–the Wahabi’s (an extreme version of Islam) creating a state in central Arabia in the Eighteenth Century. This state, along with Yemen, maintained its independence through the turbulent period when the British and the French held mandates over most of Palestine and the Arabian peninsula. But, “without known resources, with few links with the outside world, and surrounded on all sides by British power, [they]. . . could be independent only within limits.” It was the discovery of small amounts of oil in the 1930s, which changed Saudi fortunes.
This oil was discovered, extracted, and exported by western companies, and by 1960 the total Middle Eastern oil reserves were estimated to be about 60 percent of known world reserves. Given the erosion of international rules concerning property rights, and the growth of statism, the Saudi oil fields along with others in Iraq and Iran were nationalized. The Saudi’s were moreover protected by the U.S. “In 1945, Franklin Delano Roosevelt flew from Yalta to Suez, where he met King Ibn Saud abroad the U.S. Navy ship Quincy. They struck the deal that would eventually “fuel” the cold war. Saudi Arabian oil flowed to the west, matching the Soviet’s reserves. In return, the U.S. promised security to the dynasty. . . But there was always a tension at the heart of the arrangement. On the Quincy, the King was adamant that he could not compromise on his opposition to a future state for the Jews in the Muslim land of Palestine. The U.S. dilemma ever since has been to reconcile its backing of Israel with its protection of Saudi Arabia.”
September 11 finally showed up the dangers in this Faustian pact. It concerns both money and ideology. The Saudis have maintained a tightrope act for half a century. They have balanced their alliance with the infidels and the untold riches they provide the dynasty, by maintaining what is probably the most virulent and medieval form of Islam in their own country, and using their newfound wealth to propagate it through financing mosques and Wahabi preachers around the world. The madrasas in Pakistan which turned out the Taliban were all run by Wahabis. The charitable donations all believers are required to make, have often–perhaps innocently–ended up in charities which funded Al Qaeda. The Saudis have directly and indirectly funded the mosques and madrasas which preach hatred against the infidels–the Jews, Christians, and above all the Hindus–to young minds, who learn little if anything about the modern world. But for the Saudis to eschew or put a stop to this funding would undoubtedly create a Wahabi backlash in Saudi Arabia and end the dynasty
For the rest of the world, the poison being spread by this Wahabi evangelism is becoming intolerable. To see how pernicious it is, think what we would think if German schools just had lessons in anti-Semitism, or those in America were just teaching the young to hate blacks. But this is what the large number of madrasas funded by the Saudis, in Pakistan and many other countries around the world, are teaching. If there is to be an end to the “war of terror” this poisoning of the Muslim mind clearly has to stop.
But, numerous commentators have argued that, the reason why this poison is still being successfully spread is the continuing Arab-Israeli confrontation and the anger this arouses in the Arab street, which provides the Islamists with an unlimited supply of jehadis. Without going into the historical rights and wrongs of the issue–on which I have always believed the Arabs have a rightful grievance–there are two reasons why in my view this issue (despite Arab rhetoric) is merely another symptom of the failure of both the Islamic world to come to terms with modernity, as well as the common tactic used by the third world to externalize its domestic problems.
The first point is that the Camp David Accord brokered by President Clinton in 2000-01, gave the Palestinians virtually everything they had asked for except for the so called “right of return,” and yet Arafat turned it down and instead launched the intifada. He and every Arab government knows that no Israeli government can agree to “the right of return,” which in effect would involve the extinction of Israel. Apart from that, Barak had accepted almost every other Palestinian demand.
The amazing thing for me is that, the “right to return” after fifty years is still an issue and is being kept alive by the large number of Palestinians still in refugee camps. Why are they still there after fifty years? On a personal note, my family and I, along with millions of others lost their land and property as a result of the partition of India in 1947. We were refugees. Both the Indian and Pakistani governments provided some help, but most importantly the refugees themselves, after a little while, made new lives for themselves. There are no refugee camps on both sides of the Indo-Pakistani border with millions demanding “the right of return.”
History is never just, and economists have been right to maintain that “bygones are bygones.” This is particularly important in that highly contested territory of Palestine. This came home to me in the late 1970s when a friend was carrying out a dig near the Wailing Wall. He took me down, and showed me layer upon layer of corpses. The ones in each layer had been killed by those above, and then they themselves in a later layer had killed those below them. To decide who has the original rights to the land in this fiercely contested territory, where “might has been right” for millennia, to right historical wrongs on the basis of some principle of restitution would defeat even the wisdom of Solomon. Sensibly, losers in these continual shifts in fortune through history have come to terms with their losses and continued with their lives.
The Palestinians could have done the same. There was plenty of land in neighboring Arab countries to provide them housing, and given the untold oil wealth that accrued to the Arab states in the area there should have been no financial impediment to their rehabilitation. Yet fifty years later we have two generations who have lived in the misery of these camps, waiting for the Israeli state to be destroyed. There can be no peace on those terms with Israel. In the circumstances what should any prime minister of Israel, even an Arab do in the face of the current intifada? I have never received any answer to these questions from any Arab leader with whom I have discussed this issue.
The only solution to the Arab-Israeli problem therefore, also lies in the Muslim world coming to terms with modernity, and with the other Arab states providing both land (if needed) and resources from their oil wealth to resettle the refugees. But this in turn requires that the Saudi and Iraqi direct and indirect support for the “intifada” must end. What this suggests is that the current status quo in the Middle East is untenable. The primary task of a Pax Americana must be to find ways to create a new order in the Middle East, where the cosmological beliefs are preserved, but the prosperity engendered by modernity leads to the ending of the belief in jehad, thus easing the confusion in the Islamic soul which has plagued it for over a century.
How this is to be done is not an issue I have the time or competence to discuss in any depth in this lecture. But there are a few points that can be made. It is accusingly said by many that any such rearrangement of the status quo would be an act of imperialism and would largely be motivated by the desire to control Middle Eastern oil. In this lecture, I have argued that, far from being objectionable, imperialism is precisely what is needed to restore order in the Middle East.
Moreover, oil remains central to both the problem and the solution for two reasons. First, despite the claims by the greens that alternative forms of energy can replace oil as the major energy source propelling global prosperity, realistically this prospect is still a long way off. For the next twenty to fifty years oil will be required not only by the present industrial countries but, even more, by the rapidly industrializing ones like India and China to fuel their growth. With a large part of the world’s know reserves of oil and natural gas still concentrated in Saudi Arabia and Iraq, these countries remain crucial for providing this essential ingredient for global prosperity.
So far, given Roosevelt’s compact with the House of Saud, the Saudis have continued to remain reli
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