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February 1, 2007

Without developing economy one cannot enforce democracy

The attempts of the West and Japan to hastily impose democracy and market economy so far do not have real success. Why? It is because we do not understand the nature of the pre-industrialized society---"zero-sum society".
Below is my thesis based upon my own observations in Russia and Central Asia.

“Zero-Sum Continent” Eurasia
---or how the “Arc of Instability” came about---

Akio Kawato

The geopolitics of H.J.Mackinder et al have been rejected as being out of date, but it is an undeniable fact that Eurasia, where all the major powers other than the United States are gathered, is the nucleus of global politics. The United States first became a superpower after involvement in two world wars in Eurasia, and if the United States loses its footing in Eurasia, its current status of superpower would be lost. Incidentally, Japanese diplomacy, with its naivety and incapacity for swift action, has always failed on the Eurasia continent awhirl with human desire and Machiavellism. Japanese must turn their gaze more toward expansive Eurasia, which influences East Asia, which is most important to Japan.

Japan deals poorly with Eurasia because it does not understand its real nature. Japan has been very fortunate in its economic development history, with peasants’ ownership rights to agricultural land established for a long time, and there was limited occurrence of using countrymen as serfs. This greatly benefited Japan when she began its industrial revolution 150 years ago.
However, many countries in Eurasia are living according to morals before the industrial revolution based on a system of large landowners and serfdom. If you embark on business and volunteer activities without knowledge of this fundamental fact, you are doomed to end up with unnecessary friction and frustration.

Human beings and nations are not motivated by -isms and words. The driving force behind international relations is the greed and pride. And whether or not the nation has experienced the industrial revolution strongly affects the mentality of nations and races. There are positive sum societies that were born out of the industrial revolution, which can create their own wealth—though they had to compete for markets—contrasting with pre-industrial revolution societies, where in order to become affluent oneself, the only means is to plunder riches from others. These are zero-sum societies.

In the zero-sum society, in order to become even slightly more affluent, the Machiavellian philosophy of “anything goes” spreads, and high status is instead afforded to people with the “ability” to cheat people. In Eurasia, numerous countries live in a zero-sum culture that has not yet benefited from the industrial revolution. Such countries are incapable of mutual understanding on many points with plus-sum-minded societies that have passed through the industrial revolution, creating the “clash of civilizations” described by Samuel Huntington. The clash is not caused by difference of religions. Islam is not the cause of terrorism. It is rather used as an ideological banner to unite the people, just as Christianity
roused Europeans against more civilized Islam at the time of the Crusades.
There are a variety of reasons why Eurasia other than Western Europe is stalled at the pre-industrial revolution stage. First, there was control of the trade routes to Southeast Asia, India and the Middle East by various Western European countries. Later the latter became exclusive markets for the European colonialists, whose commodities stifled the local industry.
Western Europe developed at the expense of its colonies—it is thought that the Indian economy in the 19th century shrunk 3% annually, meaning India’s GDP contracted to one-twentieth over 100 years. The United States has expanded its economy through numerous wars. Japan is no exception, and it must not be forgotten that the munitions plants in several regions of pre-war Japan generated many large private enterprises and SMEs.
The shift of East Asian countries now to industrial societies in peacetime is due to maintenance of the free trade since the end of the war, and the intake of foreign direct investment with the acceptance of a low wage level. However, Singapore’s per capita GDP today is higher than Japan’s.

Russia, and the larger part of the former Soviet Union, is another zero-sum region in Eurasia. In Russia, landowners binding peasants to the land and preventing them from fleeing in the 17th century created the serf system, and the continuation of this system until the mid-19th century generated a rift that has continued to now, so that the elite and the masses seem like separate races.
For several hundred years serfs became used to the collective ownership system (Mir) whereby serfs did not own their own arable land, and arable land collectively possessed by the village community was allocated through periodic rotation to each household. After the Russian revolution in 1917, this collectivistic tradition led to an unusual movement whereby the laborers ousted the factory managers and declared its “nationalization”.
In this way, the state ended up with managing the entire economy.—Lenin did not want it to go that far!—This was fine for construction of gigantic steel mills and dams, but the system could not keep up with the next wave of industrial revolution, i.e. the mass consumption society centered upon electronic consumer goods. Even now, more than 70% of Russia’s national income is energy-related, and Russia has not been able to establish a plus-sum society based on industrial production.

A zero-sum society has a small economic scale, so the privileged classes easily control the whole aspect of the economy. They form clans and divides the profits among themselves, neglecting the majority of the people.
No matter how much plus-sum countries extol to them the virtues of a market economy, democracy and a constitutional state, the privileged class of the zero-sum society just ignores it. This is because they are completely unable to understand why they should create competitors to challenge their own vested interests, or why they should stand by and watch while the nouveau rich create political parties to push for a presidential candidate who will endanger their own political power. It is because they have no concept of the good of the overall population and society overall.

Even if the government pushes for privatization in order to realize a market economy, there are almost no people within the country with the capital to buy out the nationalized companies or with the required managerial capability. Even if Europe and the United States provided capital to produce an “opposition party,” the people it gathers will tend to be occupied with their own participation in the privileged classes rather than the welfare of the people.

In such societies, ownership rights and human rights are viewed lightly, and authoritarianism dominates. Because if the people are not suppressed by state power, a struggle or mutual killing for power involving religion or personal grievances occurs as happened in Tajikistan in the 1990s or is happening in Iraq now. The people are unconsciously aware of this, so in reality they prefer an authoritarian government.

In a society where obtaining all riches and services are dependent on the discretion of the privileged classes, the masses become servile and everything is expected to be received from “above.” They come to think that even in the West the leaders decide every aspect of the country, and believe that the “independence” of the media and parliament that we talk about is nothing but deceptive words.

The morals of those who distribute the riches of a zero-sum society are completely opposite to those in Europe and the United States who respect rationality and transparency. They live in a world of struggle, disregard for rules, connections and flexible principles, arbitrariness and a lack of transparency. To many of them, public service is not to work toward improving the life of the people, but a means toward riches for oneself or the clan one belongs to. In such a society, the “compliance” attained by Western corporations is impossible, and in order to survive, it is necessary to act smartly.

There are three types of people in a zero-sum society. When I was studying in Moscow long ago, I was taught that: “In Russian literature, there are two prototypes in human character. One is the ‘outsider’ and the other is the ‘small guys.’” The outsider is the intelligentsia with the swollen head that has floated up through society, and the small guys character represents the masses. If the privileged class is added to these, it makes three types. And depending on which of these three types you associate with, the impression you receive of that country is definitively different. While persons who see the elite may think: “Russian officials are cold. I hate that country,” there are those mixing with the masses who query: “Why can’t we get along with Russia, which has so many warm people?”

The problem is that none of these three types of people can be relied upon for reforms. Many of the intelligentsia cry for freedom, but in reality are only thinking of themselves. The masses disregard such people. The masses speak quite freely in whatever period, and don’t understand why the intelligentsia demands “freedom” and “democracy.” To the masses, economic reform and a market economy mean no more than strengthening of labor conditions, hikes in public prices, worsening political stability, and the emergence of minority nouveau rich, so they see no merit at all in it.

Accordingly, in a zero-sum society, there is almost no basis on which to start reforms. The types of developmental economics that are popular in the West are not suited toward a zero-sum society. In a zero-sum society, persons other than those with a local connection or blood relationship are not trusted as a business partner. The “unspecified majority of customers” indispensable for a market economy tend to be avoided in China, Russia and Middle Eastern countries. Growth of stock companies in these countries is difficult, and family trust companies and financial cliques are effective. They are smaller and compactly operated.

If we preach overbearingly about freedom and democracy in such societies, the masses refuse to listen. To them, the patriarchal system and village communal system is a highly convenient form for maintaining their own rights and lifestyle, because the freedom espoused by the West strips authority from the elders and reduces them to the same status as the juniors.

Some US-affiliated organizations have spread the cause of democracy sometimes without consideration of the characteristics of a zero-sum society. New “democratic” governments that emerge with the help of the West are constantly in battles for their own material comfort, suppressing opposition groups by forceful means as ruthlessly as their predecessors.

In this way, various Islamic countries and former socialist countries are forming a large belt of authoritarianism across the Eurasian continent. This “Arc of Instability”, as Americans call it, consists interestingly enough of the break-away regions of the ex-empires: the Ottoman Empire and the Soviet Union. Lagging behind in the industrialization, they remain in poverty. Their elite prefer investing their money abroad, where they see more stability and profitability. Anyway, it is too late for them to start up manufacturing industry, since they do not possess either brands, technology, or management skills.
Therefore, for many of the people living in this part of the world there is no alternative but to live on narcotic-traffic, arms trading and terrorism. These people are victims of history. If these countries do not receive large amounts of direct investment, the people there have no means other than leaving to work in other countries.

(This is a part of my lengthy article which was published in Japanese periodical “Chuo Koron” Dec. 2006)


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