Margaret Thatcher has passed away. I could try to talk about Thatcher's place as a world historical figure, but let's face it, there's going to be an orgy of columns on that very point over the next week or so -- anything I write on the topic would be second rate at best. I could write about my own memories of living in London during the late Thatcher era, but to be honest, that's not terribly interesting -- it's a tale of fading political popularity and really strident left-wing art.
So, instead, consider the following two ways in which Thatcher has left a legacy in international relations theory:
1) Diversionary war. There's a large literature in international relations on the notion of using war against a foreign adversary as a way to distract domestic opposition and/or bolster domestic support for a leader (see Chiozza and Goemans for the latest iteration of this literature). It's a little-known fact, but International Studies Association rules prohibit any paper on this topic from being published without a Thatcher reference.
I kid, but only barely. The Falklands War represents the paradigmatic case of diversionary war theory for two reasons. First, almost every analysis of the conflicts attributes the Argentine junta's growing domestic unpopularity as a key cause of their decision to launch the conflict (though, of course, it's a bit more complicated than that). Second and more importantly, absent the Falklands War, Margaret Thatcher would be remembered as a failed one-term prime minister. Victory over the Argentines in the South Atlantic enabled Thatcher to win re-election.
In truth, it's far from clear that diversionary war is all that common a practice (if it was, we'd be drowning in conflicts since 2008). The Falklands War, however, does provide the paradigmatic case.
2) The spread of ideas. It's fitting that the New York Times ran a story over the weekend about the boomlet in history about studying the growth of capitalism. Thatcher's role in advancing the spread of free-market ideas to other policymakers was crucial. To explain why free-market capitalism became the pre-eminent idea in economic policymaking over the past few decades, you have to look at Thatcher. She preceded Reagan, becoming the first leader in the developed world to try to change her country's variety of capitalism. Even after Reagan came to power, one could persuasively argue that Thatcher mattered more. As some international political economy scholars have noted, ideas and policies spread much faster when "supporter states" embrace them vigorously rather than reluctantly. Thatcher embraced capitalism with a near-religious fervor, acting as a vanguard for the rest of Europe on this front. For more on the role that Thatcher and her advisors played, see Yergin and Stanislaw's The Commanding Heights, or Jeffry Frieden's Global Capitalism.
OK, readers, in what other areas of international relations and comparative politics did Margaret Thatcher leave her mark?
Your humble blogger was watching CNN late last night after the House of Representatives passed the fiscal cliff compromise, and was struck by the
anchor's Ali Velshi's complete and total disdain for what had just transpired. He repeatedly said that this was, "an embarrassing moment for America," and that it was so frustrating because these wounds were self-inflicted. This was surprising, since CNN is ostensibly the cable news netowrk that's the least partisan and most likely to maintain the detached, sonorous perspective that can only be incubated after prolonged exposure to Wolf Blitzer.
Now I'm certainly not gonna defend what went down the past two months as the exemplar of Jeffersonian democracy or anything, but I do think some perspective is in order here. The truth is that America's political institutions engage in self-destructive behavior on a fairly regular basis. This holds even in the post-Vietnam era. In the 1970s the country nearly tore itself apart because of Watergate. In the 1980s it was Iran-Contra. In the 1990s the federal government was shut down because Republicans and Democrats couldn't agree on the budget for a spell. That was followed by the House of Representatives impeaching President Clinton for perjury and obstruction of justice. In late 2000 the Supreme Court issued a 5-4 ruling short-circuiting ballot recounts in Florida and making George W. Bush the next president using a legal logic that was so tortured that the Court said no one could ever use it again. And last year U.S. debt was downgraded -- not because of any fundamental U.S. economic weakness, but because of the U.S. political system. All of these episodes were politically self-inficted wounds -- and the United States weathered all of them pretty easily. Please bear this in mind the next time you read something about America going to hell.
[But haven't things gotten worse?--ed. Well, no, I think what's changed is that the Dems and the GOP are acting more like European parliamentary parties in a constitutional system that emphasizes the separation of powers. That's a problem, and gerrymandering is exacerbating the situation. But it's a situation that a few nonpartisan districting commissions would be able to solve.]
Now, with this dose of perspective sauce, there also needs to be a recognition that elements of the United States have shifted in an ideological direction that makes them increasingly isolated in the world. To see why, look at this Financial Times story by Hannah Kuchler on David Cameron's G8 priorities. The salient part for this conversation:
In a letter to the leaders, Mr Cameron said the world will continue to face “grave economic uncertainty” in 2013 but the rich countries must set “ambitious standards” to drive growth in their countries and across the globe.
The UK will push for action in three key areas: trade deals, including a potential EU-US trade agreement; measures to tackle tax evasion and open government; working with developing countries to fight corruption....
The British government has prioritised chasing tax evaders, with prosecutions for tax evasion up by 80 per cent and a treaty with Switzerland, its largest ever deal on tackling tax evasion. Mr Cameron wants to use the UK’s time at the top of the G8 to “galvanise collective international action”.
“We can lead the way in sharing information to tackle abuses of the system, including in developing countries, so that governments can collect taxes due to them,” he wrote in the letter. “We can work together to sign more countries up to international standards. And we can examine the case for strengthening those standards themselves.”
Now, international tax evasion has been an on-and-off G8 priority for the past 15 years, and there's actually been some progress on tax havens. I guarantee you, however, that to the House GOP caucus this will look like some back-door globalist conspiracy by the Obama administration to raise taxes or enforce collection through jackbooted G8 thugs. So anything that will require legislative approval ain't going anywhere.
[Uh, isn't this kinda nuts? Everyone knows that the G8 doesn't have any thugs, much less jackbooted ones!!--ed. Yes, and everyone knows that Agenda 21 is a nonbinding plan of action for sustainable development, but that hasn't stopped a few deluded people from freaking out about a U.N.-hatched global conspiracy.]
So some things have changed, and for the time being there will be some issues on which legislative action is likely not gonna happen. On the other hand -- much like Americans after New Years Eve parties -- the United States usually recovers from these bouts of temporary stupidity. The federal government will muddle through, and I suspect even the 113th Congress will be interested in a U.S.-E.U. trade deal.
Am I missing anything?
The New York Times' Peter Baker wrote a pretty shrewd article pointing out that for all the differences in rhetoric, the actual foreign policy content of Barack Obama and Mitt Romney look pretty damn similar.
Of course, even if the policies would be similar, the execution and rhetoric matter. While I didn't think Romney's "disconcerting" line about the Olympics was all that bad in context, it wasn't a good day for his campaign. And while the Jerusalem leg of his trip seemed to please the Israelis, Romney still managed to stir up a hornets nest of trouble:
Mitt Romney told Jewish donors Monday that their culture is part of what has allowed them to be more economically successful than the Palestinians, outraging Palestinian leaders who suggested his comments were racist and out of touch with the realities of the Middle East. Romney's campaign later said his remarks were mischaracterized.
"As you come here and you see the GDP per capita, for instance, in Israel which is about $21,000, and compare that with the GDP per capita just across the areas managed by the Palestinian Authority, which is more like $10,000 per capita, you notice such a dramatically stark difference in economic vitality," the Republican presidential candidate told about 40 wealthy donors who ate breakfast at the luxurious King David Hotel.
Romney said some economic histories have theorized that "culture makes all the difference."
"And as I come here and I look out over this city and consider the accomplishments of the people of this nation, I recognize the power of at least culture and a few other things," Romney said, citing an innovative business climate, the Jewish history of thriving in difficult circumstances and the "hand of providence." He said similar disparity exists between neighboring countries, like Mexico and the United States.
The CIA World Factbook has a rather different assessment of what ails the Palestinian economy:
Despite the Palestinian Authority's (PA) largely successful implementation of economic and security reforms and the easing of some movement and access restrictions by the Israeli Government in 2010, Israeli closure policies continue to disrupt labor and trade flows, industrial capacity, and basic commerce, eroding the productive capacity of the West Bank economy.
So, Israel/Palestine is not a great example. And let's also stipulate that it's not... diplomatic to say that a foreign jurisdiction's development has been poor because of their culture. And let's skip over Romney's bad data and the public fallout and the White House glee and get to the really geeky question: is Romney right more generally? As Ashley Parker points out, Romney has made this "culture" argument before:
In the speech, Mr. Romney mentioned books that had influenced his thinking about nations — particularly “The Wealth and Poverty of Nations,” by David S. Landes, which, he said, argues that culture is the defining factor in determining the success of a society....
The argument comparing Israeli and Palestinian vitality is one Mr. Romney has made previously — in speeches and in his book “No Apology” — and one that he has used to explain economic disparities between other countries, as well.
Indeed, in No Apology, Romney uses the same David Landes quote from page 516 of Wealth and Poverty of Nations -- "culture makes all the difference" -- three separate times. I wish, however, that Romney had read onto page 517:
On the other hand, culture does not stand alone. Economic analysis cherishes the illusion that one good reason should be enough, but the determinants of complex processes are invariably plural and interrelated. Monocausal explanations will not work. The same values thwarted by "bad government" at home can find opportunity elsewhere.
It's that last sentence that suggests where Romney might be off base. As Daron Acemoglu and James Robinson have argued recently in Why Nations Fail, it's not culture that matters as much as political institutions. From p. 57:
Is the culture hypothesis useful for understanding world inequality? Yes and no. Yes in the sense that social norms, which are related to culture, matter and can be hard to change, and they also sometimes support institutional differences, this book's explanation for world inequality. But mostly no, because those aspectys of culture often emphasized -- religion, national ethics, African or Latin values -- are just not important for understanding how we got here and why the inequalities in the world persist.... they are mostly an outcome of institutions, not an independent cause (emphasis added).
The kind of gaps in economc output that Romney likes to stress are of so recent a vintage that institutions are the more likely driver of what's going on than culture. One can't assert, for example, that culture explains why South Korea is outperforming North Korea or why West Germany was more prosperous than East Germany. Acemoglu and Robinson don't get the final word on this -- this remains an unsettled question -- but their hypothesis is of a more recent vintage than Landes.
So no, I don't think Romney is right -- but it's still an open debate. That said, if this is what he actually believes, then there would be some profound implications for development policy if he was elected president. Chaging political and economic institutions is hard work -- but it is doable through policy. Changing culture is next to impossible -- they change, but at a glacial pace. So when Romney says he thinks culture is the key, it's another way of saying that he doesn't think the United States, World Bank or any policy tool out there is really going to promote economic growth in the least developed world.
That said, I will give Mitt Romney credit -- his political gaffes -- as opposed to those of his staff -- generate some damn fine debates.
What do you think?
My post yesterday on
following Vizzini's advice U.S. retrenchment from Central Asia generated a bit of pushback. I should point out that my concern here is that the U.S. husbands its power resources with a bit more acumen. Sure, Central Asia has some strategic significance, but the thing is, every region in the globe has some strategic significance. If I'm rank-ordering U.S. strategic priorities, it would go as follows: 1) East Asia; 2) Latin America; 3) Europe; 4) Middle East; 5) South Asia; 6) Central Asia; 7) Africa (there's also a big gap between 4 and 5 on this list). Scarce resources devoted to Central Asia have to be siphoned from somewhere, and I don't want too much of a diversion from other strategic priorities.
That said, I want to clarify that I'm not saying that the U.S. is in terminal decline and therefore should engage in a systematic strategic retreat. David Bell makes an excellent point in The New Republic today -- there has been a perpetual declinism industry in the United States since the launch of Sputnik.
Twenty-two years ago, in a refreshingly clear-sighted article for Foreign Affairs, Harvard's Samuel P. Huntington noted that the theme of "America's decline" had in fact been a constant in American culture and politics since at least the late 1950s. It had come, he wrote, in several distinct waves: in reaction to the Soviet Union's launch of Sputnik; to the Vietnam War; to the oil shock of 1973; to Soviet aggression in the late 1970s; and to the general unease that accompanied the end of the Cold War. Since Huntington wrote, we can add at least two more waves: in reaction to 9/11, and to the current "Great Recession."....
What the long history of American "declinism" -- as opposed to America's actual possible decline -- suggests is that these anxieties have an existence of their own that is quite distinct from the actual geopolitical position of our country; that they arise as much from something deeply rooted in the collective psyche of our chattering classes as from sober political and economic analyses.
For whatever reason, it is clear that for more than half a century, many of America's leading commentators have had a powerful impulse consistently to see the United States as a weak, "bred out" basket case that will fall to stronger rivals as inevitably as Rome fell to the barbarians, or France to Henry V at Agincourt.
On the foreign policy front, selective U.S. retrenchment doesn't imply terminal decline so much as a temporary realignment to ensure that American power and interest are matched up going forward.
Question to readers: does retrenchment presage resurgence?
Back in the spring, I hinted that I would be willing to produce a top ten list of must-read books on the international political economy/global political economy (IPE or GPE for those in the know), provided there was sufficient demand.
Judging by the e-mail response, the demand is robust and quite persistent. So I've decided... to postpone that list for another month or two.
Because you're not ready yet.
Let's face it, if you have read this far in the post, it means you're either:
This is great. The thing is, most graduate programs in political economy don't give you that much historical background before throwing the cutting-edge theory and methodology at you. This year I was lunching with some Ph.D. students at one of the top IPE schools in the country, and the students (and some of the professors) made it pretty clear that they didn't know all that much about the topic beyond the tricks of the trade - formal modeling, econometric techniques, etc.
If you're expecting me to go off on a rant here about the uselessness of these tools, well, you're going to be sadly disappointed. There are some pretty good reasons to learn these techniques - among other things, they'll help you to separate the wheat from the chaff when it comes to what blogs, pundits and public intellectuals are saying about the global economy.
That said, the opportunity cost can be significant - a failure to learn anything about global economic history beyond the stylized facts contained in the most-cited articles. This would be a weird collection of scattered knowledge, ranging from the 1860 Cobden-Chevalier Treaty to the 1934 Reciprocal Trade Agreements Act to the birth of the Washington Consensus.
Soooo..... before you are ready to ready the ten books in IPE that you have to read, you should first read these ten books on global economic history. I'm leaving a lot out here (North and Thomas' The Rise of the Western World; Karl Polanyi's The Great Transformation; anything and everything by William McNeill, Joel Mokyr, David Landes, Alfred D. Chandler, Jr., Joseph Needham; some things by Niall Ferguson, etc.). That's partly because I've slanted this list towards more recent scholarship, and partly because while these books are excellent economic histories, they don't focus as much on the international dimension.
[There are some other newly-released books, such as Liaquat Ahamed's Lords of Finance or Justin Fox's The Myth of the Rational Market, that might very well belong on this list. I'm still in the middle of reading them, however, so the jury is still out.]
Once you imbibe the (sometimes contradictory) information contained in these books, you can look at what the stylized facts contained in IPE books with a much more astringent perspective. It's not a coincidence that the foundational IPE texts are by the twentieth century's greatest economic historians - Eli Heckscher, Albert Hirschman, Charles Kindleberger, and Jacob Viner. Trust me - you will feel much the wiser for it.
The following would be my preferred order of how to read them, but it's hardly the only way to do it:
1. Gregory Clark, A Farewell to Alms: A Brief Economic History of the World (2007). I've already tagged this book as an interesting read. If nothing else, the first chapter of this book - "The Sixteen-Page Economic History of the World" - actually matches the audacity of the title. As I said, I don't completely buy Clark's explanation of Malthus + genetics = Industrial Revolution in Great Britain. His attempt to explain away the irrelevance of institutions doesn't hold up to scrutiny. Still, I will say I better appreciated the heyday of mercantilism after reading Clark.
2. Nathan Rosenberg and L.E. Birdzell, Jr., How the West Grew Rich (1986). Perfect when paired with Clark, because Rosenberg and Birdzell present the classical argument for why Western Europe was the birthplace of the Industrial Revolution.
3. Jared Diamond, Guns, Germs, and Steel (1997). The third leg in the triad of "why did Europe dominate the globe?" explanations. If Clark focuses on genetics/culture, and Rosenberg and Birdzell focus on institutions, Diamond proffers a geographical determinism. Simply put, he thinks the temperate climate of Eurasia was bound to produce the most sophisticated societies with the most advanced animals, germs, and technologies. Diamond's argument complements rather substitutes for the institutions and culture arguments. If nothing else, it is impossible to read this book and ever buy the ending to War of the Worlds.
4. John Nye, War, Wine and Taxes (2007). David Ricardo's classic example of comparative advantage was English wool for Portuguese wine. Nye explodes the "natural" aspect of this trade, demonstrating how high tariffs against French wine proved a boon to both the Portuguese and English beer distillers. Nye stretches his argument too far at times, but the interrelationship between war, protectionism, and statebuilding is pretty damn fascinating.
5. Douglas Irwin, Against the Tide: An Intellectual History of Free Trade (1996). Irwin's book is more a history of economic thought than economic history, but nevertheless tells a remarkable story: how did the idea of free trade knock off mercantilism, protectionism, strategic trade theory, and other doctrines?
6. Kevin O'Rourke and Jeffrey Williamson, Globalization and History (1999). A lucid, detailed and fascinating study of how the nineteenth century of globalization went down. When anyone argues that the current (fast fading?) era of globalization is historically unique, take the hardcover version of this book and whack them on the head with it. Special bonus book: people who liked this should go on to read Power and Plenty by Kevin O'Rourke and Ron Findlay).
7. Jeffry Frieden, Global Capitalism: Its Fall and Rise in the Twentieth Century (2006). This book is to the twentieth centiury as Williamson and O'Rourke's book is to the nineteenth - except it's written for a wider audience, so it's a more accessible read. Accessible doesn't mean simple, however - this book is chock full of interesting arguments, cases, and counterarguments.
8. Barry Eichengreen, Globalizing Capital: A History of the International Monetary System, second edition (2008). A more narrow work than Frieden's, Eichengreen's book is the starting point for understanding the classical gold standard, the Bretton Woods regime, and
whatever the hell system we have now the Bretton Woods II regime.
9. Daniel Yergin and Joseph Stanislaw, The Commanding Heights (1997). Yergin and Stanislaw tell a cheerleader's tale of how the Washington Consensus displaced the old quasi-Keynesian, quasi-socialist economic order that had its apogee and downfall in the 1970s. What's particularly interesting is their argument that what mattered was the content and spread of the ideas themselves, and not some coercive power, that led to the re-embrace of markets.
10. Paul Blustein, The Chastening (2001). Blustein, a reporter for the Washington Post, tells the you-are-there version of the Asian financial crisis and the reaction from the U.S. Treasury Department. If you want to know why Pacific Rim economies started hoarding foreign exchange reserves beginning in 1999, read this book.
OK, readers, which books would you recommend?
Daniel W. Drezner is professor of international politics at the Fletcher School of Law and Diplomacy at Tufts University.