Wanted: leadership in the western world

by Jonathan Todd

Francis Fukuyama is best known for confusing the period between the falls of the Berlin Wall and Lehman Brothers with the end of history. This was to be defined by the global triumph of liberal democracy and market economies. He recently conceded:

“The most important strength of the Chinese political system is its ability to make large, complex decisions quickly, and to make them relatively well, at least in economic policy”.

China is neither liberal nor democratic, but its state-directed model of capitalism is reshaping markets across the globe. Nonetheless, everyone from George W. Bush to Will Hutton is confident of the model’s limitations. It is thought that history hasn’t ended yet, but that it will, and on the lines that Fukuyama proclaimed.

“Trade freely with China and time is on our side”, said Bush. These economic freedoms will, ultimately, it is argued, require political freedoms. This is because per capita western incomes depend upon what Hutton calls the “enlightenment infrastructure” – pluralism (multiple centres of political and economic power), capabilities (rights, education, private ownership) and justification (accountability, scrutiny, free expression).

Hutton made this argument in a debate with Meghnad Desai in Prospect just before the credit crunch. Desai scoffed: “For you, there is only one road to capitalism – the Western one – and only one political system – ours”. The crunch must place at least a question mark next to Hutton’s Whiggish confidence.

Perhaps the most important way in which 11 September 2001 changed the world was in making more apparent what few had already perceived: the ambition of Al-Qaeda’s threat to the west. Similarly, the significance of China’s rise wasn’t widely understood before the financial crisis. Now it is more obvious.

Zhu Min, special advisor to the international monetary fund, coined the phrase “three-speed” recovery in the opening debate at Davos this year. This involves emerging economies growing at more than 6 per cent in 2011, the US by 3 per cent and Europe by less than 2 per cent. Negative growth in the fourth quarter of 2010 puts the UK in the slowest of the slow. China is among the quickest of quick. It isn’t a global crisis anymore. It’s a European crisis.

While Fukuyama applauds the efficient rapidity of Chinese decision making, the Eurozone is sluggish to confront its big choices. Not that the UK should be smug. We’ve allowed banks “too big to fail” to morph into banks that increasingly seem “too big to save” – without correcting the causes of these banks becoming too big to fail. We’re also guilty of failing to match lofty rhetoric on climate change with effective policy and of drifting towards dependence on Gazprom in an ever more resource-stretched world. To say nothing of our geriatric-paced policy response to demographic change.

Yes, a plan for growth is essential. But for this to be meaningful it needs to chart a trajectory for the state to stop being a featherbed for bankers and start being a catalyst to a more energy-efficient and innovative economy.

All of this is painfully clear, as is the inability of David Cameron to offer anything like an adequate response. All politicians are in the gutter, but Cameron isn’t staring at the stars. Hu Jintao is. Mark Leonard in Renewal credits him with leading a campaign of “asymmetric warfare” against the west: “finding and exploiting the enemy’s soft spots”.

After international financers, like George Soros, humbled the “Asian tigers” in 1997, Chinese intellectuals, Leonard notes, pondered: “If a lone individual like Soros could unleash so much destruction simply for profit, how much damage could a proud nation like China inflict on the USA with its trillion dollars of foreign reserves”?

China and America’s condition of mutually assured economic destruction means this theoretical proposition is unlikely to be soon tested. It does, however, expose the vulnerability of the west, particularly if the uber-pragmatists of Jintao’s generation are succeeded by a more assertive cadre. That the question is even asked shows that Chinese leaders are capable of doing what our leaders struggle to: coldly assessing strengths and weakness and, given these strengths and weaknesses, ruthlessly pursuing objectives.

Al-Qaeda are world leaders in asymmetric warfare as it is conventionally understood. Guantanamo Bay and Bagram are the weakest parts of the west’s response, because they compromise our defining values. Privatising the upside of banking, while socialising the downside, also rejects the fundamentals of capitalism. Chinese-style, forensic assessment of the West’s strengths and weaknesses would rank our values – the “enlightenment infrastructure” – as our greatest strength and anything that belittles them as corrosive weakness.

Leadership is required for this betrayal to be averted – most pressingly in relation to Egypt. True leadership would also see it as analytically inadequate and careless with the hopes of millions simply to presume that Hutton is right and Desai is wrong. Hutton is right insofar as the “enlightenment infrastructure” is the richest inheritance and the seed of the innovation that can allow the West to prosper in a century in which China will be much more globally consequential than before.

However, in addition to this infrastructure, leadership will be necessary for the west to so prosper. Real leadership isn’t just about rhetoric or grand promises to be fulfilled years hence, but about the policies that will concretely advance these promises: the prose as well as the poetry. In respect of the key challenges that confront them – banking, energy, climate change and ageing – western leaders provide little of either. In particular, they struggle with the prose, which comes so easily to the Chinese. This needs to change if history is, after all, to end.

Jonathan Todd is Uncut’s economic columnist.


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4 Responses to “Wanted: leadership in the western world”

  1. Robin Thorpe says:

    As usual a well-written, insightful article; erudite and thoughful perhaps Jonathan Todd is going to be a Crosland figure for a new generation of the labour movement. Jonathan, do you have any ideas on how growth stimulus could be achieved?
    Would a public housing programme be affordable? As a socialist do you support socialised housing and infrastructure? Would the UK be wise to pursue a policy of devaluation of the pound? Unlikely under the Tories, but would you stick your neck out and suggest that it is a way of promoting growth?

  2. james says:

    Jonathan – “privatising the upside of banking, while socialising the downside, also rejects the fundamentals of capitalism”. No, it rejects the fundamentals of the theory, but not the practice – what’s happened is pretty much routine. Capitalism is a system of power, not beliefs – that’s what Hutton forgets when he looks at China.

    Robin – Crosland’s proposal for housing was for to replace the private-rented sector with a co-operative housing sector. As an aspiration, it’s a good place to start, no?

  3. Robin Thorpe says:

    James – I would love to see an increase in co-operative housing. This is I want meant by socialised, as opposed to nationalised. A housing sector run for mutual benefit rather than individual gain would I am sure help a lot of people to live a more fulfilled life.

  4. Top writing from Jonathan Todd, as is to be expected. We seem not to have the big beasts around in domestic and international politics and economics. Where is the modern-day Keynes, explaining how to generate growth? Where are the visionary politicians plotting a way forward for our politics and economy which ensures that the system benefits ordinary people, rather than elites? We need them and/or we need the ideas that will help plot a path forward which rises above technocratic twiddling and starts to tackle some of the problems we as a country and a world face, in the moral, social AND economic spheres.

    Jonathan is Vice-Chair of Pragmatic Radicalism, and founded it with me last year.

    Our next event is THIS WEDNESDAY – a Top Of The Policies on Housing, chaired by Jack Dromey (Shadow Housing Minister), at which a variety of speakers will be pitching housing policies in 90 seconds, followed by 3 mins Q&A per idea, then a vote. http://pragmaticradicalism.co.uk/top-of-the-policies-on-housing-chaired-by-jack-dromey-mp-shadow-housing-minister. 6.30-8.30pm, The Barley Mow pub, Horseferry Rd, Westminster, London.

    Future events are on transport (13 June, chaired by Maria Eagle MP, venue TBC) and justice/constitutional reform (11 July, chaired by Sadiq Khan MP, venue TBC). More to follow.

    Democratic; inclusive; non-factional; transparent; bottom-up; designed to give a platform for ordinary activists as well as established figures. If you would like to participate or attend – please get in touch john.slinger@pragmaticradicalism.co.uk @PragRad @JohnSlinger

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