A nuanced contribution to the debate over whether free markets spread democracy or merely advance the McDonaldsization of the globe.
The answer, writes Chua (Law/Yale Univ.), is that they do both—and then some, depending on local conditions. But more often than not, Chua holds, the imposition of so-called “free markets” in the so-called “developing world” means that a ruling elite, often ethnically distinct from the mass of the ruled, prospers far out of proportion to its number. By way of illustration, Chua offers, imagine that Chinese-Americans, representing about two percent of the US population, controlled the country’s largest banks and most of its productive real estate, while the 75 percent of the population considered “white” owned no land and, worse, “had experienced no upward mobility as far back as anyone can remember”: transfer the scenario abroad, “and you will have approximated the core social dynamic that characterizes much of the non-Western world.” Market forces that bring still more wealth into the hands of the minority—Chinese, in the case of Indonesia, or Lebanese in the case of Sierra Leone—necessarily breed dissent and ethnic hatred. Political liberalization may do nothing to ease the tensions, Chua adds. Democratization in the Middle East, for instance, would likely mean only the rise of nationalist and fundamentalist regimes; corrupt and autocratic though they may be, the region’s kings are still more liberal than those who would replace them should the majority rule. All this is very provocative, to be sure, but Chua defends her case well (and adds a damning footnote to the history of Enron along the way). Globalism is a fact of modern life, she concludes, but one destined to yield much bloodshed in the years to come—unless, she adds, the privileged minorities do the smart thing: spread the wealth while they still can.
An antidote to the typical one-market tidings, and bad news for those contemplating investments abroad.