Rich World, Poor World
Francis Fukuyama’s State-Building.
December 1, 2004
Dec 1, 2004
12 Min read time
Francis Fukuyama’s State-Building.
State-Building: Governance and World Order in the 21st Century
by Francis Fukuyama
Cornell University Press, $21 (cloth)
The End of History and the Last Man, published in 1992, earned Francis Fukuyama a popular reputation as an imaginative, prophetic thinker. Writing for an Anglophone intelligentsia fascinated by globalization, he seemed to easily transcend old phobias and cultural stereotypes about East and West; he could write with equal authority about Japan and China, the United States and Europe. If we were to trust anyone to peer into the future and report back, Fukuyama was a very plausible candidate: a global intellectual for a global world.
This image endures despite the lack of originality in the core idea of The End of History: that grand political contention would fade away as the nations of the world converged toward liberal democracy. Moreover, that idea itself soon proved to be mistaken. History, as Fukuyama defined it, came back with some big bangs at the beginning of the 21st century. Neither in The End of History nor in his later books has Fukuyama demonstrated any special insight into the global forces shaping today’s world. His genius lies rather in a capacity for lucid synthesis: the ability to foray into specialized areas and sketch the big picture with great clarity. His second success, Trust(1995), seems to command the greatest respect among academics. Although he said nothing that would have been new to experts in the field, Fukuyama drew creatively on his Eastern and Western cultural knowledge to illustrate the major contributions of relationships of trust to the effectiveness of market economies.
As Fukuyama has increasingly exploited this capacity for lucid synthesis, his books have become shorter, with his latest, State-Building: Governance and World Order in the 21st Century, weighing in at 137 small pages of text. The subject—the consequences of and remedies for contemporary state failure of various kinds, from Afghanistan to Zimbabwe—is too complex for anyone to cover thoroughly in a mere 35,000 words. But that is not a complaint: this is a quick and rewarding read. The chief flaw of the book is not its brevity but Fukuyama’s uncritical acceptance of the common wisdom that prevails in the foreign and defense ministries of the rich nations of the world and the international organizations they dominate.
Why are there so many weak states in Africa, the Balkans, the Caribbean, Central Asia, Latin America, and the Middle East? Why are so many governments unable to control their frontiers; rein in their police and armed forces; combat HIV/AIDS; provide their citizens with law, education, and health care; and generally provide the kind of legitimate authority that will edge their countries toward prosperity and prevent them from becoming either breeding grounds or operational bases for terrorists? These are not easy questions to answer. But anyone writing a book on solutions to these problems would surely be expected to inquire into its roots. Not Fukuyama. Except for a few brief references to a post–Cold War intensification of the problem, he shows no interest in its origins. This striking neglect mirrors the attitudes and policies of most of the international organizations and the various aid, foreign, and defense ministries of OECD countries that are currently so obsessed with what is often termed“the problem of weak and failing states.” By failing to investigate possible causes, Fukuyama ends up writing about the remedies that are already on the table and have mostly failed—aboveall, the transfer to the poor world of contemporary rich-world institutions of law, public regulation, electoral democracy, and governmental accountability.
What are the root causes of weak and failing states, and why might the problem be so concentrated in the parts of the world that we can generically term the global South and East? Three broad answers suggest themselves. The first is that this problem is fundamentally cultural: that the various peoples of the South and East just happen to be ill-suited, by reason of inheritance or temperament, to working with the institutions of modern governance and democracy. They need to be trained carefully to understand the virtues of outlawing corruption, allowing free elections and permitting the winners to take over government, and administering justice independent of political or personal affiliation. Fukuyama does not advance this explanation explicitly and makes only the occasional comment to suggest that he sees some merit in it. But the evidence does not support such an explanation. Furthermore, any such cultural interpretation conflicts with the insight that Fukuyama displays, in this book and elsewhere, about how East Asian governments work in very different ways from those of the United States or Europe. If the Chinese and the Japanese are ruled well through institutions and value systems that differ widely from those that prevail here, then what reason could there be for denying that Iranian or Ghanaian institutions and traditions might similarly provide a basis for distinctive good governance. In the first half of the 20th century, China was widely cited as the exemplar of bad government. If that ugly duckling could become a swan, Iran or Ghana might do likewise.
A second possible explanation of why bad governance is so prevalent in the global South and East derives from the fact that these countries are also poor. Perhaps poverty leads to bad government because those with power want to grab for themselves whatever material goodies are available, or because poverty leads to low levels of education and thus a lack of understanding of the value of democratic and constitutional processes. Fukuyama rightly avoids this argument about the effects of poverty. Several centuries ago, Europeans were at least as poor as most people in contemporary Algeria, Colombia, Ecuador, Gabon, Laos, Turkmenistan, or Yemen. Yet many Europeans enjoyed more security, justice, and rights than do the unfortunate people of these countries today.
The cultural and poverty-based theories of the prevalence of weak and failing states firmly locate the cause out there—in the South and East, in the countries and cultures that need to be transformed. Fukuyama devotes most of his book to a discussion of whether and how institutions of government can be transferred from rich to poor countries in order to effect that transformation. Despite some welcome and justified skepticism about the actual effects of international aid programs on the quality of government institutions in the South and East, he identifies himself fully with the conventional views of the international establishment: the phenomenon of weak and failing states is located and rooted in the South and East; we should help if we can, for both their interests and ours; and our help will largely take the form of encouraging the transfer of our institutions to them.
There is, however, a third explanation that receives no acknowledgement at all in State-Building. It traces weak governance in the South and East to the fact that these poor countries and their citizens now share the globe with rich and powerful countries that have created global market institutions and have a long global reach, economic and political. Can rich countries be an important part of the problem? A long tradition of argument suggests that they can. Cases and evidence appear frequently in standard history texts, newspapers, official statistics, and even the pages of The Economist. Powerful and rich foreign countries, the international institutions they have created, and the rich markets for natural resources they provide impinge directly on governance in the South and East today. The effect is often very adverse for several reasons.
First, the temptation for rulers in the South and East to loot their countries is much greater now that we have a large and sophisticated set of global financial institutions that can transfer and stow money safely. So rich elites can stash their cash abroad (in 1999, The Economist estimated that African leaders had $20billion in Swiss bank accounts) and, if things go wrong at home, pickup stakes and start a new and leisured life elsewhere.
Second, rulers who control natural-resource wealth—or a strategic asset such as a busy shipping lane or a well-located military base—can generally rely on some global power to help them keep control of it. Whether that support comes from the United States, Russia, France, or the United Kingdom, it generally isolates rulers further from popular support and legitimacy. The stories of American involvement over recent decades with the Shah of Iran, Saddam Hussein, and the House of Saud illustrate graphically a sequence that is repeated with local variations throughout much of the South and East.
Third, these rulers can also easily defend themselves; it does not take many barrels of oil—or many packets of cocaine, or much foreign aid—to purchase devastating military firepower on international markets. The cost of destructive capacity has gone down steadily as industrial nations have become richer. Whether that firepower is wielded by governments or by insurgents makes little difference: the casualties are not only human lives but also the prospects of establishing civil, democratic governance.
Fourth, trading highly prized exports—forexample, diamonds and narcotics—to lucrative markets in the OECD countries creates vast, historically unprecedented economic surpluses. With international criminal networks and “roguestates” harvesting $80 to $100 billion per year in profits from illegal drug sales (2001 estimates), there is certainly a corrosive impact on public affairs and politics from that illegal money and the illegal activity and organized violence that supports it. What chance of genuine democracy in Afghanistan, Pakistan, Myanmar, Laos, Colombia, Bolivia, Peru, and much of the Caribbean can we expect when the political leadership is either financed by narcotics networks or unable to assert government authority over large populations controlled by drug gangs? Illegal diamonds, smuggled out to Antwerp or New York, have similar consequences for Angola, the Republic of the Congo, Guinea, and Sierra Leone.
The size and destructive political impact of the illegal trade in narcotics and diamonds is only a small part of what is now termed the “resourcecurse.” The curse most often applies to the impact of the legal trade in oil, gas, and minerals. These commodities are a source of enormous profit and temptation for small privileged groups in developing countries. Moreover, they have become more profitable over recent decades, especially with the increased dependence of industrial countries on oil. The figures are staggering. During the1990s, when oil prices were relatively low, the surpluses that accrued to countries exporting oil, natural gas, and minerals, once all production costs and normal profits had been paid, amounted to 21percent of the gross income of two major regions of the world: the Middle East and North Africa; and the Caspian Basin (Russia, the Caucasus, Central Asia). Even for impoverished Sub-Saharan Africa, such surpluses amounted to nearly seven percent of income. These figures refer to genuine surpluses: tax or steal these surpluses away, and it would still be profitable to produce the oil and mine the cobalt. At the extreme, it might cost only $1 or $2 to extract and export the barrel of oil that now commands around $40 on international markets. These vast financial surpluses are up for grabs. And they are grabbed. They end up in the hands of government or in the bank accounts of ruling elites. By some estimates a third of the total oil revenues ever earned in Saudi Arabia have accrued to the House of Saud.
The politics of the resource curse are straightforward. The surpluses constitute a large standing temptation to grab power and to hold onto it at all costs. Take over the government of a country with energy and mineral resources and you become fabulously wealthy. Angola’s political elite—comprising a few hundred people—probably gets more material benefit from thecountry’s oil than the other 12 million Angolans. Members of that elite know that there are plenty of entrepreneurs in the world, including some oil companies, who might be willing to provide up-front financing for a coup, should anything go wrong. Like others in the same position, they spend a great deal of their wealth on armaments, political intelligence, and buying the loyalty of the armed forces and powerful friends overseas. A recent efflorescence of social-science research provides a compelling case that surpluses from energy and mineral resources directly undercut democracy and the rule of law, generate civil war, reduce government’s ability to tax in a legitimate fashion, and often lead to lower levels of literacy and nutrition and higher death rates. The analysis demonstrates that the Middle East is a uniquely undemocratic region not because it is Arab or Muslim, but because it is deeply resource-cursed.
European history has no real parallel to the enormous temptations aroused in the contemporary South and East by large surpluses from natural-resource exports. The nearest case is16th-century Spain’s acquisition of large gold supplies from the Americas. That, too, proved to be curse rather than a blessing. Historians have long argued that this was the cause of the subsequent decline of Spanish culture and imperial power. Debates about the resource curse are not new. The novelty today lies in the size of contemporary natural-resource surpluses relative to the economies of poor nations. The change in turn reflects the extraordinary wealth of rich countries and their populations’ ability to pay hefty sums for supplies of oil, gas, diamonds, cobalt, cocaine, and heroin. In the South and East, ruling groups can sidestep the long and complex process of bargaining with organized taxpayers for public revenue that played such a central role in the establishment of limited, accountable, and, eventually, democratic government in Europe.
The governments and populations of the rich countries are not generally to blame for the weakness of governance in much of the South and East, any more than the extrovert at the party is to blame for driving the introvert deep into her shell. But both the extrovert and the rich countries should be more aware of the effects of their power. Rich countries could do a great deal to change the international environment and thus give good governance and democracy more of a chance in the South and East. Even if we cannot yet desist from supporting vile regimes, as for example in contemporary Uzbekistan, because of oil and strategic military bases, we could make some important policy changes: we could regulate the international trade in arms and military skills; monitor and control international financial transactions to deny political looters a safe haven for their cash; strengthen the Kimberley Agreement, designed to suppress the market for “blood diamonds”; sort out our narcotic policies to reduce the massive illegal profits going into politics in the South and East; better enforce laws against corruption overseas on the part of our own companies; and increase the degree of transparency and influence of the international community over the payments that national governments receive for their oil, gas, and minerals.
Unfortunately, State-Building does not consider any of these; the book is almost as thin on remedies as on causes. Fukuyama does show, elegantly and incisively, the difficulty with transferring institutions, legislatures, public-service rules, budget practices, etc., from one political and cultural environment to another. His explanation of why organizations are so deeply embedded in culture and context, and may work very differently if copied and pasted into a different environment, has a value far beyond the realm of foreign aid and state building. But these criticisms of institutional transfer only underscore the importance of finding other remedies. Improved regulation of international transactions is probably a better treatment and certainly one that is more within the competence of the rich world.
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December 01, 2004
12 Min read time