I have an article in this month’s Quadrant, The Rise of China is the Real End of History.
Fukayama’s famous 1992 book, The End of History and the Last Man, is often depicted as recognising the Fall of the Berlin Wall and the events surrounding it constituted an historical faultline and a triumph of liberal democracy and the free market.
Communism had failed to offer the standard of living it promised. Its leaders had even lost the confidence to apply draconian internal political repression, leaving space for a determined group of activists who valued liberty to attract mass support. From the 1960s, Communism also no longer appealed to ideologically committed supporters like the Cambridge Five, who were able to undermine their enemies from within, and industrial spies as instruments of technology transfer.
The Soviet leaders inherited an economy that had achieved major strides in modernisation and, rather like the Ottomans, maintained that success by copying the technological successes that were propelling the western style economies. In the case of the Sultans, the Ottoman Empire’s gradual decline lasted for centuries. The rapid advance of technology vastly telescoped this process in the 20th century and with it the period during which Communism could stand toe to toe with the west. For the Soviets, like the Ottomans, only at the death knell was there a serious examination about the reasons why a constant catch-up was necessary rather than leadership being generated internally.
The key message of the Fukayama thesis was not the failure of Communism, but the success of capitalism. Deng Xiaoping’s apostasy, “It doesn’t matter whether the cat is black or white, as long as it catches mice”, signalled a major retreat from ideology. One cat was recognised as far more productive than the other. The outcome of this was a recreation of property rights and the rule of law concerning individual property which swiftly catapulted the Chinese economy into wealth. But this did not bring liberal democracy in China – and arguably not in Russia.
What it has demonstrated is a phenomena, seen in the 1930s right wing totalitarian states, that the benefits of liberal democracy over political monopolies need not include unlocking prosperity. The key to that prosperity is freedom to innovate, low taxation, secure property rights and so on.
The implications of this are that no longer will countries seize other countries’ resources. They, or their firms, can buy everything they want from willing sellers and such voluntary exchange has been central to achieving success. This respect for existing property rights means we have little reason to fear that the Chinese, if their march to world leadership is inevitable, will seek to project that leadership and use military means to impose unwanted economic outcomes.