Deputy Defense Secretary Paul Wolfowitz said something remarkable two weeks ago about North Korea, a sullen wretch of a state, that went unnoted by everybody except perhaps dedicated libertarians.
North Korea's role model, Wolfowitz said in a speech in Singapore, should be -- China.
"Twenty-five years ago, under the leadership of Deng Xiaoping, China pointed the way to how a failed communist system can undertake a process of reform without collapsing," said Wolfowitz, who was assistant secretary of state for East Asian and Pacific affairs in the Reagan administration. "That is the course North Korea needs to pursue if it is to avoid the kind of collapse that is viewed with apprehension throughout the region."
The China that Wolfowitz spoke of strictly enforces limits on procreation, outlaws democracy and free speech, employs perhaps 100 million workers in state-owned enterprises, does not allow foreigners to fully invest in its stock market and does not permit free exchange of its currency.
Wolfowitz has always advocated a gradualist approach to China, so he is not being inconsistent, and almost anybody would agree that a Beijing-style regime would be an improvement for Pyongyang. Even so, when a senior official in an avowedly conservative, private-sector-favoring administration cites China as a desirable economic example, one catches a whiff of ambivalence toward the "free markets now for all" enthusiasm that followed the Soviet Union's collapse.
Fourteen years after Francis Fukuyama proclaimed "an unabashed victory of economic and political liberalism" in his famous essay, "The End of History?" -- later a book, The End of History and the Last Man (Avon Books, 448 pages, $15) -- economic liberalism does not look victorious.
International economic summits attract angry protesters. Russia's attempt to convert to capitalism was a disaster. President Bush presides over Roosevelt-style steel tariffs. Europe is blocking the introduction of genetically modified crops that would ease African famine. And a cascade of falling stock markets that began in Asia in 1997 has soured investors everywhere on publicly traded equities.
The attack on "globalization," a word that can mean many things but that generally connotes the spread of free trade and unfettered funds, had established a beachhead before the Asian economic collapse caused concern about rambunctious capital. The success of Pat Buchanan's protectionist platform in the 1996 presidential primaries was one marker. But "the Asian contagion," which eventually also wrecked the economies of Russia, Brazil and Argentina, lent momentum to the campaign.
William Greider's One World, Ready or Not: The Manic Logic of Global Capitalism (Touchstone Books, 528 pages, $15) arrived in late 1996, just in time to be caught by the wave of worry about Asia. Greider's statistical sins were subject to a devastating review in The Washington Post by economist Paul Krugman. But one of Greider's central contentions, that globalization had bred an oversupply of factories and other assets that was forcing down prices and wages, has been ratified by time, at least temporarily, and it harmonized with a prescient piece Krugman himself had written about the Asian economy for Foreign Affairs in 1994.
Currency speculator George Soros and Harvard economist Dani Rodrik had published pre-contagion globalism critiques that were later turned into books. Soros, in The Crisis of Global Capitalism (Public Affairs, 225 pages, $26), calls free markets "a greater threat to open society than any totalitarian ideology" and criticized people who believe that "the common interest is served by allowing everyone to look out for his or her own interests." Rodrik, in Has Globalization Gone Too Far? (Institute for International Economics, 128 pages, $17.95), praises free trade but says economists need to recognize the negatives of globalization and ensure that "international economic integration does not contribute to social disintegration."
The best-known retort to all this came in 1999 from New York Times columnist Thomas Friedman, whose The Lexus and the Olive Tree (Anchor Books, 512 pages, $15.95) argued correctly that globalization, for all its uncertainty and trauma, is the best bet for rising world living standards and, hence, the best bet for world peace.
Friedman's famous "Golden Arches Theory of Conflict Prevention," which held that no two countries with McDonald's restaurants had ever warred with each other, was quickly falsified when the United States (Billions and Billions Served) attacked Yugoslavia (Belgrade McDonald's). But the exception did not erase the larger point, which was that international capitalism creates incentives and interests that tend to dissuade countries from blowing each other into matchsticks.