Market Minorities Across the World

World On Fire, Fools In Power

by Gwydion M. Williams

A review of Amy Chua’s World On Fire.

In commerce, being 1% better doesn’t make you 1% richer, it can easily make you 100% richer or 1000% richer or 10,000% richer. Or you might be 1% better and get wiped out by a stroke of bad luck, your supplier takes your cash and goes bankrupt, or a large order is taken but not paid for. That’s the reality of commercial life, risks that can’t be avoided. And it’s the reason most people are repelled by commerce, suspicious of those who prosper within it.

It someone worked twice as long or twice as hard and got twice as much money, that would be seen as fair enough. Three or four times as much, acceptable, and that is how it tends to work for employees. But for small business, the differences can become very drastic. The harder worker or the cleverer operator gets a lot more and can often end up controlling the lives of the others.

Inequalities are not just seen as unfair, they really are unfair, at least in the world of business. Most traditional societies had suitable controls in place to stop the differences getting too large. Controls that are often resented by those they protect, since any small trader can imagine themselves being the next big success, no matter how small the chances really are. Only when the success stories are mostly members of a distinct and recognisable group does resentment start to build up.

Amy Chua’s much-praised book World On Fire starts from a recognition of this resentment, identifying it as a world-wide phenomenon. For her it started with the murder of an aunt who was a Filipino Chinese – Amy Chua’s own family had moved to the USA.

In reading books by people of Chinese origin who grew up in North America, I’ve noticed that Chinese-Canadians tend to be assimilated the Western outlook, while Chinese in the USA retain some very alien attitudes. Jan Wong’s Red China Blues: My Long March from Mao to Now is not hugely different from what some disappointed European might write. But Maxine Hong Kingston’s The Woman Warrior: Memoirs of a Girlhood among Ghosts and China Men are distinctly surreal – but some of the most unlikely things were things I knew to be authentic from other sources. Maxine Hong Kingston didn’t seem interested in fitting it into a wider context – her own family’s version of Chinese wasn’t understood by Chinese outside of her own community, which means presumably that it was not Mandarin or Cantonese. But at least in those books, she had not bothered to track down which of the other recognised Chinese dialects was the actual heritage of her family.[C]

Amy Chua comes across as much more assimilated, yet still aware of alien attitudes:

“For the Chinese, luck is a moral attribute, and a lucky person would never be murdered. Like having a birth defect, or marrying a Filipino, being murdered is shameful.” [A]

“My family is part of the Philippines’ tiny but entrepreneurial, economically powerful Chinese minority. Just 1 percent of the population,, Chinese Filipinos control as much as 60 percent of the private economy, including the country’s four major airlines and almost all of the country’s banks, hotels, shopping malls, and major conglomerates…

“My aunt took the bowl but kept talking as if the maid was not there. The Filipinos, she continued – in Chinese, but plainly not caring whether the maid understood or not – were lazy and unintelligent and didn’t really want to do much else. If they didn’t like working for us, they were free to leave any time. After all, my aunt said, they were employees, not slaves.” [B]

In this case and many others that I’ve come across in other books, Overseas Chinese typically come across as having sharp but limited minds. They can work a system but never think about how the system works.

Suppose I were living in a violent low-wage economy, had quite a lot of money and needed servants. Quite apart from social justice, if one were to pay them above the standard rate, then one would get more loyalty. Criminals do rely a lot on ‘inside information’ and a good or bad reputation makes some difference. It won’t put them off a really profitable deal, at least not most of them. But faced with several ‘prospects’ they would pick the person with the worse reputation and avoid the person with the best.

Overseas Chinese don’t seem to see it that way. Don’t seem able to plan ahead and ensure their long-term security. And that does seem to be typical of similar people of a whole range of different cultural and ethnic origins, who manage to flourish in the narrow field of commerce.

Starting with Chinese in Southeast Asia, Amy Chua looks at the wider world and sees many other cases of market-dominating minorities. She doesn’t mention Uzbeks and Kyrgyz in Kyrgyzstan, which has a class element, but was quiet at the time. But she lists lots of other cases, seeing Jews in Europe as just one example of a global pattern. She notes it as one factor that has spoiled the USA’s efforts to impose a Western-style system on the rest of the world.

“In the early states of capitalism in all the Western nations – and precisely because the wealthy were afraid that their property might be confiscated and redistributed – the poor were expressly disenfranchised. Until relatively recently, all of the Western democracies had massive exclusions from the suffrage. To take the case of the United States, after the Federal Convention of 1787 the poor were disenfranchised in virtually every state through formal property qualifications… blacks in the American South, and to a lesser extend throughout the United State, were effectively disenfranchised well into the twentieth century.” [D]

This understates the case. Britain’s parliamentary system up until the 1832 reform had tiny electorates for most of the parliamentary seats, so that a few hundred rich families had effective control of the House of Commons. The dominance of this small elite existed during the main period of the Industrial Revolution, normally defined as occurring from 1760 to 1830. The unreformed parliament oversaw an Enclosure process that ruined many yeomen, independent small farmers. It also allowed factories to put craftsmen out of business. I think that if even the richest quarter of Britons had had a vote back then, the Industrial Revolution would have been either prevented or made to go very differently and likely much slower.

By 1832, the new industrial system was no longer shocking or new, it had been mostly accepted. There was no real moved to reverse it when the reforms of 1832 extended power to the richest seventh. (Note that it wasn’t until 1886 that a majority of adult males in Britain had the vote.)

In the USA, most Northern states did not allow blacks to vote before the Civil War, and sometimes not allowed to give evidence in a court of law. They were also not allowed to join the army until the North found it was running short of soldiers. Most supporters of the latest wave of globalisation or SubAmericanisation ignore all that, or maybe do not know. Amy Chua does say:

“Americans, however, have forgotten our own history. For the last twenty years the United States has been vigorously promoting instantaneous democratization – essentially overnight elections with universal suffrage – throughout the non-Western world. In doing so we are asking developing and post-Communist countries to embrace a process of democratization that no Western nation ever went through.” [E]

Of course another reason is that in the 1950s and 1960s, the USA undermined lots of functioning parliamentary democracies that they saw as going too far to the left. A whole series of coups in Latin America, and also some in Africa, though there was also a lot of home-grown instability. Also knocking over the moderate reformer Mossadegh in Iran in 1983, encouraging the Colonels regime in Greece between 1967 and 1974, and definite plots of a coup in Italy when the Italian Communists were a huge party. And the entire Vietnam War happened because the USA would not allow the promised elections after the French withdrew from Indochina, noting that Ho Chi Minh’s Communists were likely to win them.

A much more decisive moment was the Congo in 1960, when it became independent of Belgium. The first elections were won by Patrice Lumumba, a moderate leftist. He was unwise enough to ask the United Nations to help him stabilise the country. In practice the United Nations did nothing to stop the USA and Belgium from making the Congo ungovernable and encouraging the secession of Katanga. No particular principles were involved: the USA helped defeat the secession of Biafra from Nigeria and has consistently been inconsistent on the matter, acting for short-term gain and trashing whatever there is in the way of electoral democracy whenever it gets in their way

Since the 1980s, ‘democracy’ has been identified with a system of rival political parties and a press and other media dominated by commercial interests. Obviously this gives a large advantage to the rich. Not large enough to satisfy the USA, nothing seems large enough to satisfy them and they have thrown away the dominance they had in the 1990s by encouraging a wave of ‘colour revolutions’ that did initially get rid of regimes they did not like. I assume that the smart-Alecs in their numerous think-tanks completely overlooked the fact that competitive politics needs time to become acceptable. In most of Europe, Britain included, existing monarchies ensured stability while party political systems grew up gradually. Almost all of Europe had parliaments and multi-party elections in 1914, even though this power was shared to various degrees with monarchs. It was the First World War and then the Great Slump that produced modern dictatorships.

The other US dogma has been ‘Free Markets’. Amy Chua has sensible doubts but no solid basis for them. Just by saying ‘Free Markets’, you are swallowing a world-view that used to be marginal – there used to be a substantial Old Right that was genuinely conservative, good at preserving things. The Reagan / Thatcher surge in the 1980s restored confidence to the West but was radical-right rather than conservative. It can destroy with great force and efficiency, but it has failed to create anything solid.

When the New Right say ‘freedom’, they mean a set of regulations that they are comfortable with. It generally does not mean a lack of regulation. ‘Free Markets’ mostly involve a host of complex rules and an aggressive attitude on ‘intellectual property rights’.

Competition can bring benefits, but only if the forms and intensity of competition is strongly limited in the interests of the whole society, not just confined to rules that the rich find useful. The limit can be ‘respectability’, tradition or a strong state independent of commerce, which was a very strong force in both Britain and the USA in their days of greatest economic success.

Fire can warm your house and cook your food. But you’d better limit it rigidly or will destroy and kill. With the new economics and the surprising possibilities of the Internet, ‘Fire from Heaven’ has been treated it as if it were tame and harmless. The actual chaos that results is treated as some surprising exception to ‘the normal’.

The results of unregulated commerce are usually non-linear, small initial differences build up. Most real-world processes don’t follow the simple arithmetic rules that theoretical economists follow. Indeed, people involved in real business and commerce tend to follow very different rules. Back in the 1970s, I heard people in IT projects complain ‘you can’t make a baby in one month using nine women’. The remark also reflects the much lower status of women in those days – socialists did a lot to alter this, but most socialists are so busy complaining about what’s wrong that the forget to claim credit for areas where socialist propaganda did successfully change the norm. And if you want to update the ‘babies’ remark, it could be A team of nine women cannot create a baby in one month. (Unless there was one they prepared earlier.)

Looking back at the question of market-dominating minorities, one can not give any good news for as long as New Right values prevail. Within the parameters of a global economy, it is usually true that if the market-orientated minority was not there, local business would do OK. It is also true that protectionism allows new industries to start and gain strength before being exposed to the perils and stresses of the global market. Almost every successful economy had a few decades of protectionism in which it established itself. Britain was one of the most protectionist countries in the world during the Industrial Revolution, usually dated from 1760 to 1830. The USA was protectionist after their Civil War and the defeat of a US South that was happy to prosper selling slave-grown raw materials to Europe. Likewise Germany under Bismarck. The ‘Tiger Economies’ of East Asia were allowed to be protectionist while selling freely to Europe and the USA. They were allowed because both China and the Republic of India were making decent progress while ignoring US values. China under Mao tripled its economy after having been stagnant or even declining for decades before that.[F] India was making its own way in the world, slowly but quite comfortably. Both got favourable treatment in return for moving towards the US system, though neither have yet dropped all of their defences. Meantime the East Asian Tiger Economies got hit by a series of surprising crises in the 1990s, a period when many other Cold War allies suffered puzzling setbacks or sudden US hostility at a time when the USA might have figured it did not need them. That’s the missing wider picture.

World On Fire has a lot of useful facts and interesting incidents. It’s not a very coherent critique of what’s wrong, but it is at least a popular book that has noticed that globalisation is much more a problem than a solution.

References

[A] World On Fire, page 1, Arrow Books edition 2004.

[B] Ibid, page 3

[C] There are officially 7, 13 or 14, depending on which classification you use.

[D] World On Fire, page 191

[E] Ibid., 191-2.

[F] You can get the figures from The World Economy: Historical Statistics by Angus Maddison. He is widely accepted as the best source.

 

First published in Labour & Trade Union Review, 2010

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