Council on Foreign Relations
Washington, D.C.
Tuesday, April 20, 2004
…PARKER: One of the things you talk about is the roots of American foreign policy and the project in economic organizations. And you talk about the way the American economy has changed from what you call kind of a Fordist model to a millennial capitalist model, and that that has changed the development of American foreign policy. Explain more about what I’ve just given you the headline of.
MEAD: OK. Well, one of the things that I think has made the English-speaking world–kept it kind of in an economic leadership role for centuries now–is that there’s a kind of the trade-off between accepting the risks and rigors of free-market capitalism on the one hand, and that causes a lot of social discomfort and unpleasant change; on the other hand, it brings you benefits in terms of new technologies, higher productivity, faster progress.
The English-speaking world, and especially the United States, has usually been pretty comfortable with pushing that trade-off in the more free-market direction, which, on the one hand, gives us historically a kind of a lead, often, compared to the rest of the world, but, on the other hand, means that our society is sometimes pulling the world in directions it doesn’t really want to go.
During a lot of the 20th century, particularly after the Great Depression in this country, there was a time when our choices aligned a little bit more closely with everybody else’s. In [President Franklin D. Roosevelt’s] New Deal and the post-New Deal era, we accepted a lot more regulation of the economy. We were ready to take a sort of a more cautious approach to the risk-reward trade-off of capitalism. We tended to kind of suppress our historic preference for individualism and work through institutions and groups.
And the social system of mass consumption, mass production of that era, which has been called Fordism by a lot of intellectuals–actually, mostly Marxist intellectuals, but hey, why not, it’s a good term–was a big part of the way America led the world after World War II. And so American economic leadership in a place like Europe was a comfortable fit, where European society wanted to go. It was a model that worked for them, worked for us.
But more recently, maybe since the [former U.S. President Ronald] Reagan and [former British Prime Minister Margaret] Thatcher era more openly, the U.S. has now been moving away from that Fordist model to something I just call in the book millennial capitalism, because you need a name for this new kind of capitalism that seems to be displacing that more regulated one. And it is something new, I think. And as we’ve done that, our economy has become more dynamic. I mean, if you go back to the 1980s, the Americans weren’t just worried about falling behind Japan, they were worried about falling behind Germany. But our economy is now so dynamic, we’re not really worried about falling behind anybody; maybe 30 years out, China, but that’s a very long way off.
On the other hand, the American economic model is now driving everybody else in the world crazy in that as–because the model is so successful, because capital deployed in this way tends to earn a better return than capital deployed in the old fashioned ways, the European countries–and also because of some demographic issues, and so on–European countries, who would just as soon stick with Fordism, are having to change. And so they’re seeing, you know, cutbacks in their social systems, they’re seeing, you know, this raw Anglo-Saxon capitalism coming into their lives, and they resent it. And there’s a sense in which the American model of capitalism is now diverging from the kind of–from where Europeans and others thought was going to be a kind of a permanent convergence; you know, that in the year 2050, we would all be like Sweden. And as that has begun to diverge, it’s getting harder and harder for Americans and Europeans to agree.
PARKER: So if the two sides–or if America is diverging from Europe, and arguably other countries as well, how does it show a kind of global leadership? Is that possible, even?
MEAD: It’s an interesting question. As we stress the exceptionalistic qualities of our own society, you know, our individualism, we start to–you know, whereas in the ’60s and ’70s we were talking about this process of convergence and seeing a kind of a liberal social market as the endpoint of historical development. If we’re now saying we want something radically different from what other people want, this does create some problems. And particularly in our foreign policy, I think it creates problems because very, very often the people who are most attached to the old economic models are the elites around the states of other countries.
So, for example, the old economic model allowed, and in fact encouraged countries to direct credit, allocate credit, or otherwise direct credit to backward regions, backward ethnic groups, to some kind of social purpose. This was–in the developing world, this was a vital state-building tool. And in countries like the European countries, or like Japan or Korea, it was very important in terms of managing social conflict. And what you’re seeing now increasingly is, you know, all of the talk of globalization, international capital, free capital movement, end of regulation, a lot of what this is about is taking power out of the hands of states around the world, and these states are the actors that the American government increasingly depends on, or does depend on for international work. This is the audience for our foreign policy.
So what I think we’re seeing is a crisis -I talk in the book about a succession of elites; that the kinds of people in other countries who, say in the NATO [North Atlantic Treaty Organization] countries during the Cold War, or in Korea or in Japan, used to work very hard to minimize friction between the U.S. and their own public opinion and keep the relationship close and keep cooperating, these are now some of the most alienated people in those various countries. And it’s creating a range of foreign policy problems for us that did not start with the [George W.] Bush administration, but have very much complicated it, and I think often surprised it.
PARKER: So those tensions have kind of deep roots in the sort of underlying economic structures, if you like, rather than just in the particular policy choices?
MEAD: Right. Yeah, and it’s somewhat fashionable to say this abrasive Bush diplomacy has caused all these problems. You know, there have certainly been moments when it’s exacerbated problems, but I think we were seeing some of this shaping up in the ’90s and it’s got much deeper roots than Bush.
PARKER: Before we come on to the kind of implications of that, let me just stop–the book has a very nice sort of balance sheet as what you see as the pros and cons of the administration foreign policy so far. Will you take us through that?
MEAD: Yeah, just briefly, it seems to me that they made–most of the really big strategic choices that they made have been, I would say, the right choices. That is to say, first, the war on-is it a war on terror after September 11th? And a lot of very intelligent and thoughtful people say, “Oh, that’s a terrible, misleading metaphor. It confuses things. This is really more of a police, intelligence, criminal matter, and so we shouldn’t really be using [the term] war.”
I think the administration is reading correctly both public opinion, which demands that this be treated at this level of seriousness, but also the level of threat that this kind of terror produces. This is not an ethnic minority that wants more autonomy. This is–you know, this is a fundamental challenge to the way we do business in the world. You know, if we have to check every container coming into every port for weapons of mass destruction or biological agents and so on, the kind of integrated system of trade and finance, globalized production, and so many other things that we’re–that are essential to the kind of country we want, the kind world we’re trying to build, will be impossible, or the free movement of people around the world and so on.
So they’re correct in seeing that this has to be treated like a war. I think the next big choice they made was whether or not to get rid of Saddam Hussein. I would argue that–in spite of all of the trouble we’ve seen since, that was the right choice. And we were going to have to do it sooner or later, and probably sooner, rather than later.
They’re–they’ve also–behind some of these choices, there’s the choice they’ve made to no longer have a Eurocentric foreign policy. That is, up until really 2001, there was a kind of an operating default assumption in American foreign policy that Europe was the source of both our greatest dangers and our opportunities, as, in fact, it had been for most of our history. That, it seems to me, actually ceased to be true in 1989, but we, to some degree, we went on autopilot until September 11th. And, in fact, in the future, even after the war on terror, it’ll be to the developing world, rather than to Europe, that we will face the greatest dangers in the world, the greatest opportunities, and probably where we will find, over time, our most important allies…
The war on terror, in many ways, reminds me of the Cold War. And let’s not forget, the Cold War was a metaphorical war, just like the war on terror. The U.S. and Soviet armies weren’t campaigning. A lot of what we did in the Cold War was political, was intelligence. It was containing communist ideology, particularly in the early years when communism was a viable contender for taking over power in countries like France and Italy and even, I think, briefly, in Germany. And trying–and even if we had failed to stop the progress of the ideology, it wouldn’t have mattered how many tanks we had in the Fulda Gap [the anticipated point of attack by communist forces in Europe during the Cold War]. And so this is not so dissimilar to what we face now, in some ways.
Then, also, the fact that the Soviets, in a sense, became a supra-state by having a nuclear deterrent that meant that we couldn’t do foreign policy in the classic way that rival great powers do and fight and duke it out and win. And in the same way, you know, now al Qaeda and the movement it is part of are, you know, infrastate things. They are lower than, but they’re still–we still can’t–we can’t send our army to al Qaeda and defeat it, so we’re forced to think of our war in other ways.
I think thinking of a new kind of a containment approach to terror may be a way to bridge the gap between the metaphorical nature of the conflict, but also the very real and existential stakes there are. It may also help make it a little bit easier to explain to our friends and allies and to neutrals why we do what we do and what our policy is.
And I would just suggest that if you think about containment now, as in the Cold War, there were really three dimensions to it. One was the military containment of the Soviet Union. Now it would be really dealing very aggressively with the power of these terror movements to hurt us–that is, disrupting their organizations, cutting their links to states, reducing their ability to operate, move money around, you know, isolating and diminishing their power to arm.
Then there’s a kind of a political containment, which is the movement against this fanatic ideology, which I really do think is a new form of fascism. I follow [author] Paul Berman’s arguments there. And we need to work in civil society–you know, in the 1930s, the United States government had no idea that it would ever be caring about the composition of trade union movements in other countries. By the early 1950s, a communist couldn’t go near a union hall in west Europe without the United States or one of its allies, you know, quivering and really–and thinking and acting and engaging. And I think we’re going to have to look at this new ideological opponent in the same way and look at some of our old tools that we used against it.
And finally, we have to talk about containing, in the sense of no, we can’t allow a terror movement to take power–take state power anywhere. We saw what happened in Afghanistan. If Osama bin Laden tried to take power in Saudi Arabia, we couldn’t allow that to happen. And that’s–that can be a very grim and ugly way of thinking, but it seems to me that we need to look–we look at what Afghanistan turned into under the Taliban as a large terror camp, a real threat to world peace. Any other state under the influence of this movement would be an unacceptable international reality, I think.
But beyond that, we have to be thinking in terms of–you know, getting back to this problem of millennial capitalism versus Fordism–how do we rebuild a sense in the world that the path the Americans want to take, this path of developing capitalism and extending it and exploring new potentials within it is the right path, is the best path? And, you know, we need to find–I’m oversimplifying a little bit, but I talk about in the book the need to find ways to make the power of this–the increased power of this new form of capitalism work better to meet the ordinary needs of ordinary people, to do things to attack poverty, and other things more effectively than Fordism ever could. And one example I talk about is whether international capital markets can be organized in ways to, say, support Fannie Mae-like organizations [that supplies mortgages to home buyers] in South Africa or Turkey or other developing countries so that this new kind of market-driven capitalism and large flows of international finance can begin to play a more benign role in societies and become more popular…
Looking even further ahead in the world, if you want to ask yourself, you know, what are the two strategic threats, potential threats, that the U.S. faces in the 21st century? One is, you know, what we’re seeing now on terror, and the other is the potential–which I, for one, don’t think is inevitable, but you know, you have to think about it–of a Chinese challenge to the American system. And actually, then you think, well, you know, where will the Europeans be on that one? And the answer is sitting it out in the bleachers, you know, and perhaps selling arms to both sides on a neutral and impartial basis.
There is one country in the world which hates the idea that China would be geopolitically dominant in Asia and also hates the idea of fanatical Islam dominating the Middle East. That’s India. So you can make a solid argument that, at least potentially, in the 21st century, India may well be the most important strategic partner of the United States, because we have more points of real solid contact there.
On the other hand, I think you can make a good–you can make a very good argument that it would be China, because if China and the United States can reach an agreement about how things proceed, we will be far more concerned to keep China happy than we are to keep France happy, or Denmark even…
Originally published April 27, 2004