The horizon is not so far as we can see, but as far as we can imagine

The Supreme Stupidity of the “End of History” And Its Consequences

I remember the first time I heard of Francis Fukuyama’s “The End of History”, and I remember thinking “no one can be stupid enough to believe that.”

But I knew I was wrong, because it kept popping up. The article became a book, even, and fools further down the intellectual stupidity chain made careers out of sub-theses, like Thomas Friedman’s “the world is flat”.

The thesis of the “End of History” was that the ideological wars were over: democratic market capitalism had won, everyone knew it, and history was in effect over because the great ideological war of the 20th century between capitalism/democracy, communism and fascism/democracy had ended. Everyone admitted that democratic capitalism had won and was the best system and now inevitably it would sweep the world and usher in an era of prosperity and relatively good government.

This is what elites wanted to hear after the fall of the USSR and Francis was the one to tell them. He was considered a great intellectual, made lots of money and elites proceeded to act as if he were right.

There were a lot of knock on consequences but there two were most important. The first was that without a competing model, western elites felt free to really rev up the immiseration train started by Reagan and Thacher. Post-war elites had been genuinely scared of Communism, in the “we could wind up dead” way and that had driven a lot of their acquiescence to cutting ordinary people a good deal. (A lot, not all. Much of it was just that the Great Depression cut their legs out from under them, and FDR then broke their kneecaps.)

The shipping of industry to allies and to the third world did not start at the end of the Cold War, but it did go into overdrive. The old police was to make sure that the countries it was sent to were not a real threat: either small to medium developing, or American allies. Now, however, the offshoring and outsourcing train traveled to China. Deng had opened up markets and privatized a large chunk of the economy, and Fukuyama had said that capitalism lead to democracy, so by shipping all that industry to China, well, the West would make them into a democracy.

The Chinese Communist party, in this storyline, were a bunch of suckers, who were inviting in the very forces which would overthrow them.

The line in poker is that if you don’t know who the sucker at the table is, it’s you, but the real danger is when you think someone else is the sucker, and they aren’t.

The CCP had understood Americans and the West very well. Ironically they were aided in this by Marxism and their belief that capitalists were blinded by greed. They offered Western elites cheap labor and high profits and dangled the dream of access to a market of a billion people.

There was a time when it was understood that what made countries mighty was industry, and that you kept the industry at home. In the post-war era that was relaxed: by you still didn’t send your industry to anyone who might well become an enemy.

But history was over and there were no enemies and the West, with its transnational elite largely shorn of patriotism figured they’d co-opt Chinese elites and make them no longer nationalist.

They didn’t understand that the CCP didn’t feel that way: they were proud of being Chinese and they also believed that if they lost power a lot of them would wind up dead. They obsessively studied the fall of the USSR (and its communist party) and were determined that wouldn’t happen to them. And they deeply resented the west, including America, for the “century of humiliation.”

Sure, they were willing to go to a mixed economy with a lot of capitalism, but they were determined to stay in charge and never become democratic capitalists, and they wanted to return China to its natural place as the richest and most important country in the world, a position it had occupied for most of the last 2,000 years (before that it was India, and before that it was Mesopotamia with Egyptian interregnums.)

So you had two bets. The West, led by America, bet that if they shipped industry to China, China would become just another country like them, happy to be part of an international community running on laws that had been created when China was at its weakest.

The Chinese Communist Party bet that they could let some capitalism in and catch up in technology, and even exceed the West in terms of industrial base.

We now know who was right, and it wasn’t the West. Our tech boycotts are a sign of weakness, not strength. We know we can’t stay ahead of them without restricting their access, but it’s very much a case of slamming the barn door after the horses have left. The tech lead moves to where the manufacturing floor is. Britain stayed in the lead technologically for about 20 years after the US became the manufacturing power, for example, but it was a lagging indicator, and ironically Britain had done the same thing America has done with China: it invested big time, built the factories and transferred a ton of tech.

Fukuyama was full of it. He sold a fairy tale to an elite desperate to believe they had won forever and he in selling it and they in believing it took the exact steps required to ensure it wasn’t true, by empowering the only nation in the world strong enough to challenge America. (India was never in the running due to severe corruption and governance issues.)

But the people who engaged in this foolishness (from the POV of the Americ and its allies) reaped their mortal reward: the elites became stinking rich, and Fukuyama become wealthy and was regarded as a genius for telling the story his audience wanted to hear, even if it was obviously wrong.

History never ends. There is no end-state ideology or system and when someone tells you the world is exactly as wonderful as you want it to be, run.

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Problems of Capitalism: Power Accumulation


Open Thread


  1. StewartM

    I am amazed how the once-upon-a-time “Arsenal of Democracy” forgot the importance of industry (and behind it, science and technology). In 2009, Mitt Romney said we should let our auto industry collapse, and I suppose he would recommend our tanks, self-propelled artillery, and personnel carriers by manufactured by–who?–Hyundai? Ditto with the airline industry. No commercial airliners eventually means no military planes. Now we’re already talking of outsourcing ship-building.

    I grew up in a textile manufacturing locale in the South. I’m sure in WWII we sent uniforms not only to our armed services, but also the English and Soviets. So even textiles and shoes you don’t let escape as they have potential military usages.

  2. Soredemos

    The collapse of the Soviet Union was the greatest tragedy of the second half of the 20th century.

  3. Willy

    Strange how eastern ‘collective ideological thinkers’ conquered the ‘free thinkers’ of the west. By using independent thought. As a corporate sociopath once told me, perception is a strange thing.

    Hive mind reasoning. That place where all any worker bee can really ever do is their tiny little part in defense of the hive. Lest they get kicked out. And the hive’s only ever as good as the queen bee who’s directing everything.

    Or it could be that the peer review system breaks down when there’s some serious coin involved.

  4. bruce wilder

    It’s a big club and you ain’t in it.

    Just because someone has power and responsibility in a community or enterprise or industry and benefits from the way the community, enterprise or whatever functions doesn’t mean that power will be used to protect the organization or enhance how well it performs for the bulk of its constituent members.

    Partly, it is due to the way money works as Ian wrote in the other recent post. Just one vector, but when marginal taxes came down, powerful people saw the trade off between cash rewards on the one hand and prominence, reputation, prestige on the other shift markedly. If a couple years as CEO could secure tens of millions, ruthless, risky moves in the tournament of corporate hierarchy attracted more sociopaths, displacing the stolid but competent. Disinvestment became a path to riches.

    The fantastic explosion of debt, public and private, since Nixon became a Keynesian to insure re-election, is sucking the life out of the corpse of the body politic.

  5. different clue

    One wishes the USSR could have evolved into a USDR . . . Union of Social Democratic Republics. One wishes the GDR could have been left alone after the Fall of the Wall to evolve into a GSDR . . . a German Social Democratic Republic.

    Well . . . as Homer Simpson once said . . . ” Aww, history is just a bunch of stuff that happened.”

  6. someofparts

    Michael Hudson is the best source I’ve found to help me understand how our economic system is broken and what measures are being taken globally to build a better set of arrangements.

  7. Mark Pontin

    I once talked to a Chinese VC of the generation that encountered American investors in the 1990s. A comment of his that has always stayed in my mind was, “We had never met people so greedy and so naive.”

    One can assume that with ‘naive,’ he was being polite.

  8. Jon Rudd

    “One can assume that with ‘naive,’ he was being polite.”
    That could more accurately be rendered as “heads firmly planted where the sun never shines”.
    Never, NEVER, take policy advice from a Hegelian.

  9. rkka

    And now we have contrived to hand them one of the greatest troves of energy, other natural resources, food, and non-trivial military, military-industrial, & military-technical power.

    Meanwhile, US military Allies in Europe have had their cheap energy jugular veins cut by… someone, gutting the competitiveness of their industrial economies that support their military power.

  10. Gaianne

    Again I am late to comment–which I must quit doing.

    Thank you Ian for this concise, crystalline summary, and congratulations on being linked by Naked Capitalism this Saturday!


  11. elkern

    I have long been amused by the idea that Monarchy was staunchly defended by many/most intellectuals/academics of the 18th century, but I recently recognized an advantage it has over Democracy in Capitalist societies.

    The primary advantage of Capitalism is that it concentrates Capital (resources, etc) which can then be used to build ever larger machinery and institutions. This was probably key to the Industrial Revolution in the West. The downside of Capitalism is that it concentrates Capital relentlessly, so fewer people control larger portions of a society’s wealth and resources, and the system (political *and* economic) slides into Oligarchy.

    In a Democracy, political leaders are temporary by definition, and usually acutely aware of this in practice. Even the most high-minded politician knows that they need money to stay in office; some just enjoy the power-trip, and want to keep it going; others are glad to trade favors now for the promise of a cushy Boardroom seat down the line.

    All can be bought – or at least rented – when Capital gets too highly concentrated.

    By contrast, a Monarch is [theoretically] motivated by stability and success many generations into the future. They are also susceptible to corruption, but at least they have *some* reason to avoid actions which obviously harm the long-term health of the society.

    Note: I do *not* mean this as an argument for Monarchy, duh! I’m merely pointing out that the “democratic capitalism” which Fukuyama imagined as the pinnacle of human society is so obviously flawed that it makes Monarchy seem almost reasonable.

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