What are the lessons to be learned from current events about the synergy of commerce and democracy?
Invasion of Ukraine makes no sense for Russia's economy
Capitalism — in Russia and China — is being altered by autocratic leaders.
By Isaac Cheifetz
March 19, 2022 at 1:00PM
For the past generation, the global economy has proceeded on the theory that success in the knowledge-based economy is dependent on increasing democracy.
According to this thinking:
- The Soviet Union and its satellite countries could not compete against the democratic West (plus the Asian tigers like Japan and South Korea) in the knowledge-based economy. That was a big factor in its collapse a generation ago.
- Integrating capitalist economies into China, even at the cost of domestic jobs, was worth it to give China financial incentives to open up its society. It was assumed that as China moved up the value chain into more knowledge-based work, freedom of expression would logically infuse into civil society from the freedoms necessary to run global integrated businesses.
- No two countries with McDonald's franchises have ever fought a war. In New York Times columnist Thomas Friedman's colloquialism, any society that had advanced far enough down the path to global integration and conspicuous consumption would find ways other than war to resolve their disputes.
With Russia's invasion of Ukraine, these assumptions have been proven wrong, or at least incomplete:
- Whatever Vladimir Putin's concerns are about NATO countries creeping up to Russia's borders, it is inconceivable to Western minds to destroy his economy and long-term viability by invading the Ukraine. Yet he did, for reasons that make no sense to a spreadsheet mindset.
- China spent much of the past few decades expanding its economy and its connections to the West, but its policies now are making the country more insular economically while expanding its political influence globally. It has explicitly stated multiple times that it will invade Taiwan if the island moves toward independence. Again, this would not serve the interests of China economically.
- Sadly, the McDonald's theory of foreign relations does not hold true with the current state of affairs. And now McDonald's has closed all its Russian restaurants.
Capitalism is still a force for logic and openness, but historical drivers and the conceits of autocratic leaders are still capable of disrupting what seemed to be the inevitability of peaceful global competition.
Isaac Cheifetz, a Twin Cities executive recruiter, can be reached through catalytic1.com.
about the writer
Isaac Cheifetz
The Birds Eye plant recruited workers without providing all the job details Minnesota law requires.
