Cold War Triumph of Liberal Capitalism — in Hindsight

If we ask the retrospective question, why did Western liberal capitalism actually triumph, then what Branko Milanovic calls “vulgar Fukuyama triumphalism” supplies the correct answer. Liberal capitalism outproduced and outappealed communism and Third World socialism.

( And by “liberal capitalism”, I do not mean ‘neoliberalism’; I mean the heterogeneous varieties of capitalism existing within the OECD. )

The tête-à-tête Soviet-American global struggle over the Third World — the support of comprador dictators, the interference in elections, the military coups that installed friendly tyrants, the interminable proxy civil wars, etc. — these were sideshows.

The Ogaden War; Cuban troops in Angola; Vietnam; the 1964 coup in Brazil; the Algerian revolution; North & South Yemen!!!, Central America, Afghanistan!, Malaya!!, Polisario!!!, the Indo-Pakistan wars, Allende, the Greek civil war, the mass murder of hundreds of thousands of PKI by Suharto, UNITA, SWAPO, RENAMO, FRELIMO, FMLN, ERP, MIR, i.e., the preposterous hyperabundance of insurgent acronyms, etc., etc. — all grand irrelevances in the scheme of things. At least from a western point of view.

What ever Cold Warriors thought at the time, most — not all — but most developing countries could have disappeared into a black hole 16 galaxies away and it would have made no difference to Western liberal capitalism. (And most of the exceptions were found in the few oil-producing parts of the Middle East.)

George Kennan, the original author of the containment policy, had observed there were “only five centres of industrial and military power in the world which are important to us from the standpoint of national security”, and he meant: the United States, Great Britain, Germany, the Soviet Union, and Japan. That could be modified to Western Europe and (some portion of) East Asia.

If the Cold War in the Third World did matter in some way, it was by inducing the Soviet Union to allocate more of its resources to silly adventurism. It was expensive for the United States, but military tit-for-tat was relatively even more expensive for the Soviet Union. If the Soviet Union was not financing Cuba, Afghanistan, Vietnam, a dozen insurgencies here and there, and a big Pacific navy, could it have allocated more resources toward agriculture and consumer goods? Maybe it could have increased investment to exploit the poorly exploited energy sector? How much less wheat might it have imported from Canada and Australia in the 1980s (often purchased with Western bank credit)? And how much longer could the USSR have survived?

What is the true “Fukuyama vulgarism” ? It’s not the triumphalism of liberal capitalism, which seems bloody obvious. It’s the utopian expectation that the Rest of the World would and could adopt the model.

Edit (an addendum): My point is that most of the violent illiberal means by which the Cold War was waged constituted pure waste. They were ineffective and unnecessary. They did not matter in the end. Decision-makers at the time may have rationally thought differently, but in retrospect it appears to be true. How can anyone disagree? Was the American war in Vietnam or the Soviet war in Afghanistan not a big waste of human life and national fortune?