The Ideas That Conquered the World

Peace, Democracy, and Free Markets in the Twenty-first Century

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Foreign policy analyses written by CFR fellows and published by the trade presses, academic presses, or the Council on Foreign Relations Press.

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At the dawn of the twenty-first century, three ideas dominate the world: peace as the preferred basis for relations between countries, democracy as the optimal way to organize political life, and free markets as the indispensable vehicle for the creation of wealth. While not practiced everywhere, these ideas have—for the first time in history—no serious rivals as methods for organizing the world's politics, economics, and international relations.

In this illuminating book, one of America's leading foreign-policy thinkers, Michael Mandelbaum, describes how the wars and revolutions of the past two centuries brought these ideas to a commanding position worldwide. He then assesses the prospects for these ideas in the years to come, with a particular focus on the United States, which bears the greatest responsibility for protecting and promoting them, and on Russia, China, and the Middle East, where these ideas are not well-established but where their fate will profoundly affect the rest of the world.

One remarkable legacy of the second half of the twentieth century is the decline of major war among the great powers. Something emerged in Europe at the end of the Cold War, Mandelbaum argues, that had eluded the statesmen of previous eras—a formula for peace. He assesses the possibility of applying this formula in East Asia, another region where a major war could take place. He also provides a context for understanding why much of the rest of the world, from the Balkans to Afghanistan, has become less peaceful.

As major wars have declined, the free market has become the most widely accepted institution in human history, and Mandelbaum explains why this happened and how the rise of free markets holds the key to a peaceful and democratic future, while depicting the obstacles to the construction and operation of working markets. His analysis offers an original and compelling picture of the twenty-first-century world, a world remarkably favorable to American values and interests.

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Reviews and Endorsements

The Ideas That Conquered the World is the most important work thus far on what's new and what's old about the post-Cold War world, about the forces and ideas that will do battle in the future, and it is beautifully written. It shows that history continues with interesting new wrinkles-worrisome and exciting.

Leslie H. Gelb, President, Council on Foreign Relations

Michael Mandelbaums new book, The Ideas That Conquered the World, is illuminating and thought-provoking.

Henry Kissinger

Almost ninety years ago, Woodrow Wilson proclaimed the political triad of peace, democracy, and free markets. How difficult it has been to get there! Nonetheless, the broad global trends of the past century show that humankind has been moving, often kicking and screaming, in this Wilsonian direction. Mandelbaums achievement is to chart that course, and explain the interconnectedness of ideas, politics, and economics. He is not rash enough to assume that the path toward global peace and prosperity will be easier than that in the past. But this intelligent and interesting book gives today's civic society grounds for hope in our common future.

Paul Kennedy, author of The Rise and Fall of Great Powers

Michael Mandelbaum demonstrates, with extraordinary authority and lucidity, how the liberal ideas first enunciated by Woodrow Wilson have come to decisively shape the world at the beginning of the twenty-first century. These ideas, and not the terrorism of September 11, are the true underpinnings of world politics today.

Francis Fukuyama, author of The End of History and the Last Man

Michael Mandelbaum has stepped back from the crises of the moment to look at the big picture. What he sees is stability, prosperity, and international consensus. As Americans worry about the future, they should read this work of intelligent optimism.

Fareed Zakaria, Newsweek International

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First Chapter

On the morning of Tuesday, September 11, 2001, two hijacked commercial airliners flew directly into the twin towers of the World Trade Center, the tallest structures in New York City. The heat from the explosion of the two airplanes and the fires they set melted the steel supports of the 110-storey buildings and they collapsed, killing more than 3000 people. Almost simultaneously another hijacked airliner crashed into the headquarters of the American Department of Defense, the Pentagon, in Washington, D.C.
 

The events of September 11 qualify as the most spectacular, riveting, grim, costly and searing acts of terrorism in history. The shock of the attacks reverberated around the United States and throughout the world. In their aftermath, September 11 was widely said to have been an historical watershed, a moment when the assumptions that had governed the way the world conducted its affairs were abruptly swept away.
 

In fact, the attacks did not usher in a new world. Instead, they illuminated the main features of the world that already existed, a world that had emerged in its full form a decade earlier but had been two centuries in the making. It is a world dominated by three major ideas: peace as the preferred basis for relations among countries; democracy as the optimal way to organize political life within them; and the free market as the indispensable vehicle for producing wealth. The world that peace, democracy and free markets conquered and dominate, the world of the twenty-first century - its origins, its principal features, and its future - is the subject of this book.
 

Societies raise their grandest monuments to what their cultures value most highly. As the tallest buildings in a city noted for tall buildings, the twin towers of the World Trade Center were certainly monumental. They were the equivalent for the twenty-first century United States of the great pyramid of Giza in ancient Egypt, and the Cathedral of Chartres in medieval France. The institution that the World Trade Center symbolized, and to which it was dedicated, was the free market, the central activity of which is trade. The planet's dominant method for organizing economic activity, the market, did in fact occupy an exalted place in American society.
 

It enjoyed a commanding position outside the United States as well and the September 11 attack also symbolized its global status. Once Manhattan's tallest structures had been the Empire State Building, named for New York itself, and the Chrysler Building, the headquarters of an American automobile manufacturer that by 2001 had become a subsidiary of a German corporation. The even taller buildings destroyed in September 11 were named not simply for trade but for world trade.
 

People from more than eighty different countries died in the fires and the collapse. Most of them, moreover, worked for firms concerned with one aspect or another of finance. Concentrated in lower Manhattan, the financial industry is the most cosmopolitan in the world because its product, money, is more portable and more widely utilized than any other. This product is the key to the international reach of markets: while purely local exchange can and does operate on the basis of barter, markets stretching beyond a particular time and place require money.
 

The money on which international commerce and industry depends is collected in lower Manhattan and from there distributed to every continent. The World Trade Center was thus symbolic of the network of commercial and financial exchanges that by the year 2001 had spread all over the planet. In choosing it as their target the terrorists perversely dramatized the supremacy of the free market and of the political system intimately associated with it in the United States and elsewhere, democracy, as a defining feature of the world of the twenty-first century.
 

The attacks on Washington and New York were acts of war, and the war they inaugurated, the American war against terrorism, became the first war of the new century. They recalled the surprise attack at Pearl Harbor sixty years earlier. Like that 1941 assault, the events of September 11 triggered a campaign against the attackers, with the American government mobilized for military action. It dispatched forces to Afghanistan to root out the terrorists based there and to overthrow and replace the government that harbored them.
 

Yet the war against terrorism was unlike the conflict that began for the United States on December 7, 1941, or any of the other great wars of modern history - the European conflict touched off by the French Revolution at the end of the eighteenth century, the two World Wars of the twentieth century, and the four decades-long political and military struggle known as the Cold War. The previous wars pitted mighty sovereign states against one another, all of them seeking the control of territory. They were waged by vast armies, which clashed in great battles - Waterloo, the Somme, Stalingrad - in which the fate of great nations and huge empires hung in the balance. In the Cuban missile crisis of 1962, when the United States and the Soviet Union confronted each other armed with nuclear weapons, the fate of the entire planet, of the human race itself, seemed to be at stake.
 

By these standards the war against terrorism scarcely qualified as a war at all. The United States conducted a campaign of aerial bombardment and modest mopping up operations on the ground in Afghanistan. And to wage this war, the aim of which was to protect their citizens against terrorist attacks, the United States and other countries relied less on their armed forces than on their intelligence services, local law enforcement agencies, border guards and customs and immigration officials, as well as on their public health systems. The Pentagon, one of the targets of the September 11 attacks, was not the only nerve center of the American campaign against terrorism.
 

The attacks thus illustrated another defining feature of the world of the twenty-first century: the transformation, or at least the dramatic devaluation, of war - the age-old practice that, for the first two centuries of the modern age, did more to shape international relations than any other.
 

There was no possibility that the September 11 attacks would touch off a conflict anything like the great wars of the modern era, and the reason for this pointed to a third signal feature of the world of the twenty-first century. In the past, a blow to the international system's strongest power would have been welcomed by its rivals. In the wake of September 11, however, every significant government in the world declared its support for the United States.
 

For this there was an obvious reason: every major government in the world supported the market-dominated world order that had come under attack and of which the United States served as the linchpin. While not every one subscribed to the political values symbolized by the other world-famous landmark at the tip of Manhattan island, the Statue of Liberty, all saw the free market as the path to what had become, in the twenty-first century, a supreme and undisputed national goal: the creation of wealth. Thus there was virtually no country that neither received nor hoped to receive capital from the New York financial community.
 

The market-centered international order of the twenty-first century commanded almost universal allegiance not only because every country saw potential benefit in it but also because there was no viable alternative to it. In the past, those who had challenged the existing order of things had equipped themselves with alternative programs for the organization of political and economic life. The slogan of the French Revolution expressed its aims: liberty, equality, fraternity. The revolutionaries of the nineteenth century who drew their inspiration from that great upheaval pursued concrete goals: the end of monarchical rule, the promulgation of constitutions, the establishment of nation-states instead of multinational empires. The revolutionaries of the twentieth century also had a slogan: "Workers of the world, unite!" - and a program: the abolition of private property and the installation in power of Communist parties. The perpetrators of the September 11 attacks had neither. They proposed nothing in place of what they sought to destroy. They acted in the name of a fanatical strain of Islam that was far removed from the precepts and customs of the great Islamic civilizations of history and that, insofar as it offered a political program of any kind, was intended to apply only to Muslims, who comprised approximately fifteen percent of the world's six billion inhabitants.
 

The events of September 11 therefore demonstrated that the dominant methods for organizing the universal tasks of political and economic organization had no serious rival in the world of the twenty-first century, and that is a third hallmark feature of it.
 

The commanding position of free markets and, to a lesser extent, democracy, the dramatic devaluation of war, and the absence of a plausible alternative to the global order of which these are the main elements characterize the conduct of human affairs at the outset of the third millennium. They also form the basis for the organization of this book, which is divided into three parts, each revolving around one of these three themes. In the pages that follow the themes are taken up, however, in the reverse order: first comes the rise to a dominant position of markets and affiliated institutions and practices, then the dramatic changes in the role of war, and finally the reasons for and the implications of the supremacy of democracy and the free market. The themes appear in this sequence so as to tell the story of the world of the twenty-first century in chronological order. The book's first part concerns mainly the past, the second the present, and the third the future of the world that came under attack on September 11, 2001.
 

A book about the world of the twenty-first century begins by outlining its historical origins for three reasons. First, historical periods, like individual personalities, are the products of all the past experiences that shaped them. Both must be understood biographically, and the first part of The Ideas That Conquered the World offers a brief life history of the international order that the events of September 11 illuminated.
 

Second, because it is the product of two event-filled centuries of history, the world of the twenty-first century has deep roots. This helps to explain why the attacks on the United States did not fracture that world, and provides the basis for believing that its main features will endure for some time. Third, the forces that created the market-dominated international order did not cease to operate with the collapse of Communism. They remain the most powerful influences on the world of the twenty-first century. For that reason, the past offers a preview of the future.
 

While the modern age, of which the world of the twenty-first century is the latest stage, is two hundred years old, Chapter 1 begins in the middle of the story, with the ideas presented as the basis of a new and better international order by the American president Woodrow Wilson in the wake of World War I. Eight decades later this set of ideas - peace, democracy, and free markets - had come to dominate international affairs, not in the sense that each was enthusiastically embraced and faithfully practiced everywhere but rather in the sense that they had no fully articulated and politically potent rivals. After Wilson first offered them to the world, victory in two subsequent conflicts was required for his "Wilsonian triad" to gain global ascendancy. One of them, World War II, was the bloodiest conflict in human history. The other, longer conflict ended with the triumph of the liberal, Wilsonian formulas for organizing political and economic life and remaining secure in a world of sovereign states. This second conflict, the Cold War, is the subject of Chapter 2, which addresses the paradox at its heart: it produced the same effects as the other great conflicts of the modern era - sweeping changes in the governments and the borders of much of the world - but without the familiar method of prolonged and intense fighting. The effects of the Cold War had a different cause, which is the oldest of all historical processes: the spread of new ideas, institutions, practices and products from the world's "core," where they are created, to its "periphery," which adopts them.
 

The core and the periphery are made up of sovereign states, which are as important in the twenty-first century as in the past. They are the subjects of Chapter 3, which presents a political map of the contemporary world. As in the past, some countries are more important than others.
 

Germany and Japan have particular importance within the core because their conversion to free markets, democracy, and peace in the second half of the twentieth century, after having waged war against them in its first half, had a decisive influence on modern history. Their transformation from opponents to champions of liberalism immensely enhanced the standing of the Wilsonian triad in the world and provided a precedent for other would-be converts to these three liberal norms to follow.
 

The foremost member of the world's core at the outset of the twenty-first century, however, remains the United States. America stands at the core of the core. It was not accidental that an attack on the global order targeted Washington, its political capital, and New York, its economic center. The United States possesses the world's largest store of military and economic power and bears the heaviest responsibility for defending and sustaining the global institutions and practices that embody the Wilsonian triad. The fate of the global liberal order depends very substantially on the extent to which the United States is willing and able to fulfill these responsibilities, a matter that Chapter 3 considers.
 

Most of the countries of the periphery count for little in international affairs: what transpires within their borders affects only them. To this post-Cold War rule there are, however, three conspicuous exceptions. One is a region, the Middle East. The other two are major countries, Russia and China, which are part of the periphery in economic terms but for the purposes of security are countries of the core. Along with the United States, the national futures of Russia and China will have a greater impact on the world of the twenty-first century than any others. The reason is that the world is shaped by great power in concert with large ideas. The terrorists of September 11 had neither, but Russia and China each has the potential for both.
 

In the first decade of the new century neither of them had military might and economic power on a scale sufficient to challenge the existing international order but both could achieve them in the future. Nor did either of them offer the world an alternative to the Wilsonian triad. But in the second half of the twentieth century each had done so. They had been the bearers of a political creed different from, and opposed to, Woodrow Wilson's liberal values and practices. Their illiberal ideology failed and Russia and China abandoned it. But in discarding orthodox Communism, neither fully embraced the Wilsonian triad. Each pursued a foreign policy that was not entirely peaceful, conducted its domestic politics in a way at best partly democratic, and operated an economic system that was only incompletely marketized. Because they could shake the reigning international order if they placed themselves in determined opposition to it, as the terrorists of September 11 could not, the future of Russia and China is a major theme of The Ideas That Conquered the World, and in particular of Part Two, which concerns war and peace.
 

In the Arthur Conan Doyle story "Silver Blaze" Sherlock Holmes calls Dr. Watson's attention to "the curious case of the dog barking in the night." "But the dog did not bark," Watson observes. "That," Holmes replies, "is what is curious." In the world of the twenty-first century, great war is the non-barking dog. And just as the dog's silence is the key to the mystery Holmes is investigating, so the transformed status of major war is crucial to the understanding of the world in the third century of the modern era.
 

Throughout this era, and for most of recorded history before it, the fact or threat of war on a large scale exercised a powerful and pervasive influence on the domestic and foreign affairs of sovereign states. The maxim of the ancient Greek historian Heraclitus held true: war is the father of all things. The minimal likelihood of such a conflict in the wake of the Cold War sets the twenty-first century dramatically apart from the two preceding eras.
 

The devaluation of war is as important a feature of the world of the twenty-first century as the rise of the market. The two are in fact closely connected: when the main business of governments ceased to be the defense of their sovereign borders, the way was cleared for the promotion and maintenance of smoothly functioning free markets to become their most important responsibility. And yet, while the third century of the modern age is more peaceful than the previous two, peace is far from universal. The terrorist network responsible for the attacks of September 11 was based in Afghanistan, a country consumed by armed conflict, and no account of the post-Cold War world would be complete - indeed no such account would be even adequate - without dealing with the places where conflict persists and with the reasons for its persistence. Moreover, even where the devaluation of armed conflict has gone furthest, this state of affairs is not irreversible. The future of the international order of the twenty-first century depends heavily on how durable peace turns out to be where it has been established.
 

The devaluation of major war is embodied in a great and underappreciated political innovation, one as important, in its own way, for international relations as the free market is for economics and democracy is for politics. In Europe, where organized violence achieved its greatest intensity in the five centuries preceding the twenty-first, a formula for peace emerged in the late twentieth century. This formula, common security, has two principles: the transparency of all national military forces and military operations; and the configuration of all such military forces so that they are suitable for defense but not for attack. Common security in Europe is the subject of Chapter 4.
 

Although the principles are universally applicable, only the countries of Europe and North America have mustered the political will to adopt them. The decision to establish a common security order stemmed from a number of related attitudes to armed conflict that are here grouped under the heading "warlessness." The Europeans and Americans implemented the principles of common security through a series of negotiated agreements limiting arms concluded at the end of the Cold War. The attitudes that comprise warlessness grew and spread in the West over the second half of the twentieth century.
 

The commitment to common security at the outset of the new century was not uniform across Europe. It was shakiest in Russia, the security policies of which are also a subject of Chapter 4. Nor are the principles of common security firmly established in the other region besides Europe where a major war, a war that could not only destroy tall buildings but also shake the international order itself could begin: East Asia. The prospects for war and peace in this region is the subject of Chapter 5.
 

In issues of war and peace in East Asia, China is cast in the same role that Russia plays in Europe. Neither retains the principled allegiance to a war-driven foreign policy that prevailed during its era of orthodox Communism. But both are less resolutely committed to peace than their neighbors and each is therefore the country within its region on the foreign and military policies of which the prospects for peace there most heavily depend.
 

Because the principles of common security are less well established in East Asia than in Europe, the chance of a major war there is greater, particularly in two parts of the region where American interests are directly engaged. One, the Korean peninsula, does not directly involve China. The other, the Taiwan Strait, qualifies as the most dangerous spot on the planet because it does.
 

While the world's core became, on the whole, more peaceful in the wake of the Cold War, much of the periphery followed the opposite course, growing more violent. In countries outside Europe and East Asia the end of the Cold War caused an upsurge in violence. Chapter 6 explains how and why this occurred. One reason is that, with the end of the Soviet-American conflict of the second half of the twentieth century and the suspension, at least temporarily, of the kind of great-power rivalry that dominated international relations for centuries, the core countries had no interest in the periphery and so contributed nothing to stopping the violence there.
 

To this twenty-first century disconnection between the two principal parts of the international system, however, one region stands as a glaring exception: the Middle East. As Chapter 7 describes, the core countries, especially the most powerful of them, the United States, were obliged to take an interest in the Middle East because that region contained three sources of potential damage to the richest and most powerful members of the international system.
 

One, the most conspicuous in the wake of September 11, was terrorist networks, including the one responsible for attacking New York and Washington. Another was the world's largest reserves of oil, the mineral resource on which the global economy was most dependent; a serious interruption in the flow of oil could do the kind of harm to the core countries usually associated with war. A third source of potential damage emanating from the Middle East is weapons of mass destruction, above all nuclear weapons, which might be acquired through the use of the revenues earned from the sale of oil and deployed or even used according to the fanatical convictions that animate terrorism. Chapter 7 assesses the threat posed by each of the three.
 

What are the prospects for Europe and East Asia to remain peaceful, and the world's periphery, especially the Middle East, to become peaceful in the course of the twenty-first century? They depend, according to a set of ideas widely held if not systematically articulated within the countries of the core, especially the United States, upon the progress of the other two parts of the Wilsonian triad - democratic government and free market economics. These are the subjects of the third part of this book. Having described and explained the origins of the world of the twenty-first century in Part One, and investigated its defining condition - the devaluation of major war - in Part Two, the book moves, in Part Three, to a consideration of its central features, two of which - democracy and the market - came under symbolic attack on September 11, 2001.
 

The understanding of the world of the twenty-first century that prevails in the core countries - the "liberal theory of history" - consists of two propositions. One is that democracies tend to conduct peaceful foreign policies. The other is that where free markets are established their working, over time, tends to promote democracy. Chapter 8 examines both propositions and finds them, with important qualifications, to have substantial validity. To the extent that they are valid, domestic politics and foreign policy depend, in the twenty-first century, on economics. The future of international relations, and of public life within the world's sovereign states, rest on the fate of the liberal method for organizing economic activity, the free market.
 

At the outset of the twenty-first century, two important things were true about the status of free markets. One was that, as a method of economic organization, it held a commanding position in the world. It was as close to a universally accepted institution as had ever existed in all of human history. Chapter 9 describes and explains the market's rise to global dominance. The other was that the construction and maintenance of a free market had proved to be far more difficult than had been imagined for most of the modern era. Virtually every sovereign state on the planet was engaged in the attempt, but the degree of success achieved varied greatly among them. Drawing on the experiences of Russia and China, Chapter 10 explores the difficulties of establishing and operating a free market.
 

The construction of a working market economy depends chiefly on the efforts of the individual societies and governments involved - but not exclusively on them. It also depends on the vitality of the international economic order, especially the rules and institutions for assuring the unimpeded circulation, across sovereign borders of goods and money. The economic history of the twentieth century teaches the lesson that national economies thrive to the extent that they have access to a global market. The collapse of international markets in the Great Depression of the 1930s had catastrophic economic and ultimately political effects the world over. A comparable twenty-first century collapse would be equally devastating.
 

The international economic order is the creation of the countries of the core. Its upkeep is their responsibility, and particularly that of the United States. Chapter 11 describes the evolution of the world's trade and monetary systems, while Chapter 12 assesses their prospects in the twenty-first century.
 

While the attacks of September 11 aimed at the heart of the international order of the twenty-first century, their effect was more like that of a badly stubbed toe. They caused shock and pain. They led to a pause for checking and treating the injury. They produced heightened caution and vigilance and an effort to make sure that nothing similar happened again. But in their wake the world went on much as it had before. Terrorists could knock down the twin towers of the World Trade Center but they could not dislodge the system that these buildings embodied, which was pervasive, deeply rooted, and based on ideas and experiences that terrorism could not eradicate.
 

Terrorism poses a serious but not a mortal threat to the world of the twenty-first century. Nor, however, is it the only, or even necessarily the most serious threat to the supremacy of the Wilsonian triad of peace, democracy, and free markets. The book's Conclusion surveys the other potential sources of disruption, most of which have their roots in the uneven capacity among the world's sovereign states to adopt the institutions and practices of the Wilsonian triad, even when they wish to do so. The threats include those considered in the preceding chapters - the national destinies of Russia, China and the United States, the spread and use of weapons of mass destruction, and global economic collapse. They include as well the growing inequality in wealth between the countries of the core and those of the periphery. The world also faces the possibility that a major change in the temperature of the Earth's atmosphere will disrupt existing patterns of life all over the planet, which, if it should occur, would be produced by the global expansion rather than the failure of market-driven industrial activity.
 

These final reflections of conform to the dictum of the American philosopher and baseball player Yogi Berra, who once said: "Never make predictions - especially about the future." In this respect, both the Conclusion and preceding chapters resemble a preview of a baseball game, which can describe the rules, the field conditions, the important players and the main strategies, and can say what is likely to happen in the contest, but can never foretell with certainty its result. Similarly, what the reader may expect to find in the pages that follow is everything important about the history of the twenty-first century except its outcome.