George Soros On Globalization

Geopolitical realism is based on the interests of the state; open society idealism stresses the interests of humanity. Ever since the Enlightenment, there has always been a tension between universal principles and the sovereignty of the state. As the United States grew stronger the tension became more pronounced. Theodore Roosevelt can be taken as the protagonist of American hegemony and Woodrow Wilson stands for an idealistic approach to international affairs. He does not qualify, however, as a paragon of open society idealism because of his dismal civil rights record at home. Jimmy Carter is a purer example. When geopolitical realism and open society idealism clash, the former usually wins out.

The Cold War can be interpreted as a conflict between two superpowers or as a conflict between two ideas about how society ought to be organized: open society and closed society. Actually, it was both. The Cold War was one of those periods in American history when the two visions blended together more or less harmoniously. (World War II was another after the United States joined it.) There were of course sharp differences during the Cold War on which vision should take precedence; at the time of the Vietnam War they clashed quite explicitly. But if one takes the near half century of the Cold War as a whole, the United States successfully combined the two roles of being one of the two superpowers and the leader of the free world. Other democratic countries voluntarily submitted to U.S. leadership in face of a common danger. Most important, the United States emerged victorious.

After the collapse of communism and the disintegration first of the Soviet empire and then the Soviet Union itself, the choice between the two visions presented itself more starkly. Strangely enough, American public opinion was hardly aware of it. Under the influence of market fundamentalism, the idea of reaching out to the formerly communist countries the way the United States reached out to Europe after the end of World War II with the Marshall Plan did not even come into consideration. (I felt quite alone when I threw all my resources into helping the formerly communist countries to make the transition to open societies.) As a result, a historic opportunity was lost, but the American public remains unaware of it to this day. The United States chose the path of geopolitical realism almost unthinkingly.

After September 11, the American public has become more aware than before that what happens in the rest of the world can affect them directly and there are important foreign policy choices to be made. This awareness may not last long, and I am determined not to let the moment pass.

It has to be bluntly stated that the path chosen by the United States proved to be highly successful. We enjoy a dominant position both from an economic and a military point of view. The natural tendency, the line of least resistance, leads to a continuation of market fundamentalism and geopolitical realism. It has worked: We have established undisputed leadership and we ought to do whatever it takes to preserve it. We are on top and we must stay there. Competition is the guiding principle in both economic and military matters, and the goal is to come out ahead.

This goal is best served in the economic sphere by removing all obstacles from the pursuit of profit. Having a large market and a sound legal system that protects property rights, we can attract capital and entrepreneurship by offering a hospitable environment for business. The EU offers an even larger market and an equally sound legal system, but the environment is far less hospitable to business. Labor markets are rigid, with greater restrictions on employing and dismissing people, and there are all kinds of other regulations. Capital is in fact drawn to the United States from Europe and from all over the world. The United States has a current account deficit of more than 4 percent of the GDP, yet the dollar has been going from strength to strength.

Being in possession of the main trading currency and in charge of its own economic policy, it is very much in U.S. interests to have open markets, particularly financial markets. That is in fact the policy that the United States has pursued, sometimes with disastrous effects for countries whose financial systems could not operate efficiently in a competitive environment. Japan, for instance, had built up a very efficient industrial system, but its financial system was geared not to obey market signals but to take instructions from the Ministry of Finance. When financial markets opened up, the financial system frittered away the wealth that the industrial system generated. Japan is mired in a financial crisis from which it seems incapable of extricating itself.

Having open markets can sometimes be detrimental to particular industries, but the United States is powerful enough to impose trade restrictions when the pain—and the political pressure—become too heavy. This has been facilitated by the unequal influence of developed and developing countries within the structure of the WTO. It can be seen that globalization has worked for the United States like a charm, and it has been pursued by both political parties although their policies may have differed in some details.

The United States has also continued to maintain a strong military posture since the end of the Cold War. The size of the armed forces was reduced, but there was no let up in technological innovation. The gap between the military capabilities of the United States and the rest of the world has become wider than ever. This is reflected in budgets: The United States accounts for 37 percent of the world’s total military spending.⁷⁵

In military matters there is a significant difference between the Bush and Clinton administrations. President Bush is determined to exploit the technological advantage the United States currently enjoys and to push ahead without letting international agreements stand in the way. NATO has lost much of its usefulness since the end of the Cold War; it has become one of those multilateral institutions that the United States holds in low esteem. The National Missile Defense (NMD), by contrast, holds out the promise of reestablishing the unilateral control that the United States enjoyed during the Cold War but this time without an adversary capable of inflicting total destruction. The Bush administration came into office with the determination to pursue NMD against all opposition, and it has not been diverted from this course by September 11. The Clinton administration was much more ambivalent on this issue; it delayed taking a decision until after the elections.

It has to be admitted that the Bush administration’s policy is internally much more consistent than that of the Clinton administration. It is unabashedly unilateralist and hegemonic, whereas President Clinton mixed a hard-headed pursuit of economic competitiveness with a rather sentimental attachment to peacemaking in international affairs. A strong defense posture combines well with a reliance on market discipline in the economic sphere to ensure overall American hegemony.

Politically, the terrorist attack provided the Bush administration with the enemy it needed to justify its strong defense posture. Prior to September 11, the administration was looking high and low for an enemy against whom NMD could be regarded as a defense. It deemed North Korea suitable for that role at least for the near term, and President Bush pressed South Korean President Kim Dae Jung to stop trying to bring North Korea in from the cold. For the longer term the administration was positioning China as a potential strategic rival, but even Russia was not left out of consideration. The terrorist attack provided an instant solution. President Bush did not hesitate to declare war on terrorism, and the nation lined up behind the president. It is difficult to see how NMD can protect against terrorist attacks, but with the degree of support he is currently enjoying, the president has no difficulty in renouncing the Anti-Ballistic Missile Treaty and pushing ahead with NMD.

Terrorism is the ideal enemy because it is invisible and therefore does not disappear. The need for other enemies has dissipated, and relations with China and Russia have undergone a remarkable transformation. This is one of several positive by-products of one of the most devastating tragedies in American history. Having an enemy that poses a genuine and widely recognized threat can be very effective in holding the nation together. That is particularly useful when the prevailing ideology is based on the unabashed pursuit of self-interest.

But the situation is not without its dangers. In a state of war the president is largely immune from criticism. Yet a critical process is the foundation of an open society. At present, the critical process is practically in abeyance. The Democratic opposition is loathe to criticize the president, and the attorney general has gone so far as to declare any opposition to the antiterrorist measures an unpatriotic act that gives aid and comfort to the enemy.⁷⁶ Open society is under duress in the United States. Somewhat less obviously, we may be once again missing a historic opportunity to move toward a global open society.

It is difficult to engage in a critical examination of administration policies at a time of genuine emergency when the government is doing many things that need to be done. Rather than trying to find faults, I shall try to explain the historic opportunity we are missing.

We are the dominant economic and military power in the world today. We have a large degree of discretion in setting the terms of the discussion about globalization and the future of the world in general. We are missing a historic opportunity when we focus all our efforts on perpetuating our dominant position. The United States ought to pay a lot more attention to the functioning of the global capitalist system and the fate of humanity as a whole. It needs to do so both for its own sake and for the welfare and survival of humanity. It is not something that the United States can or should do on its own. A cooperative effort is needed but it cannot be done without U.S. leadership.

Our hegemony is quite secure. On the military side it would take decades before another state could challenge us. The country most likely to want to do so is China, which seeks to assert its sovereignty over Taiwan. But China is lagging far behind Russia in military technology, particularly in the air. The two powers that would be closest to being able to challenge our military superiority are the EU and Russia. But the EU is not yet a military power at all, and the various states that compose it are allied closely with the United States in NATO. Russia is primarily interested in economic development. It seeks to regain great power status partly for the sake of its own identity and partly because it may be a good investment, but it will not repeat the Soviet experiment of sacrificing economic prosperity and advancement for the sake of superpower status. At first the Bush administration treated Russia coldly; after September 11 the relationship underwent a notable warming. The basis of the new relationship is almost entirely geopolitical. Both sides know how to play the game, but it is the United States that sets the terms. We may not be aware of it, but the United States has a great influence over what kind of game Russia will be playing in the future.

In the economic sphere, U.S. dominance is somewhat less secure, but the threats come more from the system itself than from the position of the United States within the system. The fact that there is a synchronous global recession has put the system under great stress, and whatever can go wrong is liable to do so. But the U.S. economy is much stronger than that of the rest of the world and U.S. leadership is difficult to challenge.⁷⁷

Although no state can challenge American supremacy, we are at risk if we fail to live up to the responsibilities that our leadership position imposes. That is the real significance of September 11: It has brought home the fact that we are at risk. It is fashionable to speak of asymmetric threats. What makes them asymmetric is that they do not fit neatly into the equations of geopolitical realism.

The risks that confront us cannot be understood in terms of the disciplines we have relied on to establish our supremacy: market discipline and geopolitical realism. Both disciplines relate to power. But the responsibilities I am talking about are moral responsibilities. That is the missing ingredient in U.S. policy. It is of course not entirely missing; it is only shunted to the sidelines by the prevailing doctrines of market fundamentalism and geopolitical realism.

We have come to distrust invocations of moral principles because those principles are easily perverted. It is difficult to distinguish between right and wrong and even more difficult to reach consensus on what is right. It is much easier to find a moral justification for amoral or immoral behavior. Morality breeds hypocrisy and lends itself to abuse. Many heinous acts have been committed in its name. September 11 is one of the worst examples.

We have been so put off by the perversion of morality that we are trying to do without morality. The distinguishing feature of both market fundamentalism and geopolitical realism is that they are amoral—morality does not enter into the calculations.That is one of the reasons why they have been so successful. We have been seduced by their success into thinking that we can do without moral considerations. We have come to worship success. We admire businessmen who make a fortune and politicians who get themselves elected irrespective of how they have done it.

That is where we have gone wrong. No society can exist without morality. Even our amoral pursuits need a moral justification. Market fundamentalists claim that the untrammeled pursuit of self-interest serves the common interest; and the exercise of our geopolitical power appeals to our patriotism. The fact remains that these are amoral pursuits. If that is all we have to offer, our view of the world is liable to be rejected by more traditional societies where morality still plays a central role. That is the case in traditional Islamic societies where church and state have not even been separated. In the end, we may not find it satisfactory ourselves.

When I speak of morality I do not mean it in the traditional sense of observing religious precepts or standards of propriety. Those are private matters in societies where church and state are separated. I mean accepting the responsibilities that go with belonging to a global community. Those responsibilities are not well defined at present. Our international arrangements are based on the sovereignty of states, and states are guided by their own interests that do not necessarily coincide with the interests of the people who live in those states and are even less likely to coincide with the interests of humanity as a whole. Those latter interests need to be better protected than they are at present.

The lesson we have to learn from September 11 is that morality has to play a larger role in international affairs. The asymmetric threats that confront us arise out of the asymmetry that we have identified in globalization: We have global markets but we do not have a global society. And we cannot build a global society without taking into account moral considerations.

In saying this I am of course not excusing terrorism in any shape or form. What I am asserting is that the moral base of globalization and American domination is deficient. Markets are amoral, the untrammeled pursuit of self-interest does not necessarily serve the common interest, and military might is not necessarily right. This may be an unpopular thing to say, especially after innocent people have been killed in the name of a perverted religious belief, but it is nevertheless true. I was saying it before September 11.

The United States bears a special responsibility for the world because of its dominant position. Without its cooperation no international arrangements are possible. Yet the United States is the major obstacle to international cooperation today. It is resolutely opposed to any international arrangement that would infringe on its sovereignty. The list is long, including the International Criminal Court, the Landmines Treaty, the Kyoto Protocol, many of the ILO conventions, and many more arcane conventions like the Law of the Sea Convention and the Convention on Biological Diversity. The United States is one of only nine nations that have not ratified the latter convention. The only area where the United States is willing to subordinate its sovereignty to international institutions is in the facilitation of international commerce. Prior to September 11 the Bush administration was not even willing to accept OECD standards for monitoring financial transactions. After September 11, it is still not willing to compromise its sovereignty in waging war on terrorists. Under UN rules, it is not obliged to do so because it can claim to be acting in self-defense.

It is here that the pursuit of hegemony comes into direct conflict with the vision of a global open society. The hegemonic view is willing to tolerate infringements of the sovereignty of other states but insists on protecting U.S. sovereignty in all its aspects. It wants the United States to be the unmoved mover. The vision of a global open society requires the United States to abide by the same rules that apply to others. Moreover, it requires the United States to exercise leadership in strengthening our international institutions, rules, laws, and standards. Since the sovereignty of states stands in the way of enforcing most rules, laws, and standards, it must be willing to offer inducements and incentives for voluntary compliance. Of course the United States cannot be expected to do that on its own, but it must take the initiative to secure the cooperation of other countries.

It hardly needs mentioning that this vision is radically opposed to current U.S. policy. This is not a matter of party politics. The Bush administration is more consistent in its hegemonic views than the Clinton administration was, but the policy is bipartisan—and those who are more sympathetic to the vision of a global open society are also to be found in both parties.

The hegemonic view is considered hard-headed and realistic while the vision of a global open society is liable to be dismissed as utopian. I beg to differ. I admit that the hegemonic view is realistic in the sense that it represents the here and now, but as a goal to pursue it is more unrealistic and counterproductive than a global open society.

No hegemony can be maintained if the dominant member does not pay adequate attention to the interests of the other members, because the other members will combine to break the hegemony. That is the basis of the balance of powers theory espoused by that champion of geopolitical realism, Henry Kissinger. What we have now is much more favorable to the United States than a balance of powers; we enjoy supremacy. By failing to live up to its responsibilities, we are liable to degrade ourselves to a more lowly position within a balance of powers system—not a very alluring prospect. Of course, it is not likely to happen soon because our hegemony is so secure. We can afford to act irresponsibly because it will take decades before other states will be able to form a countervailing force.

That is where the so-called asymmetric threats come into play. If other states are not strong enough to create a balance, people may rebel against the system. Geopolitical realism is ill-suited to deal with asymmetric threats because it is based on the relationship among states, not what happens within states.

The system may be strong enough to repress those asymmetric threats, but repressing them rather than removing the root causes is likely to change the character of the system: It would be based on repression rather than cooperation. That would be the result of carrying the hegemonic view to its logical conclusion. History shows that no repressive regime can endure forever—although some have lasted a very long time. Empires that had staying power found ways to satisfy the needs and aspirations of the people who belonged to them—the Roman, British, and Ottoman empires come to mind; those that relied on repression did not last long—Nazi Germany and the Soviet Union can be used as examples. That is why I consider the hegemonic view counterproductive. Of course, the United States could never become like Nazi Germany or the Soviet Union because our system of government would not permit it; I am only pointing out the dangers inherent in the hegemonic view.

By the same token, the vision of a global open society is very far from utopian. Open society is based on the recognition that we act on the basis of imperfect understanding. Perfection is beyond our reach; we must content ourselves with an imperfect society that holds itself open to improvement. The acceptance of imperfection coupled with a constant search for improvement and a willingness to submit to critical examination are the guiding principles of an open society. These principles imply that what is real may not be reasonable—that is to say, the regimes that prevail are liable to be flawed and therefore in need of reform, and what is reasonable may not be attainable—that is to say, improvements must be based on what exists and what is possible, not on the dictates of some abstract rationality.

The principles of open society find expression in a democratic form of government and a market economy. But in trying to apply these principles on a global scale we run into a seemingly insuperable difficulty: the sovereignty of states.

Sovereignty is an anachronistic concept. It has its origin in the Treaty of Westphalia (1648) concluded after 30 years of religious warfare. It was decided that the sovereign could determine the religion of his subjects: cuius regio eius religio. When the people rose up against their rulers in the French Revolution the power they captured was the power of the sovereign. That is how the modern nation-state was born, in which sovereignty belongs to the people. There has been a tension between the nation-state and the universal principles of liberty, equality, and fraternity ever since.

It may be anachronistic, but the concept of sovereignty remains the foundation of international relations. It has to be accepted as the starting point in creating a global open society. States may cede part of their sovereignty by international treaty. The member states of the EU have gone quite far in surrendering their sovereignty. The future of the EU will show how far it is possible to go along that avenue.

One way to foster open societies without running afoul of the sovereignty of states is to offer countries positive incentives for voluntary compliance with international rules and standards. That is the idea that permeates the practical proposals I have put forward in this book. After September 11, it seems appropriate to push this idea a step further.

I have proposed in my previous book, Open Society, forming a coalition of the willing with the dual objective of promoting open societies in individual countries and laying the groundwork of a global open society. After September 11 the principle that it is in the common interest of open societies to foster the development of democracy, market economy, and the rule of law in other countries should be generally accepted. There is also a need to establish certain standards of behavior ranging from not harboring terrorists to not manufacturing weapons of mass destruction. None of this will work, of course, without appropriate inspection and enforcement mechanisms.

The need is pressing. The introduction of biological weapons is an irreversible development, similar to the dropping of the first nuclear bomb.

The United States must take the lead. It can choose to act unilaterally or multilaterally. It would be utopian to think that the United States could accomplish these goals unilaterally, yet this is seriously contemplated. It is generally agreed that Saddam Hussein has engaged in the manufacture of biological weapons, and his regime presents a real danger to the world. The question is, What can be done about it? Some elements in the Bush administration argue for the United States attacking Iraq. But even if a military campaign against Iraq were as successful as the campaign against Afghanistan, the problem would not go away. Other countries could engage in the manufacture of biological weapons. Significantly, no elements in the Bush administration are arguing publicly for a multilateral approach. Yet it is the only one that has a chance of success.

The Bush administration refused to complete negotiations to update the 1972 Biological and Toxic Weapons Convention because it considered the inspection features too intrusive and other aspects ineffective; it must now propose a stronger one. The new multilateral treaty should impose on all countries, whether they signed the treaty or not, rigorous inspection requirements. The signatories of the treaty should agree to take whatever measures are necessary against countries that refuse. Saddam Hussein would either have to submit or take the consequences.

It would be desirable to conclude such a treaty under the aegis of the United Nations, but if that proved impossible it should still be possible to form a coalition of the willing that would be strong enough to enforce its will. Naturally the United States and the other signatories would have to abide by the same rules they seek to impose on others.

The question of what to do about nuclear weapons also needs to be addressed with renewed intensity. The present arrangements are unstable. There is a nuclear nonproliferation treaty, but it is not a long-term solution because it is trying to preserve a situation of inequality. It has created a club of nuclear haves who seek to keep the nuclear have-nots out of the club. Originally, the members promised to impose constraints on themselves, but they failed to deliver on their promise. At the same time, they failed to put in effect an enforcement mechanism. This has created an incentive for have-nots to join the club, and if they have the will to develop nuclear weapons it is only a matter of time before the existing members will acquiesce. India and Pakistan have proved the point. The larger the membership the easier it will be to break into the club.

By contrast, the situation was much more stable during the Cold War. Two sides were facing each other, and each had the capacity to retaliate and destroy the other even if it had been attacked first. This provided a deterrent for mutually assured destruction, appropriately abbreviated MAD.

We are facing an increasing danger of nuclear war, yet very little thought is given to preventing it. Again, this stands in stark contrast to the Cold War, when the best brains were devoted to studying the subject. A radically new approach is needed, and I am too much of an amateur to propose one. All the alternatives must be considered. A case can be made for total nuclear disarmament,⁷⁸ but I do not consider it sound because it would give too much of a chance to a rogue state to break the rules. I do believe that a regime could be devised in which the nuclear powers would drastically reduce their arsenals under international control and at the same time establish a stronger enforcement mechanism against proliferation. I may be accused of putting too much faith in international controls, but I do believe that they could work a lot better if the United States put its weight behind them. In any case this is not a concrete proposal, only a pointer of the direction we ought to explore. The trouble is, it would constitute too much of a break with the present situation, and it is difficult to introduce a radical change in normal times. Yet it would be tempting fate to wait until times become more abnormal.

The Bush administration is determined to perpetuate its military superiority by unilaterally pursuing NMD.⁷⁹ This is a feasible policy, but I consider it ill advised because it offers no defense against asymmetric threats. We cannot protect ourselves against terrorism without international cooperation. Only if people are on our side can terrorists be prevented from operating. I would have expected September 11 to give rise to second thoughts, but the Bush administration seems ideologically committed to a unilateral approach.

It may be thought from the fact that I advocate international cooperation that I am opposed to the use of military force. That is not the case. I advocated military intervention in Bosnia and Kosovo, and I am glad of the extent of American military superiority. It follows from the postulate of imperfect understanding that all our efforts at crisis prevention may come to naught, and as a fallback position we had better be prepared to win military confrontations if and when they occur. But the allocation of efforts and resources to international assistance as compared to our military preparedness is completely out of proportion: $301 billion in defense expenditures⁸⁰ versus $10 billion in Official Development Assistance in 2000.

No regime can survive by military force alone, and the world certainly cannot be ruled by military superiority. I believe our superiority is great enough to allow us to think of other things than trying to increase it further. Unless we manage to control the proliferation of weapons of mass destruction, there is a real danger that our civilization eventually will be destroyed. If our security were threatened by other states we could not afford to do anything about this larger danger because we would have to focus on the more immediate one, but the only threats currently facing us are asymmetric ones. We cannot protect against those threats by increasing our military superiority over other states.

The fight against terrorism requires international cooperation and intrusive inspection. To justify intrusive inspection the United States must change its posture from unilateral hegemony to being the leader of a multilateral effort to protect the world against infringements of law and order. We are no longer in a cold war situation where being a superpower and the leader of the free world were identical. The Bush administration came into office with a strong determination to reinforce our superpower status by developing NMD. But its policy was based on an outdated view of the world. The convenient identity of the Cold War is no longer valid. We must also reinforce our status as the leader of the free world. We must form a coalition of the willing with the objective of maintaining law and order in the world. The coalition would sponsor international arrangements and foster internal improvements in individual countries. It would offer incentives where possible but would not shy away from enforcement where necessary.

The initiative has to come from the United States. It requires a profound change of attitude, a veritable change of heart. Such a radical change is not possible in normal times, but these are not normal times. We have become aware how precarious our civilization is. It does not make sense to devote all our energies to improving our relative position in a social system when the system itself is drifting toward disaster. The United States is the only country in the world that is in a position to initiate a change in the world order, to replace the Washington consensus with a global open society. To do so we must abandon the unthinking pursuit of narrow self-interest and give some thought to the future of humanity.⁸¹

The difference between global capitalism and a global open society is not so great. It is not an either/or alternative but merely a change of emphasis, a better balance between competition and cooperation, a reassertion of morality amid our amoral preoccupations. It would be naïve to expect a change in human nature, but humans are capable of transcending the pursuit of narrow self-interest. Indeed, they cannot live without some sense of morality. It is market fundamentalism, which holds that the social good is best served by allowing people to pursue their self-interest without any thought for the social good—the two being identical—that is a perversion of human nature. As I said previously, I consider global capitalism a distorted form of a global open society.

The vision of a global open society I have outlined here is not a practical program like the measures proposed in the previous chapters. But acting on those proposals—particularly on the SDR proposal—would be a good beginning.

Developing an Open Society Alliance will require a lot more thought and preparation. The goal of fostering open societies has to be reconciled with geopolitical necessities. A sudden shift of policy could have a destabilizing effect. I envision the Open Society Alliance not as a replacement for our current alliances but as an additional dimension of our policy. It would aim at strengthening those governments and those elements within society that seek to move toward democracy and modernity, and it would use incentives rather than penalties as its tool. Even that could prove to be a risky proposition, but we cannot afford not to take the risk. The fight against terrorism cannot succeed unless we can also project the vision of a better world. The United States must lead the fight against poverty, ignorance, and repression with the same urgency, determination, and commitment of resources as the war on terrorism.