The Defacto "Grand Strategy" of Neoliberalism

Now, in this inchoate period when the Cold War ended, however it ended, there was a debate within the foreign policy community about whether we needed a new grand strategy. Peter Tarnoff was our guest, and he said that the Clinton administration consulted with George Kennan, and Kennan seemed to indicate that it wasn't necessary. That's what we had come up with at the end of the Second World War, when we embraced NSC-68 and the containment doctrine. So why didn't a grand strategy emerge in the nineties, either from the agenda that you were raising or from the more establishment triumphalists?

I think something of a grand strategy did emerge. It was an incomplete one, and it was based on some false notions, and it caused certain kinds of frictions. But there was a general acceptance that emerged about the promotion of liberal democracy through the exertion of American power and influence, using the instrumentalities of both American capital, the IMF, the World Bank, but also the U.S. military. That creating this, pushing this global neoliberal agenda, was the best way of ensuring prosperity and had beneficial ramifications for security as well. In essence, there was the articulation that if we trade and engage China in international investment and finance, they will become less of a threat, they will be more susceptible to human rights improvements, etc.

I adhere to one part of that. I do think the attractiveness of economic development and commercial prosperity is too powerful for most elites in all the dominant nations of the world to ignore, and the attractiveness to the middle classes and potential middle classes. I differed with the formulas by which they wanted to execute it, because I thought they had an economic gospel that was oversimplified and wouldn't work, or would cause so many crises before you ever got to the point where it would work, it would be counterproductive.

That argument was for markets together with democracy. Markets should be liberalized: tear down the trade barriers and financial controls. All of the notions that we had about how to build up a state were put aside, because countries would be able to participate in this global economy.

Particularly misguided was the notion that you could have financial liberalization as a first-step measure, as opposed to the end result of the much longer, longer process. Some liberalization, especially of the East Asian economies, would have been a welcome thing, but this was a dogmatic agenda which was attempted to be pushed in all places at all times, and not in any right sequence. So it was more likely to lead to boom-and-bust kinds of capitalism, with major misallocation of precious investment and resources, than it was likely to draw these countries into a sustainable pattern of commercial prosperity.

The other side of this was the notion that you could bring democracy at the end of a bayonet, that intervention could lead to the building of democratic societies in places like the Balkans and Rwanda, and so on. Of course, the intervention came after genocide or crimes against humanity had broken out.

Yes, you're quite right. It became the general second precept or second principle of the grand strategy. What it reflects is the shortcomings or the temptations of America's current political culture, that we want to do it so quickly, and we tend to, therefore, fall back on the crude instruments that we have at our disposal. We have no trouble building a super-modern high-tech military, and we usually are able to get money from Congress for doing it, so we have it at our disposal. That's a lot more difficult than working painlessly at state-building in collaboration with a very complex web of international institutions, alliance partnerships, NGOs, and local [groups]. There's a romantic notion that we can use our great power in an idealistic way.

Similarly, the one area where the U.S. does matter is in terms of both financial flows and serving as a market. So, again, our financial positions -- within the IMF, our financial institutions, our banks and other things -- drove an agenda that probably wasn't in the broad American interest. We were considered at the cutting edge of the financial industry, so forcing other countries to liberalize their financial markets to "make the world safe for CitiBank" -- again, there was a certain idealism to it, driven by crude economic interests, but it was not done in a way that would serve either the broad local interests or the broader American and global interests.

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