Value Competition

Obama's Peace Prize

The following op-ed uses Obama's recent Nobel Prize to combine value competition ideas about good things arising from the competition of self-interested pols with classical/neoclassical economic ideas about good things arising from the competition of self-interested businesspeople:

Robbed by Oslo:

 

Obama and Other Peacemakers Whose Successes Were Overlooked

 

Wayne Eastman

Rutgers Business School—Newark and New Brunswick

1 Washington Park

Newark, NJ 07102

weastman@business.rutgers.edu

(973) 353-1001

 

    With its airy recognition of Barack Obama for potential rather than accomplishment--"for his extraordinary efforts to strengthen international diplomacy and cooperation between peoples"--the Norwegian Nobel Committee did the President and the cause of peacemaking a disservice, but not for the reason that most critics of the award have suggested.

    In fact, Obama would have been a reasonable if controversial choice for a peace prize based on accomplishment, given his substantial contributions as an opposition politician and then as President to the winding down of the war in Iraq.

As an anti-war Democratic candidate in 2007, Obama took the position that the U.S. needed to withdraw large numbers of troops from Iraq relatively quickly.  At the time, that position was highly controversial though popular among many Democratic primary voters, and was opposed by Hillary Clinton, John McCain and other Republican candidates, and the Bush administration.   Two years later, Obama’s position has become conventional wisdom, and has gone along with a major reduction in violence and considerable political progress in Iraq. 

    It is true that the situation in Iraq was and is highly complex, and that figures in addition to Obama--David Petraeus with his military ingenuity and Nouri al-Maliki with his outreach beyond his political base are just two who come to mind—can also be credited with major roles in the reduction in bloodshed and increase in order.  Still, a Nobel award that recognized Obama “for his central role as a democratic opposition politician and then as President in fostering a resolution to a long-running war in Iraq” would have been sound in a way that the actual award citation was not.

Although the oddity of Obama’s being recognized by the Nobel Committee for the wrong reason makes his situation unusual, he stands in a long line of figures in politics and in business over the decades who have made major contributions to peace but have been unrecognized by Oslo, with its chronic bias toward noble gestures and diplomatic agreements.

Unless they engage in dramatic diplomatic deals, hardheaded democratic politicians like Obama who care about winning elections and who often wage war as well as peace are poorly represented in the roster of Nobel Peace Prize winners.  For example, Boris Yeltsin, whose decision to end Russian control over Ukraine and the other parts of the Soviet empire was intertwined with his own electoral calculations as President of Russia and who later went to war in Chechnya, did not win a Nobel.

Given the Nobel Committee’s tilt against practical politicians, Yeltsin’s failure to win is not surprising.  But considering that it was Yeltsin—not Mikhail Gorbachev, who wanted to preserve the Soviet Union—who ended the coercive Russian empire, the Nobel Committee wound up snubbing one of the century’s major contributors to peace. 

Another politician who didn’t fit the Nobel Committee’s preferences for idealism and diplomacy but who made a major peacemaking contribution was Charles de Gaulle.  Given his deep identification with the French military, French nationalism, and French party politics, along with his often undiplomatic diplomacy, de Gaulle did not fit the Nobel Committee’s criteria well at all.  But as the man who led his nation out of a brutal, futile, and very difficult to end war in Algeria in the early 1960s, he would have been a deserving winner.   

Hardheaded businesspeople who worry about profits are even more poorly represented among Nobel Peace Prize winners than hardheaded democratic politicians who worry about elections.  But business leaders who have knit the world together economically have likely done far more for international peace in the past several decades than many actual Nobel winners have. 

For example, Sony founder Akio Morita and long-time Toyota leader Eiji Toyoda would have been worthy Peace Prize recipients, given their roles in transforming a nation that had been convulsed by violent nationalism into a model of how to succeed through economic rather than military strength.  Neither Toyoda’s contributions to a just-in-time inventory system that has encouraged businesses to integrate their operations with those of other businesses around the world nor Morita’s contributions to innovations in electronics that in turn have contributed to a global popular culture fit into the familiar Nobel categories of idealism and diplomacy.   But if the right test is how much a life’s work has moved a nation and the world away from the ways of war to ways of peace, both men would have been good choices.

Given that consequences are tricky to evaluate and that hardheaded democratic politicians and businesspeople have multiple motives and are not saints, recognizing them for contributions to peace will always be controversial.   If Sam Walton had won a Nobel Peace Prize for his central role in knitting together the Chinese and American economies and in doing so enhancing the prospects for world peace, the award would have been simultaneously reasonable and open to reasonable criticism from the many critics of Walton and Wal-Mart.

   Likewise, it would undoubtedly have been controversial if Obama had been recognized in 2009 for his contributions over the last two years to reduced violence in Iraq, given the complexity of the situation there and the close connection between Obama’s actions and his political ambitions.  But such recognition would have been much more sensible than what the Nobel Committee actually did.

There have been all too many Nobels awarded over the years for high-minded but less than effective idealism and ultimately futile diplomatic deals.   Progress toward world peace has depended and will depend in large part on hardheaded, calculating actions by imperfect, unsaintly leaders like Boris Yeltsin, Charles de Gaulle, Akio Morita, Eiji Toyoda, and Sam Walton.  Perhaps in his acceptance speech in Oslo, Barack Obama can employ his formidable gift for explaining to tell us how he is proud to be one of those leaders, rather than the plaster saint that the Nobel Committee takes him for.

Popular Cosmopolitanism and Business Nationalism in Indonesia

Sukarno, Indonesia's post-colonial leader from 1945 to 1966, was, along with Nehru in India and Nasser in Egypt, one of the pillars of the non-aligned movement, and shared with his counterparts a modernizing, internationalist, secular ethos on culture and a belief in state-led, populist approaches on economics.   By contrast, Suharto, the dominant figure in Indonesia from 1965 to 1998, led a regime that was pro-business on economics and, by comparison with Sukarno, nationalist and traditionalist in its cultural orientation. 

Business Cosmopolitanism

Business cosmopolitanism involves choices by a nation-building elite to ally with business on economics and with modernizing, internationalist forces on culture.  In recent times, it could be termed the Westernizing option for nation-building, in which the newly formed political regime embraces Western capitalism and Western cultural freedom, and makes peace with if not embraces the military dominance of the United States and its Western allies.  Among the large middle-income and lower-income nations with political competition, very few have featured nation-building elites that have made across-the-board Westernizing choices.  The only clear example is Russia in the late 1980s and 1990s, with Boris Yeltsin as the pivotal Westernizing leader who privatized huge swathes of Russian industry, freed the press, and backed off from military confrontation with the West. 

Lipset and Rokkan Updated: Culture

Per Lipset and Rokkan, the basic choices for European nation-building elites on culture involved allying with secular forces (as in France or Italy), with Catholicism (as in Austria or Belgium), with a national Protestant church (as in Britain or Scandinavia), or with both a national Protestant church and Catholicism (as in Germany and the Netherlands, with their large Catholic minorities).  As in the economic sphere, these choices, along with the parallel, reactive choices of peripheral groups resisting the dominance of the nation builders, became the basis of long-lasting European party systems. 

Compared to the Lipset-Rokkan economic framework, which can be best updated by adding a category, their cultural framework needs to be pared down in order to fit the nation-building experience of populous lower income and middle-income countries around the world that have substantial elecoral competition.   Instead of four choices keyed to the nuances of 19th century European Christianity, it makes more sense to view the basic cultural choice facing recent nation-builders in Asia and Eastern Europe as a basically dichotomous one.  Contemporary nation-builders can ally themselves with secular and/or cosmopolitan and/or Westernizing cultural forces, or alternatively with religious and/or nationalist and/or traditionalist forces.  India in the 1940s, South Africa in the 1990s, and the Gorbachev-Yeltsin Russia of glasnost and rapid cultural liberalization in the late 1980s and 1990s exemplify the secular/cosmopolitan/Westernizing option being taken by nation-building elites.   On the other side of the ledger, Khomeini's Iran from 1979 on and Suharto's Indonesia from the 1960s to the 1990s exemplify nation-building elites that by comparison with their comparatively cosmopolitan discarded predecessors (the Shah, Sukarno) took a more nationalist/traditionalist/religious line on culture.  Park-Hwan South Korea in the 1970s and 1980s is a trickier case given its strong alliance with the US and the ambiguities of Korean nationalism, but is also reasonably classified as illustrating the nationalist-traditionalist-religious cultural choice by a nation-building elite.

Lipset and Rokkan Updated: Economics

In the economic sphere, Lipset and Rokkan contended that nation-building elites in 19th century Europe were faced with a choice between allying with urban business elites or with rural landowning elites, and that these choices exercised long term influence over national political systems.   More recently, those two choices have remained options for nation-building elites, but the rise of the universal franchise has gone along with another economic choice becoming available: a popular alliance between the nation-building elite and the less affluent majority of the population.  Among large middle-income or lower-income nations with competitive electoral politics, the best examples of that alliance involve the Congress Party in India, the Khomeini-led Islamic Revolution in Iran, and the African National Congress in South Africa.   In these three cases, the new nation-building elites in comparison to their predecessors (the British, the Shah, South African whites) took a populist, egalitarian approach to economics.  The connection between the nation-builders and egalitarian doctrine on economics was especially clear in India, where the Congress Party of Nehru identified itself with socialism, land reform, and state planning.  In Khomeini's Iran and Mandela's South Africa, nation-building took place later in the twentieth century, at a time in which nationalization and central planning had lost much of the appeal it had had during Indian nation-building.  At least partly for that reason, the Khomeinist revolutionaries and the ANC did not espouse a clear left of center economic agenda, but both groups of nation-builders relied in part on a populist appeal that they, unlike their predecessors, would stand up for the majority of the nation's people rather than a small, economically privileged elite.

War, Guns, and Votes

Paul Collier's latest book on the travails of the "bottom billion" of the world's population in Africa, Central Asia, and pockets of poverty elsewhere does an excellent job translating high-tech economic studies replete with instrumental variables into lively prose and an imaginative argument for internationally-sponsored coup protection for bottom billion leaders who run fair elections.   The arguments of the book focus pretty much exclusively on incentives for the political elite; my sense, though, was that Collier's limited focus does not reflect a belief on his part that cultural, values-oriented factors are irrelevant or minor to the huge project of improving the lot of the bottom billion.

A value competition take: Making economic development and political democracy work is in large part a long-term cultural project of developing certain character types that blend self-interested and altruistic values.  On the economic side, two types are especially important.  Society needs a class of Weberian businessmen who are not necessarily Calvinists but who are influenced if not always governed by altruistic moral rules such as following the law and keeping promises even when it is to one's disadvantage to do so, who believe in markets rather than government favors, and are willing to work irrationally hard on behalf of their personal gain--and it is even better if society also has a fair part of its work force that adopts similar values, not just its business leaders.  Society also needs a class of civil servants-regulators-lawyers-accountants-professionals who have an egoistic, self-interested belief in their useful role in correcting for market failures, who work irrationally hard in doing their jobs, and who also have an altruistic belief in markets and stepping aside and not controlling the private sector. 

"Auction a $20 Bill" or "Give Me $5"?

Rom and Ori Brafman's Sway is a light, Gladwellesque traverse through the greatest hits of behavioral economics and social psychology, ranging from prospect theory to groupthink to the fundamental attribution error of allowing a label to overcome reality: http://www.swaybook.com/

Chapter Two, "The Swamp of Commitment," uses business school professor  Max Bazerman's "auction a $20 bill" exercise as a parallel to LBJ's decision-making in Vietnam and, more briefly, to W's in Iraq.  In the auction exercise, a class of students is given the chance to buy the professor's $20 for as little as $1.  The nasty catch is that the second place bidder as well as the first place bidder has to pay the professor the value of his or her highest bid.  The result obtained by Professor Bazerman is that two bidders, neither of whom wants to lose, both wind up bidding more, sometimes much more, than $20.  The conclusion suggested by the brothers Brafman is that Vietnam and Iraq embody the auction exercise in real life, with US leaders initially hoping to win cheaply and then sucked in ever deeper by an irrational although behaviorally compelling unwillingness to let sunk costs be bygones and withdraw.  Here--as is usually the case in their book--the Brafmans uphold rational choice; by expounding people's deviations from RC in practice, they hope to encourage rationality.

Okay...but here, as is often the case with RC arguments, some cautionary notes are in order.  The world is full of models of how people deviate from RC, and it is often very hard to tell which if any model applies.  Further, it is sometimes very tricky to tell what the normative implications of an RC model are, assuming its applicability. 

Instead of the "auction $20" exercise, imagine a "Give me $5" exercise: Student A is given $20.  Student B can ask Student A for $5 on behalf of Students B-Z.  If Student A agrees, Student B must promise on behalf of the rest of the class that A will not be asked for more.  This promise is not binding on B or the other students, though, as the professor explains.  If it is broken by any of students B-Z asking A for another $5, another promise is made by the requesting student, and so on.  If A refuses at any point, the game ends and A has to give all his or her money to B-Z if a coin flip turns up tails; if the flip is heads A gets to keep what he or she has left.  The dominant interpretation of RC says that in the "Give me $5" (or "Munich" or "Falling Dominos" or "Bernie Goetz" game), a perfectly rational A who knows the other players are perfectly rational should refuse the first request for $5.  In practice, I suspect many students would wait to resist, a la Neville Chamberlain, and that a majority would fork over the first $5 if the game were played with only A and B rather than with B-Z.  To refuse the first request for $5, defensible as it is under RC, suggests that you are an untrusting person who would rather fight, with an expectation of only $10, rather than share and trust B or B-Z to keep B's promise and leave you with $15. 

None of this is intended to debunk RC.  The more RC stories one can tell and compare and contrast with an inevitably messier world the better, as long as one does not fall too much in love with any one of them and commit one's own RC version of the fundamental attribution error.  

 A VC story about how a society can reduce the likelihood and the magnitude of Chamberlain-style errors of appeasement on one side as well as LBJ-style errors of escalation on the other side:  In the current political system in the US and most other wealthy nations, a center-left that is more worried about errors of escalation competes for popular favor with a center-right that is more worried about errors of appeasement.  But the coalition of both sides as well as the group of voters in the middle contains numerous voters who not zealots for the party's tilt in favor of or against military force.  Compared to a consensus system like that of the US in the early 1960s in which the use of military force does not divide the sides, vote-seeking politicians of both the more force-averse center-left party and the more force-favoring center-right party have stronger incentives to look with care at the costs and benefits of military force and avoid being trapped in an escalation game or an appeasement game.  If there had been more of a division on military involvement between the parties under the New Deal system, Vietnam might well have been more like the comparatively manageable messes of Iraq and Afghanistan rather than the much deadlier quagmire it actually became. 

How about a flipped VC story, in favor of the New Deal system and against the current more polarized division between the Democrats and the Republicans?  There are plenty of those, some of which I find convincing.  But I can't think of one as of now that seems as convincing on Vietnam vs. Afghanistan/Iraq as the one I just gave.

Consensus on a Clash

Samuel Huntington, the long-time Harvard political science professor, has died: 

http://www.nytimes.com/2008/12/28/us/28huntington.html?partner=rss&emc=rss&pagewanted=all

Huntington's most famous work, The Clash of Civilizations and the Remaking of World Order, provoked a large and continuing controversy, in which critics accused him of overemphasizing cultural divides and underemphasizing diversities within cultures and connections across cultures.  From a value competition perspective, the debate is interesting partly because Huntington, his supporters, and his critics alike proceed from the normative premise that a value-laden clash of civilizations is undesirable, disagreeing on empirical issues of whether such clashes in fact exist and how serious they are. 

Since a reinforcement of interests by egoistic values can usefully spur participation and enterprise, there is a value competition point to be made against the conventional wisdom and in favor of cultural clash.  But since optimal values per VC are not only egoistic but also altruistic, there is a more important VC argument to be made that accords with Huntington's and his critics' concern about a clash of cultures.  Whatever the reality of "the West," "Islam," "Sinic China/Vietnam/Korea," and so on as clashing civilizations, Huntington's supporters and his critics are right to worry about such a clash.

Unions and the Center-Left Alliance

Stable democracies around the world are characterized by an opposition between center-right and center-left sides.  On the center-left side, unions are important as a source of blue-collar participation and as a vehicle for allying working-class economic populism with cultural liberalism. 

In theory, unions could be allied with anti-liberal cultural populism, but in country after country they are instead pillars of center-left parties like the American Democrats, British Labour, and the German Social Democrats that fuse pro-union positions on economics with liberalism on culture.  A value competition perspective that is critical of enterprise unionism for polarizing life within firms needs at the same time to come to terms with the way in which unionism at the national political level has an important anti-polarizing effect.  Instead of a polarized opposition between worker-supported economic and cultural populism on one side and elite-supported classical liberalism on the other side, established democracies benefit from a system in which the sides are less polarized by class.

Allowing that other value competition conclusions can be drawn, an ambivalent conclusion about unionism seems truest to the logic of the framework: Unions tend to be simultaneously unhelpful to the firms they organize and helpful to the national political order. 

Kurdish Voters in Turkey

In contrast to New Zealand, the US, and a number of other countries, in Turkey the country's major ethnic minority disproportionately supports the center-right rather than the center-left.  In the 2007 parliamentary elections the pro-business, Islamist AKP ran about even in Kurdish areas with the DTP, a Kurdish nationalist party with some connections to the banned Kurdish Workers Party, the PKK.  The AKP's performance was a considerable improvement over its performance in the 2002 elections; in both elections, the center-left CHP did dismally, getting under 5% in most Kurdish areas in 2007.  http://psephos.adam-carr.net/countries/t/turkey/turkeymapsindex.shtml  Presumably, the CHP's role as the inheritor of the secularizing, pro-Turkish, anti-ethnic minority Ataturk tradition limits the party's appeal among Kurds, while the AK's Islamist line, as well as its comparative openness to the use of the Kurdish language, give it greater appeal for Kurdish voters.