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Market-Dominant Minorities and Economic Justice
Yale law professor Amy Chua opens a big window by which to see the social reality of what is actually happening in developing countries around the globe.
By Ed Knudson
Despite decades of foreign aid very large numbers of human beings live in oppressive poverty around the world, especially in Africa, Latin America, and Asia. Why? Answers are debated usually relying on abstract concepts of capitalism and socialism. But the cold war is over. For a couple decades now international economic institutions have been trying to promote market economies in developing countries but little progress has been realized. What is going on?
Perhaps we have been trying to see things using only economic categories. Economics can explain a lot about wealth creation but it tends to screen out other important aspects of human behavior. Amy Chua has written a book that gives us a new way to see and understand global economics and politics.
Let me first suggest that we “see” what is “out there” in the world around us through what we can call “windows” of the mind. The term economics refers to concepts through which we will be able to see the production, distribution, and consumption of material goods. The term “politics” will open windows by which we are able to see the patterns of the application of legal power within or among nations. And the term “social” will open a window in our mind by which we are able to see interaction of human beings within groups such as families and ethnic association. Without concepts the mind is essentially closed; it cannot make sense of what is “out there” in the world. And if the mind only has one window open, such as economics, it cannot see the full reality of what is occurring within a society.
Amy Chua opens a big picture window to what’s happening in the world through a particular social concept, what she calls “market-dominant minorities”. It refers to ethnic groups that represent a small percentage of the population but command and enjoy a large percentage of the economic activity and resources of a country. For example, the Chinese represent only three percent of the population but command seventy percent of the economic resources in Indonesia; most of the indigenous population continues to live in abject poverty.
In her new book, World on Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability, Amy Chua uses the concept of market-dominant minorities to explain what has been going on all across the globe, including parts of Europe, the Middle East, and the United States. But her particular focus is on places where ethnic minorities wield wildly disproportionate economic, and sometimes political power in Africa, Asia, and Latin America.
Chua is able to see so clearly the ethnic reality within economic and political relations because of her own experience as a Chinese woman from a wealthy family in the Philippines where the Chinese dominate economic life. Though now a professor at Yale Law School she is able to see from the “inside out” so to speak, from the inside experience of a member of a market-dominant minority. She tells in dramatic fashion about the murder of her wealthy aunt in the Philippines by the aunt’s Filipino chauffer who was never prosecuted for the crime because local police are Filipino and not motivated to promote justice for the economically powerful Chinese. The book may be the result of Chua’s effort to explain this event and in the process of doing so she has opened a very large picture window by which she and the rest of us are able to see and come to understand what is happening in other parts of the world.
The United States has been aggressively promoting free markets and democracy around the globe. With the fall of Communism our brand of “Free Market Democracy” is viewed by many in the U.S. as the destiny of the world. Capitalism has triumphed over Communism. All nations should elect their leaders democratically. But continuing to promote our own concepts of economics and politics without taking into account how ethnicity is a major factor in other countries means that we are helping to create a “world on fire”, a world exploding in ethnic violence.
Here is why. Markets in countries such as Indonesia and the Philippines are not “free” in the sense of individuals buying and selling from one another. They are controlled by ethnic minorities. So when the United States and other economically advanced countries enter into economic relations with these countries they are working with these ethnic minorities; the poor majority population does not benefit from the economic activity. Most of the people remain poor and they resent that condition.
Furthermore, world economic institutions such as the World Bank and the International Monetary Fund have, since the 1980s when Ronald Reagan influenced the installation of ideologically-committed free market staff in these institutions, forced developing countries to adopt economic and investment policies that reduced the distribution of economic benefits to the poor population even more. These international institutions forced these countries to adopt policies which would never have been possible in this country. It is now widely recognized that the result has been the greater impoverishment of the majority populations.
What Chua emphasizes is that then if democracy is promoted at the same time then politicians emerge who voice the resentment of the majority population creating the conditions for explosive social events, such as have occurred in Indonesia and several African countries. Hence the title of her book, World on Fire.
Chua applies her analysis to the Middle East, to areas of the United States, and speaks also of Hitler’s Germany, noting that Hitler himself came to power through a democratic election in a time of widespread national suffering and economic failure. Her analysis of the Russian transition from Communism to capitalism, and why it is failing so miserably, is especially cogent and helpful.
The author does less well when proposing solutions, which is often the case with a profound analysis. We may be able to see what is happening; it is always less clear to know what it is that should be done to try to create an alternative future. Chua suggests that market-dominant minorities themselves should learn how to make a larger contribution to the societies within which they live and function. But this voluntary option probably would not go very far.
What is needed is a much stronger international legal framework within which all nations are expected to create the conditions necessary for their majority populations to develop and enjoy the benefits of international trade and the domestic economy. Current international economic institutions should be expected to function within that global legal framework, not be separate institutions as if economics is a totally separate function within societies. Chua doesn’t talk much about global governance, but her book is a very powerful argument for moving in that direction.
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