The list of complaints against laissez-faire capitalism is long, including such contradictory notions as its guilt in impoverishing the masses and its role in enabling the poor to escape their “proper” station in life. In World on Fire, Amy Chua adds to the list, arguing that capitalism, when combined with democratization in economically developing nations, produces violence. The reason is that “market-dominant” minorities amass far more wealth than the majority population group does, unleashing resentment against their success.
Understand that Chua is not advocating socialist economic controls. She forthrightly states that “Market capitalism is the most efficient economic system the world has ever known.” But her book may be read by opponents of the free market as proving that government policy should be used aggressively to redistribute wealth in order to avoid the kind of violence she describes. For that reason, it is worth examining World on Fire to see if Chua makes her case, and if so, what conclusions logically follow.
Chua, a professor at Yale Law School, begins with a painful personal experience. Her aunt was brutally murdered in the Philippines, a victim of anti-Chinese violence. In the Philippines, as in many other nations, ethnic Chinese have been more economically successful than the indigenous population generally. That wealth disparity has been seized on by demagogues eager to exploit the envy of their less successful countrymen. Consequently, many Filipinos have come to believe that violent “retaliation” against Chinese “exploiters” is justified. Chua points to many examples around the world of majority hatred directed against “outsiders” who, by virtue of their superior business acumen, become conspicuously wealthy.
The author’s contention is that envy-driven violence against “market-dominant” minorities is apt to occur when a nation moves from political authoritarianism to democracy at the same time it moves from a centrally planned or highly regulated economy to capitalism. That combination, she maintains, leads to rapid accumulation of wealth for a few, but the breaking of the political restraints that had previously held outbreaks of racist envy in check. How to deal with that problem is a question she leaves unexplored.
I don’t find Chua’s thesis convincing and certainly do not think that the way to avoid outbreaks of racially driven violence against those who prosper the most under capitalism is to maintain socialism.
First, her examples do not provide much support for her contention that the combination of laissez-faire economic policy and political liberalization is an incendiary mix. That is because the world is virtually bereft of instances of significant reforms in both directions. Chua continually writes about nations that have adopted “free-market democracy,” but the cases she cites involve no more than small steps in those directions, especially toward capitalism. For instance, she notes the ethnic violence in Zimbabwe, but that pitiable nation remains a state with little freedom of any kind.
Second, it is easy to find instances of the sort of violence against the economically successful occurring without either of Chua’s two conditions being met. She cites anti-Jewish violence in Russia as a case in support of her argument, and while it’s true that Russia has moved somewhat in the direction of political and economic freedom over the last decade or so, there was a great deal of violence against Jews by majority Russians for centuries under the autocratic rule of the czars. The fact is that even under highly authoritarian regimes, some people—whether they are from a “market-dominant” minority or not—figure out how to become wealthier than most of their countrymen and thereby make themselves targets for violence by those who resent their success. Increases in political and economic freedom don’t necessarily have anything to do with envy-based violence.
A third difficulty with Chua’s thesis is that she attributes ethnic violence to hatred engendered by economic success of a minority group without considering that the violence may have its roots in simple racism. There was, after all, violence against the Chinese in the United States in the late nineteenth century that cannot be said to have been caused by their “market dominance.”
Finally, remember that in journalism, bad news sells. Chua is so eager to create an issue with the alleged danger of “free-market democracy” that she says nothing about the upside of freedom. As Samuel Johnson wrote, man is rarely so innocently employed as when he is making money. What capitalism does is liberate all people from state-imposed restraints and eventually spread prosperity to nearly everyone. Nothing does more to reduce violence and many other social ills than the rising standards of living that capitalism alone makes possible.
All that World on Fire proves is that governments cannot be depended on to prevent violence against people who have been, for whatever reason, demonized by others. That’s nothing new.