COMPETING CIVILIZATIONS (2001+)


CPDS Home Contact The Second Failure of Globalization?  Discouraging Pointless Extremism  Global Financial Crisis   Leadership by Emerging Economies? Creating a New International 'Confucian' Economic and Political Order?   Remaking Democratic Capitalism  Competing Thought Cultures   The Infantile US vs China Debate  Parting the Bamboo Curtain ... A Bit  Contributions to Western Civilization  The 'game is rigged' for geo-political rather than 'commercial' reasons  Is Islam a Religion of Peace?  Scepticism about Japan China's Strategic Approach to its Economic and Political Problems: A Speculation  Understanding East Asia Requires More Than a Study of Confucian Values   Economic Babes in the Asian Woods  Australians Should Unite Against the Repression of Muslims
Introduction + Attachments

INTRODUCTION

Samuel Huntington in his book The Clash of Civilizations and the Remaking of World Order suggested that the basis for divisions in the world following the Cold War would be cultural, rather than ideological.  

Summary extract from Huntington's book: In the First Crusade the entire West was seen as moving into Muslim lands. In the 19th century spectacular population growth in Europe again produced a European out-migration into other lands. Other factors have increased the conflict between Islam and the West in the late 20th century (a) Muslim population growth has led to large numbers of unemployed and disaffected people, who exert pressure on neighbours and migrate to the West (b) Islamic resurgence has given renewed confidence in the worth of its civilization - relative to the West (c) The West's efforts to universalize its values and institutions to maintain military and economic superiority has led to resentment (d) The collapse of communism removed a common enemy (e) closer contacts made each more aware of their own identity and of differences (f) the rights of members of each civilization in countries dominated by the other were of increased concern, and tolerance declined sharply in the 1980s and 1990s. Thus the causes of conflict relate to culture and power - and will remain as long as each remains unchanged. Conflict over territory is no longer as important as it was. But 19 of the 28 points of conflict which Muslim societies have are with Christians. The West is facing a mood and movement which far transcends the policies of particular governments - a clash of civilizations - and needs to avoid a similarly irrational response. Islamic observers believe there is a clash - between civilizations, not between religions. Islamic resurgence in the 1980s and 1990s has been anti-Western, because of the perceived Westernization of Islamic societies. They see Western culture as materialistic, corrupt, decadent and immoral. They fear and resent Western power, and see it as seductive. The West is attacked, not for adhering to an imperfect religion, but for not adhering to any religion at all. The West labeled its opponents in the Cold war as 'godless communists'. It is now being labeled as the 'godless West' ('Two civilizations defined by difference', Courier Mail, 22/11/01)

Other views:

Modernity has reached a crisis point. The expansion of Western power has drawn great religions and civilizations such as Islam into systems of imperialism and globalization in ways that have stimulated resistance. India struggled against British rule - and succeeded through non-violence. The cause of discontent by those who have now used violence must be understood and responded to. There is a need for a sustained effort to do so in Australia if it is to be a prosperous multicultural society. Scholars specializing in comparative religions must analyze the processes that have transformed the world in recent centuries and given rise to intense cultural and religious tensions. Demographics will be a critical concern, because the West's population is rapidly aging and slowing, while population growth is most rapid in impoverished areas, and especially in Muslim nations. This will produce enormous pressures in coming decades. These people must be integrated into the global system in ways that are equitable and respectful. This will require the West to re-examine the excesses of its own materialistic and secular culture. Australia has organizations that could work on these topics (eg Australian Association for the Study of Religion and ANZ Society for Theological Studies (Bendle M 'Multicultural voices trained in harmony',  Australian,  19/9/01).

Christian leaders need to recognize that actions by Islamic terrorists are based on warlike traditions of Islam, and that it is a threat to the liberty which has been the basis of the success of Christian countries [1]

The Muslim world's primary objection to the West relates to sexual rather than to political liberty [1]

Malaysian Prime Minister Mahathir Mohamad:

  • called for Muslims to emphasize economic development as the basis for building an independent military capabilities to resist oppression [1];
  • called for Muslims worldwide to unite against Jews who were seen as the ultimate manipulators of Western societies - and to use economic, political and diplomatic pressures rather than violence [1]; and
  • blamed terrorism on Europe and Israel (especially in relation to the situation in Palestine), and suggested that the numbers of victims of terrorists were modest when compared with European precedents [1].

Alternative perspectives suggest that 'clashes' between civilizations might arise between:

  • the US and Europe [1] or
  • 'Southern Christianity' (eg in Africa, Asia and Latin America where orthodox Christian values are being widely accepted) and Western societies that have shifted away from Christian values [1];
  • the West and 'Confucian' East Asia [1]. 

Some of the dimensions of the latter potential 'clash' can be identified by reading between the lines of President Hu's address to Australia's Parliament in October 2003. There are also indications that a 'silent clash' may have been underway for decades in relation to economic and financial systems which is now leading to a situation in which structural incompatibilities put global growth at risk.  

Moreover it has been suggested that it was the tensions in the 1920s and 1930s associated with attempting to modernize to adapt to the globalization of Western society which led Japan to try to achieve independence through aggression in Asia in World War II [1].

However Huntington described a situation - and a potential risk. He didn't draw up a 'blue-print' for the clash of civilizations that anyone should now be following. Different civilizations have much different worldviews - and as improved transport and communication has made the world smaller those differences (which translate into quite different social, political and economic systems) are bound to cause friction.

These differences have the potential to generate conflict if:

  • they are not (as has too often been the case) recognized, discussed and managed;
  • there is a naive response to the provocations of factions who seek advantages for their own causes in such clashes.

While there are many options for defusing a potential 'clash of civilizations', the best prospect lies in reviewing the limitations of the 'postmodern' assumptions which have often discouraged critical analysis of the practical consequences of different worldviews by students of the humanities and social sciences, and led some to a search for scapegoats for global problems rather than solutions.

Outline

OUTLINE

This document considers the context to the September 11 attack in America, in terms of the cultural issues that might lead extremists to wish to challenge the West's now-dominant 'democratic capitalist' model of political economy.

Cultural features have historically contributed to the economic strength of Western societies (including the individual freedom that the Judeo-Christian tradition allowed; and the rationality and science that emerged from classical Greek thought). However non-Western societies have faced difficulties in the global environment created by those cultural features, including: A 'hidden' clash of civilizations has been implicit in the threat to the global financial system from the communitarian / mercantilist strategies of major East Asian economies - whose in-built demand deficit made global growth unsustainable and contributed to the global financial crisis - and in the discrete development of a new international order in East Asia based on practices which are radically different to those which Western societies have established globally..

Moreover the benefits of globalization for Islamic populations may cause some to fear for Islam's future, if Western societies (and other religions) are not defined as 'enemies'.

At the same time postmodern intellectual trends have been eroding Western advantages, while ignorance of the practical implications of cultural differences, which has been amplified by uncritical 'postmodernism', makes it hard to help those who suffer disadvantages and potentially leads to conflict (eg through misunderstanding, and the emergence of conspiracy theories).

There are risks in a 'clash' with Islamist extremists (including diverting attention from other risks), and also scope to defuse any such 'clash' including:

  • expansion of democratic models;
  • ethical renewal, including a more serious metaphysics;
  • reform of the global order on a basis under which all may reasonably hope to succeed;
  • more effective mechanisms for development in disadvantaged regions;
  • specific attention to problems of cross-cultural communication; and
  • clarifying the lack of any obvious system of political economy that would be better than democratic-capitalism.
Culture Matters

the Cultural Potential for a 'Clash'

The potential for a 'clash' of civilizations is very real, because culture is the principal determinant of a community's ability to be materially successful and to live in relative peace and harmony. Culture affects: people's goals and aspirations; the way they understand reality (and thus how they go about solving problems, and whether they can develop technologies); their ability to learn, to cope with risk and to change; the way people relate; the scope for initiative; and the institutions their society maintains. 

Illustrations:

What is 'Knowledge'? The central importance of culture to material prosperity can be illustrated by the fact that economists have long regarded knowledge as the key factor in economic growth while various cultures have entirely incompatible epistemologies (ie assumptions about the nature of knowledge).

For example, the Western view of abstract knowledge about nature and society derived from Platonic-Aristotelian traditions in classical Greece is anything but universally shared:

  • in East Asia abstract knowledge seems to be viewed as overly simplistic (see Competing Thought Cultures and  Asia literacy);
  • a key feature of the 'enlightenment' of Siddhartha Gautama, who founded Buddhism, was recognition of what can be called 'dependent causation' which involves a recognition of the interconnection / complexity of things. This was valid in relation to showing the limits to human understanding, but did not provide a means to overcome those limits and make practical use of knowledge;
  • Islamic science apparently views knowledge about natural and social systems as merely symbolic of Divine will. If it is assumed that that there are no aspects of nature that are not constantly subject to manipulation by God, it is impossible to develop technologies that depend on understanding the material world.

If the very nature of the key factor in economic growth varies amongst cultures, then clearly culture must affect the ability of different societies to achieve material progress and prosperity.  Failure to consider those effects can have serious consequences for societies who are left unaware of the adverse consequences of their traditional cultures (eg see UN Declaration of the Rights of Indigenous People: Perpetuating Disadvantage)

Affecting Refugee Flows? The importance of culture might also be illustrated by refugee flows. In a well-intended pro-refugee Anglicare presentation the present writer attended in Brisbane in October 2013 on ‘Supporting People from a Refugee Background’, it was argued that refugees in Australia (and apparently worldwide) tend to be escaping from countries with particular cultural characteristics and to be seeking asylum in countries with different types of cultural characteristics. In brief it appeared that:

  • refugees tend to come from societies where:
    • ‘collectivist’ / ‘high context’ (Communitarian?) cultures are characterised by an emphasis on ‘We’. For example: (a) group needs and goals get priority; (b) value is attached to enhancing family power / obedience / respect / avoiding shame / modesty / cooperation / avoiding conflict ; and (c) family and work structures are hierarchical;
    • hierarchical position: (a) maximizes status and power; and (b) is gained by association;
    • the existence of hierarchy: (a) is accepted / expected; and (b) centralises authority;
    • high status is attached to males / husbands / parents / teachers / older people (relative to the lower status of females / wives / children / students / younger people);
    • there do not tend to be arrangements such as: Medicare; pensions; unemployment / sickness benefits; or private health / life insurance.
  • refugees tend to seek asylum in societies where:
    • ‘Individualist’ cultures are characterised by an emphasis on ‘I’. For example: (a) priority is given to individual needs and goals; (b) value is placed on independence / directness / self-reliance / creativity / assertiveness / risk taking / questioning; and; (c) family / work structures tend to be egalitarian;
    • Equality minimizes status and power; power is achieved through performance and achievement; egalitarian values / democracy prevail; and personal / group initiative is encouraged.

Most of the world's current torrents of refugees (and most of the asylum seekers who reach Australia) seem to come from predominantly Islamic societies. Though there are other complexities (see below), in such societies repression of initiative / difference / innovation seems to be associated with: (a)  the fact that moral behaviour is enforced by communal pressure rather than by individual consciences; (b) economic failure in recent centuries - especially in the Middle East; (c) political repression (partly to silence those who complain about economic failure); (d) political instability now associated with potential Islamic revolutions (by those who see Islam as the solution to their society's problems); and (e) conflicts that give rise to floods of refugees (see also Boat People Magic).

Destabilizing Financial SystemsThe importance of culture can also be illustrated by the economic 'miracles' followed by international and later domestic financial and economic instabilities that have resulted from the lack of reliance on abstract concepts (ie 'profitability') in the financial systems that have been established in major East Asian societies with an ancient Chinese cultural heritage (see Financial Systems: Where the Rubber Hits the Road and International Regulation of Lending Standards)

And it is easy for those with cultures which support material prosperity to feel superior, and for others to feel resentful, exploited and threatened. Moreover, the latter have great difficulty improving their position because differences in cultural frameworks make it hard to even understand what is really needed for success. Furthermore change could then challenge their sense of identity and religion as well as the status and power of traditional authorities. Also change will tend to take so long that popular political expectations will prove difficult to satisfy (making immature democratic government unstable), while those who do not change will find themselves relatively disadvantaged. 

The US (and the West) support a particular economic and political order (democratic capitalism) which is currently dominant and being 'globalized'.  That order contains many strengths and many weaknesses.  

However for those who benefit from the strengths of that order or who suffer from  its weaknesses (or their own weaknesses) or who fear cultural desertions because of the lure of the products of that economic, political and cultural order to scapegoat (or attack) each other will achieve nothing useful. The situation is too complex. They need to "pause, breathe deeply and reverse their megalomania before much more harm is done" (to quote a wise suggestion the author received from another person).

Aspects that need to be considered include: the cultural origins of Western strengths; the difficulties that others may experience; factors that are eroding Western strengths; and the potential for ignorance of the practical consequences of cultural assumptions to lead to conflict.

Cultural Foundations of Western Progress: The Realm of the Rational / Responsible Individual Cultural Foundations of Western PROGRESS: The Realm of the Rational / Responsible individual

There have been many attempts to explain the causes of economic growth, and particularly the advances made by Western societies in recent centuries - of which some examples are outlined below.

A comprehensive evaluation of such theories is beyond the scope of this document.

Moreover it is hypothesized that there are fundamental obstacles to 'understanding' economic growth because:

  • seeking understanding (ie a scientific approach to economics) reflects a paradigm which assumes that cause and effect relationships are fixed (and thus able to be known), whereas the essence of economic development (and innovation within enterprises) may be that they change cause / effect relationships (eg see Probable Breakthrough in Understanding Economic Development);
  • economic systems that are quite different to those of Western societies have emerged in East Asia from the different approaches to knowledge, power, problem solving, governance, economic goals etc that arise in societies with an ancient Chinese cultural heritage, and these can not be understood in terms of Western ways of thinking (eg see Asia Literacy)

However it is hypothesized that wealth creation primarily requires cultural characteristics that allow 'economic' problems to be solved (eg to know what others want and how to produce it, and to be able to organize production and distribution). 

In particular it will be suggested below that Western (originally European) societies have gained strength (economically, militarily and politically) mainly because of their ability to create social, economic and political environments in which complexity (which otherwise obstructs 'rational' / abstract / analytical problem solving) could be limited by the presumption that whether individuals act responsibly / morally should be ensured by their direct next-life accountability to God - a presumption which follows from Matthew 7:1; 13:24-30 and 1 Corinthians 4:3-5. 'Liberal' institutions (ie those which build on individual efforts) could emerge where social / political elites lacked any right (divine or otherwise) to supervise individuals behaviour (eg to ensure that it complied with elites' understanding of morality). In competing 'liberal' institutions, the classical-Greek notion of 'rationality' (which the Renaissance / Enlightenment rediscovered) and analysis could become reasonably reliable means for problem solving, and thereby dramatically increase the effectiveness of individuals in all walks of life. The West could thus become what could be called the 'realm of the rational / responsible individual'.

The Renaissance from the 14th century (which renewed classical interest in learning) and the Enlightenment from the late 17th Century (which emphasized reason over tradition) represented significant stages in the emergence of these Western capabilities - but (as discussed further below) the resulting emphasis on reason and science: (a) was critically dependent on a foundation of widespread Christian adherence in Western societies; and (b) can now be seen to have involved overly simplistic assumptions - because both reason and science are subject to significant limitations. 

The Judeo-Christian Foundation

Europe's [Judeo] Christ-ian traditions seemed to be of central importance.

 Judeo-Christian traditions incorporated an amalgam of:
  • the Mosaic law of 10 Commandments and an extensively elaborated Jewish religious legalism detailed in the Old Testament;
  • a simple yet incredibly demanding ethical ideal of putting God first and valuing others as oneself (Matthew 22:35-40 and Mark 12: 28-34) - which, about 2000 years ago, Jesus of Nazareth : (a) advocated as the essence and  consolidation of the Mosaic Law and other detailed religious legalism of Old Testament Law; and (b) illustrated with numerous examples in his life and teachings (see more below);
  • an emphasis on the relationship between God and humanity - eg as reflected in Jesus' proclamation of: (a) the coming of the Kingdom of God (eg see Mark 1: 13-14; Matthew 4:23; and Luke 4:43); and (b) God's kindness, love and generosity (eg see Luke 12:5-7; Matthew 7:8-11; Matthew 5:45; Luke 15: 4-7; and John 3:16-17); 
  • a rejection of human claims to real moral / ethical authority (eg Jesus: (a) criticized moral legalists for making up what they wanted to be seen as commandments (Matthew 15:9); (b) pointed to the limitations of traditional religious principles (Mark 2: 24-27); (c) objected to people judging / condemning others (Luke 6:37) even though people are required to know the difference between good and evil (Luke 6: 43-45); and (d) suggested that individuals' judgment by God (Matthew 12:36-37) should be feared more than anything that other people could do (Matthew 10:28)
  • faith as an alternative to moral legalism (eg see Mark 16:16; John 10:4; Acts 13: 39; Romans 10: 4-13). Moral behaviour became an indicator, rather than the determinant, of spiritual success (Galatians 3);
  • universalist values (ie valuing all people and seeking truth);
  • concern for the welfare of others - including strangers and enemies (eg see Luke 10:25-37; Matthew 28:19; Matthew 5:43-48) and (perhaps uniquely) those on the bottom rungs of society (eg see Luke 4:18; Matthew 5:5; Mark, 10:24-25; Luke 14:13; Matthew 25:40; Matthew 9:36; Matthew 9:13; Matthew 25:31-46; Luke 12:32);
  • a belief that events move forward in time from a beginning towards an end - which made scientific inquiry possible [1];
  • freedom of religion - noting that Jesus did not attempt to force others to conform to his teachings (eg Matthew 19: 16-12) and encouraged his followers to simply move on if they were not well received (eg Luke 9: 3-5)
  • an emphasis on forgiving those who cause harm, leaving judgment and punishment to God (eg Matthew 7:1 and John 8:7); and
  • concern for the welfare and capabilities of ordinary individuals within the Kingdom of God that Jesus proclaimed - as compared with concern for the welfare and capabilities of tribes / nations as a whole (or primarily for those who ruled such tribes / nations);
  • the separation of God's domain from human regimes [consider: Jesus' rejection of of earthly kingdoms - Luke 4:5-8 ; 'My kingdom is not of this world' - John 18:36; 'Give unto Caesar that which is Caesars' - Matthew 22:21]  - though this separation was only put into practice after the breakdown in Europe of the link  between church hierarchies and states which had characterized medieval 'Christendom'  .
In particular, according to the New Testament Gospels, the teachings by Christianity's founder, Jesus of Nazareth, focused on himself the only way to reach God (John 14:6) and the fulfillment of Old Testament prophesy and the requirements of the traditional religious Law (Matthew 5:17) - which he suggested were a long way below God's actual requirements (Matthew 5-7). He referred to himself as the 'Son of Man' (eg Mark 2: 10) which was no trivial claim in Jewish scripture (see Daniel 7:13-15). He accepted his followers' assessment of himself as the 'Christ, the Son of the Living God' (Matthew, 16:15-17)

Jesus also taught about: the Gospel (good news) of the coming of the Kingdom of God which would set people free from the powers that oppressed them; the need for repentance to enter it; the precedence of the humble in that Kingdom; God's care for people (while himself healing and helping many); the spirit of the law (ie love for God and for other people) being more important than the letter of the law; the need for followers to bear 'fruit'; helping others - especially the less fortunate and even enemies; forgiveness (of others and of our sins by God);  life after death; the perils of giving priority to earthly riches, and the importance of acquiring treasures in heaven; material needs being met by seeking the Kingdom;  spreading the Gospel to all nations; the importance of faith and prayer; righteousness coming as a gift from God through Jesus, not from ritual or good works; avoiding religious authorities who did not practice what they preached or taught 'the commandments of men'; freedom to reject his teachings; refraining from judging others; the coming of the Holy Sprit after he departed to provide support and guidance to his disciples etc. (see other interpretations in, for example: 1, 2, 3).

Jesus' teachings seem to be widely regarded by non-Christian philosophers as the greatest moral principles ever expressed.

The New Testament also record that: (a) Jesus was executed by religious and Roman authorities, because they saw him as challenging their power; (b) Jesus was then resurrected (a sequence of events that the Gospels record that Jesus had predicted); and (c) Jesus' disciples were so convinced of his divinity and were supported by the same spiritual power as Jesus that they took on (and ultimately changed) their 'world' by spreading his Gospel ('good news'), though most paid with their lives for doing so.

While Christianity's most profound implications are for believers individually and as communities, this is not the issue that is of concern here. Rather the focus is on the implications for a society as a whole.

At the most basic level Christianity was significant for society because it involved valuing the welfare of individuals - rather than the welfare of tribes / nations as a whole (and their elites in particular). It motivated and empowered those on society's bottom rungs to help themselves and to help one another and thus started a process of: (a) reducing social inequality; and (b) enabling much wider groups within a society to make strong contributions. Ultimately Christianity also created a basis for liberal social, economic and political institutions because others could be trusted to a fair degree on the basis of their next-life accountability to God for the morality of their actions. Liberal institutions can't work where trust tends to be limited to a person's family or tribe, or where individuals' behaviour has to be supervised by their family / community or depends on compliance with human laws. 

Under the later Roman empire Christian churches became immensely successful in mobilizing grass-roots support because of: (a) their ‘good news’; (b) their concern for, and empowerment of, those on the margins of society; (c) their universalism - with a great deal of effort devoted to reaching Gentiles (non-Jews); and (d) their efforts to gain  intellectual credibility for the 'good news' (with the Gospel message presented in ways that were meaningful not only within its original Jewish context but also in terms of Greek high-culture and the Roman power of that day).

Kings and Emperors eventually wanted a 'piece of that action' – by seeking a Church mandate. And Church leaders were often glad to accept the 'benefits' that this linkage provided them even though: (a) this was something that Jesus of Nazareth had never had nor sought; and (b) those 'benefits' came with strings attached in terms of supporting royal regimes and thus getting embroiled in politics rather than simply carrying forward Jesus' Commission to bring others into the Kingdom of God.

However from early in the 16th century the Reformation re-emphasized the New Testament - and nothing in New Testament Christianity encouraged linking the church with the state (see Church’s Mission). The Reformation's rediscovery of New Testament Christianity laid the foundations of the separation of church and state, and the development of the notion of a 'secular' state (ie one concerned with everything but religion). The Protestant 'work ethic' is often credited with facilitating accelerated economic progress in Europe - but the Reformation's role in undermining claims by social / religious elites that they (rather than God) should have moral authority over individual citizens that derived from Christianity was arguably more significant.  

The Emergence and Advantages of Responsible Liberty

For societies as a whole Judeo-Christian traditions then became extremely significant because they permitted the emergence of legal and government institutions that presumed ethically- responsible individual liberty (ie they set people free from more than their own sins as had been suggested in John 8:31 - because they also set people free from human claims (eg claims by god-kings, philosophers, politicians etc) to be able to define the nature of, or to have have the right to enforce, moral / ethical interpersonal behaviour).

Christianity, it has often been noted, was a significant influence in the development of the constitutional foundations of liberal Western institutions. For example:

An Australian journalist (Greg Sheridan) suggested that attacks on Christianity by those who favoured a universal secularism would undermine Western society.

Vishal Mangalwadi argued from an Indian viewpoint that the Bible had shaped basic values and concepts which profoundly shaped European identity, thought and culture - and had in many ways also been the foundation of modern India (Mangalwadi V., 'The Book that made your world', 2011).

An Asian Perspective on the Foundations of Western Democracy and a Rule of Law

Democracy: Greek city states had tried democracy five centuries before Christ - and some have seen this as the source of Greek strength. But "Greek democracies never worked for more than a few decades. They always degenerated into mob rule. Plato experienced Greek democracy as the social chaos that murdered his mentor Socrates. Therefore he condemned pure democracy as the the worst of all political systems. He advocates a rule by a 'Philosopher King' as the best form of government. His protégé Aristotle trained Alexander the Great to become Plato's Philosopher King. Alexander became one of history's most ambitious and ruthless conquerors. Alexander's tyranny is the true legacy of Greek political thought. ..... Alexander's conquests of the known world spread the Greek language, literature, art and culture.   Yet nowhere did Hellenisation inspire democratic freedom. The Greeks knew their democracies had failed.  Europe's Reformation and democratisation began with the sixteenth century rediscovery of the Bible and a biblical understanding of governance. It led to America's founders explicitly rejecting Greek democracy for a constitutional republic. The constitutional republic required the people's as well as rulers' power to be constrained by the rule of law". 

Rule of Law: In elections the law (eg about the electoral process) determines the results even where this means that candidates who get a majority don't win. The 'rule of law' has been seen as the most significant political development of the second millennium. The idea of a rule of law had been present in the pre-Christian world (eg in Persia and Rome). But this did not involve immutable transcendent law on which to base national laws. In practice the 'rule of law' had meant the rule of the ruler. The modern principle of law that is above human rulers, above the majority came from the Bible - not from pre-Christian precedents. A former US President candidate (Al Gore) argued that: "the modern Western notion of a rule of law flowed from the idea that God is our ultimate ruler". The development of a real 'rule of law' has been suggested to be a direct consequence of the Christian view that there is a divine law against which human actions need to be judged.

A similar point was made in relation to oaths for public office - ie that these had relevance only because it was accepted that there was a a higher-than-human source of authority (see Aroney N. 'Faith in Public Office: The Meaning, Persistence and Importance of Oaths, ' Social Science Research Network, 23/11/15)

A British Prime Minister (David Cameron) and many others suggested that there was a close relationship between Christianity and democratic values.

David Cameron stated that Britain was a Christian country and that the church was a living, active force in that country. He also argued that schools must teach what it means to be British - hardly surprisingly in view of the 'Trojan Horse' affair where some Muslim schools were seen the be advocating extremist Islamic values. British values were seen to include freedom, tolerance, respect for the rule of law, personal and social responsibility and respect for British institutions. Christian leaders had produced a document on 'Values: The Characteristics of Our British National Identity' which drew similar conclusions. Angela Merkel has warned that multiculturalism has failed, and suggested that 'muscular liberalism' was the necessary alternative. Augusto Zimmerman (Murdock University) argues that Christianity has a major role in the history of common law. Legal concepts such as innocent until proven guilty, the right to a free and timely trial, habeas corpus and the right to be judged by one’s peers are also distinctive. Such rights are denied in totalitarian regimes, leading to a situation, as noted by English judge Lord Denning, where “the rulers are not under God and the law. They are a law unto themselves. All law, all courts are simply part of the state machine. The freedom of the individual, as we know it, no longer exists.” In many countries people are denied such rights. Many argued in the context of recent reviews of education curricula in Australia that Christianity is central to Australia's way of life.  [1]

An Australian journalist (Ross Gittins) noted that Christianity was foundational to many economic practices.

 The latest census shows that only 61% identify as even nominal Christians. 22% claim no religion and another 9% didn't answer the question. Only 8% regularly attend church. Many thus imagine that Christianity has little bearing on modern world or economy. Roy Williams (author of Post-God Nation?) argues that Australia would not exist in present form without Christianity. Former British PM (Margaret Thatcher) expressed similar view. Historian Geoffrey Blainey said that churches have done most to civilize Australians. Market economies depend on law (related to property rights / contracts etc). Western legal systems are founded on two core assumptions based on the Biblical - humans have free will and morality is God-given. English legal system also features other religiously-based features (separation of church and state, jury system, Magna Carta, Bill of Rights (asserting Parliaments supremacy over king - as both are bound by laws of God and nature). Canon Law started with judges who were clerics and thus knew canon law. The scientific method is a product of Christianity. Many of those who shaped current social / economic systems had religious backgrounds / beliefs (eg unions, media, generally accepted ethics) - and ethical behaviour by businesses is critical to functioning of economy.   [1]

The notion of an individual, which is foundational to western liberalism, was seen to have been invented by St Paul.

Inventing the Individual: The Origins of Western Liberalism (Larry Siededtop) deals with the transformation of the self from preclassical western traditions through ancient Greece and Rome and the 16th century rise of church in Europe. Inequality was natural in pre-Christian Europe, but achieved through Christianity. Before that the heads of families / tribes were the one ones attributed with self-government. Others were subordinates who did not have minds of their own. In classical Greece the only fully humans were males who could use the facility of reason. Action was seen to come directly from reason - with no allowance for the will. Intention was not recognised as separate from reason. People were permanently bound by their position in the hierarchy for life. With the rise of the polis, this hierarchy was maintained with status given to elites trained in reason and oratory. Present understanding of persons traces back not to Renaissance or Enlightenment - but to St Paul. He saw persons not being determined by birth / education / position but that all stood before God as independent souls. Paul's writings demolished the hierarchy based on reason. The religion that overtook the ancient world destroyed it forever - and laid the foundations for modern understandings of individual / equality / society consisting of souls standing before God.  This transformed society. Ancients lauded the man of oratory and action - whereas the early monastics modeled a life of self-reflection. Later institutions relied on Christian egalitarianism - which in turn build on Jesus as God coming as an individual amongst others. The modern world (eg in terms of the self and secular liberalism) emerged from the church in almost every detail. The roots of liberalism were established in 14-15th centuries (eg equality within legislative system; viewing enforcement of moral behaviour as a contradiction in terms; defense of individual liberty in terms of natural rights; and representative government). There is a problem now because secular liberalism has been divorced from its origin in Christianity. The popular view of the church's role in history is wrong. It is believed that the brightness of ancient Greece and Rome was lost with rise of church - which was seen to suffocate reason in new 'dark ages' until the Renaissance retrieved the humanism of Greece and the Enlightenment rediscovered reason which in turn led to flowing of natural science and the modern world. The reality was that the church built a workable legal system on Roman foundations with the added insight of Christian egalitarianism. The Church was the prime enemy of the Greek / Roman superstition. It is wrong to accuse it of superstition - and acclaim the rationality of the Greeks [1]

 

And constitutional arrangements based on individual freedom from claims of moral authority by social / political elites then allowed effective methods of economic problem solving to be used, while a secular state (ie one concerned with everything but religion) was more able to deal with the complexity of social and economic systems when it was not enmeshed in concerns about what constitutes (and then having to enforce) right / moral individual behaviour.

Freedom for individuals was promoted because (apart from the freedom from the pursuit of frivolous goals and from fear of the future that Christian believers gain)
  • law created scope for individuals to make decisions with much less need to try to second-guess the reactions of the powerful;
  • the Mosaic Law started a process of separating judgments about individual behaviour from the role of the state or other individuals by created a core moral law which was completely free from manipulation by human authorities - which is a major point of difference from (for example) tribal societies (who rely on elders), and 'Eastern' societies with a Chinese cultural heritage (who rely on elite bureaucracies who have studied history);
  • the ethical ideal of 'loving God and valuing other's as oneself' (the so-called Great Commandments) both consolidated the Old Testament law and raised the goalposts. The test of fulfillment of moral requirements was changed from compliance with 'n' simple fixed rules, down to two simple principles that could be applied by individual consciences in ways appropriate to a person's circumstances. And, in the examples of desired behaviour that he spoke of, Jesus implied that the moral standards to be sought were infinitely high (and thus humanly impossible). This consolidation, simplification and unattainable standards are major points of difference from Islamic Law;
  • the coming of the Holy Spirit provided accepting Christian believers with a situational guide to interpreting the 'spirit' of the divine law, without the need for endless elaboration by religious authorities;
  • the search for public 'truth' blocked the arbitrary exercise of authority. Political authority could shift from raw power or social status to having to be be justified in terms of widely acknowledged values and facts. A search for truth also promoted peace by suppressing the superstitions and conspiracy theories that can emerge from human imaginings;
  • the expectation that individuals would give ethical attention to others' interests and help the less fortunate: (a) reduced the perceived need for social hierarchy or strict religious rules to ensure 'right' behaviour; and (b) strengthened those otherwise much less capable of contributing to society;
  • an emphasis on forgiveness promoted an innate relative peacefulness / stability in society at grass roots level. This can be contrasted with traditions which perpetuate conflict by encouraging families to seek revenge for harm a member suffers [1].
  • the expectation of 'moral sentiments' by economic actors provided the foundation for a liberal market economy (as argued by Adam Smith in Wealth of Nations).

Individual liberty could eventually become the core of a legal and governance system (initially in Britain) because it was taken as given that interpersonal relations would be guided by a 'value-others-as-yourself' ethical ideal that was embedded in individual consciences.  In societies without an 'embedded' ethical ideal, legal and governance systems seem invariably to be deeply involved in determining the nature of, and enforcing,  moral interpersonal relationships (see below).

An emphasis on individual liberty (and thus its economic advantages) emerged sooner and more strongly in Britain than elsewhere in Europe as indicated by:
  • the signing of the Magna Carta (a charter of English liberties) in 1215;
  • the relatively early demise of the feudal system;
  • the more-complete embrace of the reformation insistence that individuals could interpret the Bible without reliance on religious authorities; and
  • the British legal system under which individuals are given legal precedence over the state (assumed to be the creation of the free association of individuals), as compared with Roman (European) law under which the state (representing the culture of a society as a whole) is taken to have legal precedence over individuals. [Others have suggested that the core difference between British and Napoleonic law is that the latter forbids unless specifically allowed, while Common law allows unless specifically forbidden - a tradition which is seen as the foundation of Anglo-Saxon creativity [1] ]

It has been suggested (by Daniel Hannan) that liberty might have emerged earliest in Britain because it was an island. There was thus less need for a standing army to provide defence against other kingdoms. And without a standing army, kings were less able to engage in authoritarian repression. Thus it was suggested that from the Middle ages  Anglo-Saxons were able to elect and dispose of rulers through representative councils [1] [CPDS Comment: This can only be part of the story because: (a) other island nations with radically different cultures (eg Japan) did not develop liberal institutions; (b) the 'representative' councils in the Middle Ages consisted of the nobility (eg the barons who were the top of local feudal orders); and (c) liberty for responsible individuals across society as a whole was needed to generate the really major benefits - and something more than a contest for power between kings and barons was needed for this]

Another observer has suggested that preconditions for the emergence of freedom in Western societies included: a rule of law, rather than a rule of man; and self-restraint - though the origin of these arrangements and values in Christianity was not mentioned.

Those in the developing world sometimes believe that the West has been blessed by a deity - given our inability to understand the foundation of our peace, stability and freedom - and why others lack these. How could free institutions have been created by those who don't know what un-freedom really is. Media discussion of Egypt's turmoil has avoided all the important issues.  Simple-mindedness leads to there being only two approaches to Egypt's situation (ie view rebellion as a form of self-expressions that will produce beneficial outcomes, or deride notions of others' freedom and simply care whether others' leaders are on our side). The free are seen to be saved, while the unfree are damned. But there could be a transition to freedom. The West's ancestors enjoyed rule of law rather than men; legal equality of citizens and peaceful relations between states, long before they perceived themselves free or the masses had a direct political voice. Freedom relies on these elemental / pre-democratic facts if it is to flourish. Moreover freedom mainly requires self-restraint, rather than self-expression. The measuring rule for freedom / un-freedom involves: subjecting all to rule of law; freedom of religious conscience; respect from private persons and property; respect for national borders and international peace. While obvious in the West, no political group in Egypt seems to accept this.  US has been seeking to promote a transition to freer electoral process. This won't please anyone, but it could be a useful small step forward. [1]

Responsible individual liberty created significant advantages.

In the first place it enabled rationality and analysis to be useful as a very efficient means for technological, economic and political problem solving.

The Advantages and Limitations of Rationality: Rationality (and analysis) involve a style of thinking derived from classical Greece - and involves manipulating abstract ideas that are seen to model various aspects of reality.

Like science, rationality promotes efficiency because, through reliable abstract analysis of problems, it saves a lot of trial-and-error effort (eg see Mendelssohn K. Science and Western Domination, 1976).

However rationality and analysis involve highly simplistic modeling of reality, and are only effective where problems are actually fairly simple. At the level of the social and economic systems that affect whole communities, rationality and analysis tend to fail - as illustrated by:

  • public administration literature on the counter-intuitive and unwanted effects that can plague public policies. Such effects arise because complex relationships in social, economic and environmental systems will often be unknown or ignored. For example the phenomenon of welfare dependence arises because government in providing welfare support ignores the effect that this can have on weakening other forms of support that individuals had had available;
  • management theories about the limits to rationality. The discrediting of centralised corporate 'strategic planning' since the 1980s can be noted in this respect (see Strategy Development in Business and Government, 1997);
  • economists' (Hayekian) arguments for a market economy (based on the impossibility of assembling the information required for centralized decision making).

Rationality and analysis also fail for individuals subjected to complex environments in which they have no way to understand simply the consequences of their actions (eg where they are subject to unpredictable actions by social elites).  However where there is intellectual, economic and political competition and collaboration the reliability of individual, collective or group rationality in producing appropriate outcomes can be significantly enhanced.

It can be noted that the foundational precept of China's traditional religion (Daoism) is that 'The Dao (truth / way) that can be known is not the true Dao'. This is a statement of the limits to rationality that allows much that is different about East Asia to be understood (see Asia Literacy). Likewise a core element of Buddhist 'enlightenment' involves recognition that natural / social interconnection (ie complexity) places limits on human understanding. However, though Buddhism recognised the constraints on human understanding, it did not lead to a way to overcome them.

'Asian' societies' recognition of the limitations of abstract concepts led them to create social, economic and political institutions which did not rely on rational understanding (see below). And this proved self-fulfilling because in the absence of 'liberal' institutions individuals usually faced situations which were too complex for rational / analytical problem solving (eg because it was always necessary to second-guess the reactions of the powerful). 

Christian societies by contrast recognised the existence of a source of law-like order in the universe and created social, economic and political institution in which rationality / analysis could be more-or-less effective.

Though truths and universal laws involve over-simplifications – they are none-the-less extremely useful for most practical purposes (ie in making decentralized ‘rational’ decisions). This is a little like Newton’s law of gravitation. Einstein’s special relativity showed that it was slightly inaccurate – yet even in undertaking interplanetary space travel Newton’s version is good enough. It is also a little like the use of ‘fuzzy logic’ (ie the deliberate reliance on oversimplified variables in control systems). A temperature might be classified as ‘hot’, ‘warm’ or ‘cold’ in a control system – rather than using the exact temperature to several decimal points. More exact calculations are possible using the exact temperature but this takes so long that a much ‘rougher’ process of control results.

The practical implications of this in the human world can be demonstrated by Sir William Slim’s report of the reasons that his forces out-maneuvered Japanese forces in SE Asia in WWII. The former relied on localized ‘rational’ decisions by field commanders (based on their abstract 'understanding' of the situation), while the latter had to repeatedly hold consultations to reach a consensus. The latter reached a more comprehensive understanding of the situation – but were usually much too late to take advantage of that understanding.. Admiral Yamamoto (the commander of those Japanese forces) thus apparently concluded that Japan could never win a ‘war’ against the West.

Also, as highlighted by Adam Smith the founder of economics who advocated of a competitive market economy (in The Wealth of Nations 1776), 'moral sentiments' are critical to any system of free trade to contain the injustices that market institutions potentially create.

Adam Smith founded economics as a field of study. But he was also a significant moral philosopher. His Theory of Moral Sentiments was respected by his contemporaries. He saw economics as a branch of moral philosophy and saw capitalism as an ethical project whose success required political commitment to justice and freedom. Now he is best known as an advocate of the ‘invisible hand’ of free market economics. Much contemporary neo-classical economics is an extension of that idea. However he only ever mentioned this one, and interpreting his thinking narrowly in those terms is misleading. Reading the Wealth of Nations reveals economics discussed in explicit moral terms – where there is a need for emphasis not also on prosperity but on justice and freedom (especially for the poor). Smith advocated commercial society over any previous socio-economic system – but recognised its possible ethical shortcomings and emphasised the need to deal with its potential materialism, inequality and inauthenticity. The Enlightenment concern for perfecting social order was both a background to, and goal of, Smith’s work. Rousseau sought perfection through a social contract, whereas Smith sought it through freedom and justice – and suggested that his proposals were a means for coordination both moral and economic conduct. Smith saw prosperity not only in terms of total wealth but its distribution. The wealth of nations consisted in the ability of ordinary citizens to satisfy their wants. European peasants were then often better off that African kings – and Smith saw this as a product of changes to systems of political economy – rather than to innate superiority. Smith’s commitment to justice for the working poor was behind his strong opposition to mercantilism (which promoted and protected the profits of producers and intermediaries). Justice was central to his criticism of the crony capitalism of his time.  (Wells R. Recovering Adam Smith's ethical economics, 2014)

And 'moral sentiment' in individuals without state / community moral supervision depends critically on widespread Christian adherence in a community (for reasons suggested in Where Did religious Freedom Come From?).

Given a number of other factors (such as a system of law, a secular state, decentralized governance; money as a measure of value and means of exchange; and market institutions which direct savings towards profitable uses), artificially simplified 'political' and 'economic' spaces were able to be created in which individual rationality and analysis could reliably be used to predict the results of incremental decisions, thus enabling a large mass of specialists to work together with great efficiency in a coherent way.

When rationality / analysis became economically value then so did Western style education, because that style of education provides access to, and the skills to manipulate, abstract knowledge - and this is only of value in a social / economic / political environment in which rationality / analysis can be reasonable effective in problem solving (see also Australia's National History Curriculum: Making Education Futile and Highlighting the Importance of Christianity? and Religious Education: Considering the Bigger Picture)

An emphasis on incremental initiative by rational responsible individuals also made the quite rapid and radical re-formation of social and economic systems simpler than when a community's structure was relatively immutable. This flexibility, though stressful, can be an adaptive advantage - and is critical to economic productivity because it provides a means (by responding to new market and technological opportunities) to escape from the squeezed profit margins that accompany the emergence of heavy competition in any mature economic function.

At the same time political and economic affairs were able to be more effectively governed, because it was not expected that these should have to conform solely to religious principles.

The latter is very significant because, while a religion may define fundamental guidelines for human behaviour, it can never allow the complexity of human affairs to be effectively analysed or understood (or change fast enough to match (say) economic conditions). That this must be so can be seen by analogy with the fact that the behaviour of complex biological systems can not be deduced solely from the (fundamental) laws of physics. The latter laws are supposed to allow the behaviour of the micro-elements of such systems to be determined, but the environment constantly stimulates the creation of sub-systems of relationships amongst such elements and those relationships (as well as the fundamental laws which are analogous to religious principles) have to be taken into account in analysing / understanding the system as a whole. The result is that where fundamental religious principles are seen to apply to governance or to fully prescribe daily life, societies and individuals can never have the flexibility to cope with more complex and rapidly changing circumstances. Also in trying to force 'square pegs into round holes' religious principles themselves must be distorted / corrupted.

These factors allowed various cultural revolutions over the past 500 years - which have translated into: 

  • the search for an empirical understanding of nature (which was expected to be lawful because of creation by an orderly God) following the Renaissance rediscovery of classical Greek ideas about science about 500 years ago. This search paid off handsomely in providing a foundation for industrial technology;
  • social innovations (eg in financial, organizational, legal and welfare / equity institutions) that have further increased the scope for coordinated 'locally-rational' initiative by many members of society; and
  • the creation of a series of economic revolutions. 

The Role of the Enlightenment

Some observers perceive the Enlightenment (ie the so-called Age of Reason) to be the primary source of Western progress - eg because it is associated with: an emphasis on rationality rather than reliance on tradition; a willingness to question authority; the displacement of the aristocracy; an emphasis on political rights and freedoms; the rise of democracy; allowing the principles and methods of science to emerge; and laying the foundations of the industrial revolution and free market economics [1].

However, while the Enlightenment was a significant stage in Western / human development this was only possible within a Christian environment. Moreover it can now be recognized that the Enlightenment reflected overly-simplistic assumptions about the power of reason and science.

It was only the West's Christian understanding that there is a source of order beyond nature which enabled 'rationality' and 'science' (ie the use of abstract concepts to model reality) to be seen to be likely to work. For example, as noted above a major feature of the Buddha's 'enlightenment' was the perception that reality was too complex to be understood. And East Asian epistemologies generally have disregarded the relevance of abstract knowledge (see below).

And, as noted above, the artificially simplified social environments in which rationality (which fails in dealing with complex situations) could actually work for practical problem solving could only be created because of Christianity's emphasis on individuals. Where there is no emphasis on the welfare and capabilities of individuals, such simplified social environments won't be created - and the presumption that rationality can't work will thus be self-fulfilling.

Moreover while the Enlightenment's rediscovery of classical Greek ideas about reason was beneficial, those ideas  were overly-simplistic - for reasons suggested in How solid are 'science, reason and critical thinking'?. The latter draws attention to the widely recognized failure of rationality in dealing with complex systems and to the fact that the conservation of information implicit in the internally-deterministic scientific laws of nature can't (in themselves) account for the gain or loss of information that the emergence or disappearance of order in nature and human society involve. That conservation of information is the reason that there is often seen to be room only for a 'God of the Gaps' - but is actually the source of a truly massive 'gap' in science's ability to understand how things change.

Other Views: Another explanation [1] of the dominance of Western societies focused on:

  • the turning inward of previously successful Chinese and Islamic civilizations;
  • the invention of commercial techniques (eg property rights);
  • the separation of church and state;
  • factors which permitted the spread of knowledge eg the valuing of individuals as children of God, the invention of the printing press

Another suggested that the key 'aps' that had made the difference for Western societies were: competition; the scientific revolution; a rule of law / representative government; modern medicine; a consumer society; and the work ethic [1]

Though it would be drawing a very long bow to claim that this was predicted by Matthew 6: 31-33, the reality is that the primary focus of Christianity on individuals’ relationship with God and on eternal / spiritual benefits (rather than on the way society works), allowed the emergence of liberal institutions (eg individualism, a rule of law, etc) and the latter in turn enabled very considerable material benefits to be created.

Another View: Larry Siedentop (in Inventing the Individual: The Origins of Western Liberalism) suggested that liberalism can be seen as a child of Christianity. Since the mid 19th century Western scholars (included by Jacob Burckhardt) have held that liberalism originated in the discovery / rediscovery of the individual at the time of the Renaissance- and have drawn a line from there through reformation and Enlightenment to the emergence of modern notions of freedom. Preceding ages were seen to be times of darkness / intellectual aridity. Siedentop suggests that it is wrong to see the Renaissance as making a decisive break with what went before. By the 15th century. canon lawyers had asserted that: 'experience' is the experience of individuals; fundamental rights should protect individuals; and the final authority of any association resides in its members. This eventually spread into universities and society. Belief in the equality of souls made equality in society possible. St Paul had made reference to freedom - and it purposes. Siedentop regards St Augustine as critical in the development of moral notions that would eventually be recognized as liberalism. Some see him as having developed the notion of the 'individual'.  Embracing the notion of the individual removes social class / status and thus makes true freedom possible. Reason alone can't motivate ethical behaviour - it must be invested with the grace of God. Now however human rights are often viewed as mainly due to the United Nations - and some even attack Christianity on the grounds of 'human rights' [1]

Consequences

Western societies' culturally-derived strength did not in itself oblige them to pursue any particular goals - and it did increase the potential for individuals to abuse their freedom or to lose sight of the fact that the  simplified 'economic space' created by a rule of law, money and market institutions was not the totality of reality but a convenient abstraction from it. Jesus of Nazareth had spoken of the Holy Spirit providing guidance and support to his followers (eg see John 14:26), but few seemed to rely on this in day-to-day decision making.

In history one result of the strengths Western societies gained was their expansion throughout the world over several centuries - involving trade, colonization, political and military influence and sharing of the cultural traits which provided that strength. However by the start of the 20th century the overwhelming advantages that Western societies had enjoyed, were being reduced as some others absorbed Western ideas (or developed alternatives), and as European societies squandered their energies in World War I. Overt political and military dominance through world-wide colonies faded in the first half of the 20th century though the United States attained a significant (and ultimately dominant) economic, military and political status in world affairs. 

None-the-less Western societies appear to have been the only source of significant new ideas in the 20th century (see Islam and the West). This presumably is a result of the traditional negative attitude to abstract ideas in East Asia and to modernity in much of Islam. Others have argued in a similar vein that since 800BC Western European males have been responsible for most of the accomplishments that required mastery of rigorous constraints [1].

However in the early 21 century there were increasing signs that the presumption about responsible individual liberty that was the foundation of Western institutions was becoming more tenuous (eg see Moral Foundations of Individual Liberty).

Non-Western Difficulties Non-Western Societies - and the Difficulties They Face

Many regions of the world (eg in Africa, South Asia, Latin America) have had difficulties in competing successfully in the Western-style economic system which dominates the global economy.

The difficulties facing non-Western societies have deep historical and cultural roots. However defects in prevailing trade and business practices and in economic wisdom and institutions (combined with a universal failure to consider how these interact with different cultural assumptions) also seem to be significant issues.

 These constraints are further compounded by:
  • internal weaknesses of human / knowledge resources, government / economic institutions, industrial capital, and infrastructure;
  • the arrangements which the strongest societies sometimes set up which benefit those who are best equipped to compete; 
  • the potentially disabling effect of reliance on foreign aid [1]; and
  • others' prejudices based on the real or imagined character of particular ethnic groups.

One result is that a substantial fraction of the human population lives in relative or extreme poverty. 

History

The legacy of history includes:

  • European expansion from 16th to 19th centuries both imposed pressure on other societies and created an environment in which they were initially ill-equipped to prosper. This can be likened to way that the expansion of any successful species (including the worldwide spread of the earliest human beings out of Africa) disturbs the environment and forces others to adapt;
  • European colonization (that was widespread in the 19th century and largely ended by the mid-20th century) left an unsound basis for future progress in some states [Comment: one cynical observer suggested that a major obstacle lay in the transmission of the 'statist' (ie anti-market) policies that were popular in Western countries in the mid 20th century [1]. However the issue is more complex than this, because market mechanisms can only be effective where large numbers of cultural and institutional preconditions are in place, and they may not be - see also Fatal Flaws in relation to US expectations about creating an effective system of democratic capitalism in Iraq]
  • the Cold War between communism and democratic capitalism was fought globally for most of the 20th century. In some states (especially in East Asia) the advocates of democratic capitalism aided nation building. But in others states (where there were very rich natural resources or cultural obstacles impeded effective nation building) the effect was often to reinforce despotic regimes.

In 2016 one observer noted that questions are being raised about whether the West became rich because it stole wealth from countries it colonised - and suggested that such claims were simplistic.

Online debates about economic history include claims that the West became rich because it stole resources from the regions it colonized. Also global capitalism is said to be inherently unjust - so that wealth should be radically redistributed in compensation. However, even though colonial powers stole resources, this theory is wrong. Wealth is not just something that exists to be divided up. It depends on productive efforts by individuals, companies and governments. The UK industrialized not by consuming spices confiscated from India but because its people invented technologies and worked hard. When resources were cheaper (eg if stolen) it became profitable to substitute machines for labour [Really??]. The distribution of income can't now be explained by a stolen wealth theory. Many rich countries never had colonies - or only had them briefly. And some rich countries now were previously colonies. Wealth came from working hard, being creative and having good institutions. Poor countries have long since taken control of their natural resources - yet they are not rich. This is known as resource curse. Resource-rich countries would not have become rich if there had been no colonization. Colonization had significant adverse effects - but did not significantly advantage the colonising powers. [1]

 

Moreover the global trading environment continues to contain serious distortions (such as the subsidization of agricultural production by most developed national economies [1] ).

Problems with Conventional Wisdom

Furthermore conventional contemporary business practices and also the economic theories promoted in good faith by global economic institutions seem to contain overlooked defects (eg adverse effects on local economic leadership in resource rich regions, and failure to deal with systemic requirements for a developed economy).

Firstly, there is the (so called) 'curse of natural resources'.

For example, it is a truism in the developing world that petroleum wealth can also be a curse [1]. In particular in Iraq, oil resources are seen as a major impediment to economic growth and democracy - because they impede the development of necessary institutions and values [1]

Even quite legal and ethical foreign investment can have unintended and un-recognized adverse effects on the political economy of less developed regions (eg by encouraging repressive regimes), especially where valuable natural resources are involved. The process can involve:

  • political and business elites (either those with traditional authority or popular support) may believe they can help their people progress by securing investment in resource-extraction projects. However all they may be doing is providing poor economic leadership because of the limited market power of this involved in the sale of un-differentiated commodities. The challenge under-developed economies face is not just to 'produce' goods and services but to 'earn' enough to buy them. To achieve the latter, learning (so as to gain competitive advantages) is essential and this may well be very limited through merely securing resource investment;.
  • consequence of this version of 'progress' can be that:
    • civil institutions able to provide a sophisticated level of public and economic policy leadership are not established (eg see Queensland's Weak Parliament) - and this makes it essentially impossible for a 'vision' to emerge of economic advancement independent of foreign investors. The absence of local sources which have a realistic understanding of workable economic policy options was described at one stage as the defining characteristic of a 'banana republic';
    • international engagement separates communities from the traditional environment they could make sense of; subjects them to various social dysfunctions; and then leaves them alienated in a 'global' environment they can not cope with;
    • large segments of the population may suffer very low incomes because of a lack of leadership in development of a productive economy - and the resulting social stresses (and inequalities) can give rise to political instability;
  • other populist political leaders can then arise with the simplistic view that sharing wealth through revolution would solve their people's problems (but with no insight into how a developed economy really works). As they create financial and economic chaos, local authoritarians may seize power and re-establish a 'client' status with the international investors;
  • a 'brain drain' of those most able to develop a modern economy then follows because they are alienated or ostracized (or worse) by the authoritarians

This cycle of (a) political 'client-ism' / poor quality economic growth and (b) political nationalism / economic ignorance seem to have been a feature of the Middle East - and contributed to a negative view in the region of Western societies (on which local elites have been dependent) and also of Western-style democratic governance [1].

Suggestions about the presence in all societies which lack Western traditions and institutions of an economically dominant ethnic minority and an impoverished ethnic majority can be noted in relation to this notion of 'progress' [1];

It was suggested in 2006 that whether or not resources proved to be a 'curse' depended on the effectiveness of political institutions (eg in ensuring that decision makers were accountable) [1]

Secondly, economic advice favouring liberal market policies may require individuals and firms to compete, without ensuring that they gain the capabilities to be competitive. The problem is that some of the capabilities needed for successful competition have a systemic character (eg require complementary elements in different types of firms, in government regulations, in people's attitudes and the way things are done).

Example: In the CIS, for example, markets were liberalized after the end of the Cold War without creating key institutional capabilities (eg effective accounting competencies), and the economy contracted for several years.

In the absence of leadership in the development of economic systems as a whole it may be beyond the power of individual enterprises or democratic institutions to create these systems (see comments in The Second Failure of Globalization?). Ways to overcome this constraint have emerged in East Asia (initially in Japan - see below), and this has substantially affected that region's economic development both positively and negatively.

Thirdly the operation of financial markets may contain an inbuilt but unrecognized tendency towards instability (rather than equilibrium) because, as Soros suggested, there can be a positive feedback between such markets' biases and real economic outcomes [1]. Those instabilities can have very damaging impacts - especially in immature economies;

Somewhat similar adverse effects are increasingly seen to have resulted from traditional approaches to foreign aid:

  • aid damages growth prospects by making corruption into the main path to wealth [1];
  • aid has damaged the Pacific region [1, 2]
  • the interaction between foreign aid and corrupt governments has led to loss of hope in the Pacific and Africa [1]
  • aid has been seen to be counter-productive (eg by keeping harsh elites in power, allowing domestic resources to be used for warfare) [1] - though efforts are being made to develop better practices [1];
  • numerous adverse unintended consequences have been identified in foreign aid [1] - similar in many ways to those seen to affect public policy generally;

Constraints Due to Cultural Traditions

However, both historically and currently cultural assumptions seem to be the most critical cause or limitation of a people's ability to be materially successful.

For example cultures (in terms of social structures, leadership and rules dictating expected behaviour) may not traditionally allow efficiency in economic transactions or the rapid economic change required for economic prosperity (see Towards a Comparative Study on Development Policies: Indonesia and Australia).

Unfortunately the practical implications of such constraints appear to receive no systematic attention.

The absence of progress in Africa led one scholar to conclude that the destructive behaviour of elites was the principal cause of the problem - though he could not explain why this occurred [1]

The most significant cultural constraint on non-Western societies may be that community pressure and authorities seem to have had to have a much greater role in enforcing interpersonal morality in societies that lacked the sort of 'embedded' ethical ideal derived from Christianity which enabled Western societies to construct legal and governance systems based on individual liberty.

This could be significant because, as noted above, individual liberty was critical to Western economic advancement because it enabled more effective problem solving.

In other major societies legal and governance systems traditionally tend to be deeply involved in determining the nature of, and enforcing, moral interpersonal relationships - and individual liberty is a foreign concept. For example:

  • defining the nature of interpersonal relationships is the starting point of Confucian systems of governance. This in turn is a factor in the advantages and disadvantages of East Asia's 'communitarian' economic models (see below). The 'virtuous' notion that an ideal ruler should mainly promote virtue may have impeded effective economic leadership in China for two centuries, and now that economic leadership has been emphasized a breakdown in morality could perhaps bring economic leadership into disrepute (see China's Development: Assessing the Implications).
  • the 'ideal' Islamic ruler is one who enforces detailed moral laws - and this seems to be a factor in the economic and political rigidities which affected societies suffer (see below).

The case of East Asian and Islamic Societies may be further considered.

East Asia: The Realm of the Autocratic and Intuitive Ethnic Hierarchy?

Japan was the first  to demonstrate that economic strength could be developed through cultural traditions that were derived from those of ancient China and are profoundly different to those of Western societies (eg in terms of the nature of: knowledge; power; governance; strategy; and economic methods / goals). For example, rather than using information as a basis for understanding and rational decisions (as Western societies do on the basis of their classical Greek heritage) information is traditionally used primarily as something like propaganda to influence the behaviour of associates, subordinates and enemies. And members of such societies are subjected to pressure to comply with whatever consensus bureaucratically-coordinated social elites reach about what would be good for the ethnic community as a whole without expecting them to 'understand' this or pay much attention to their individual interests.

Because of this societies whose cultural traditions have historically been heavily influenced by China (and have adopted various forms of the 'Asian' economic model that Japan pioneered) tend to have economic goals and systems of socio-political-economy that are quite different to Western societies even where Western-style institutional forms seem to be in place. 

An experienced Japan-watcher argued in 2008 that those methods were developed by Japan's military in Manchuria in the 1930s - a possibility that is perhaps supported by a note reportedly sent in 2014 by Japan's prime minister to a temple ceremony honouring hundreds of WWII-era war criminals - in which he suggested that they had they had "sacrificed their souls to become the foundation of their country"

Epistemology: The Core Issue

Background note: the following observations were not derived from formal 'Asian studies' but rather from the present writer's:

  • engineering background, and consequent interest in science and the philosophy of science (which reaches back to the origins of Western civilization);
  • study of and involvement in systemic and strategic management approaches to coordination and change in government and economic contexts - (see also CV).

In particular the latter involved:

  • many years experience in the 1970s of coordination (and in the use of strategic management methods of system-wide change) in a high-status central government agency (ie Queensland's Coordinator General's Department / Office). This required promoting collegiality (ie willing communication amongst different functions) and forming a consensus of the views of diverse agencies who were acknowledged as 'experts' in their own areas. The latter showed the effectiveness of consensual methods of decision making in (hierarchical) bureaucracies in dealing with complexity. The approach the Coordinator General adopted in the 1970s transformed a low-grade 'clerical' public service into an at-that-time cohesive and purposeful body;
  • the production of a masters' thesis on, a systems approach to coordination in government in the late 1970s;
  • the above made it relatively easy in the 1980s to recognise: (a) how Japan's Ministry of International Trade and Industry  had achieved post-WWII economic 'miracles' through 'vision development and administrative guidance' led by bureaucratic elites; (b) how similar methods within enterprises could be the basis of total quality management methods for enhancing production - based on 'quality circles'; and (c) what was different about East Asian intellectual traditions. To over-simplify, East Asian thought lacks belief in the value of abstract concepts, truth, law, rationality and analysis that are the basis of problem solving by rational individuals in liberal Western-style economic and political systems. Moreover such societies have operated as virtual whole-of-society 'bureaucracies' because they have been organised socially as state-centered hierarchies (see below);
  • application of similar systems approach to the development of market-led economic opportunities in the 1980s (using using apolitical methods such as those outlined in A Case for Innovative Economic Leadership, 2009+ and Developing a Regional Industry Cluster: A Possible Generic Process, 2000) which suggested the feasibility of orchestrating economic 'miracles' even in a democratic political context.

Years of involvement in the 1980s in study of economic strategy (with particular reference what was being said about Japan) led to a lead role  in concept development on behalf of the Queensland Government for a centre in Australia for international technological and cultural interchange (the so-called Multi-Function Polis - MFP) that was first suggested by Japan's Ministry for International Trade and Industry (MITI). This work was not without its complications because it exposed the huge behind-the-scenes economic and political influence in Queensland and of the MFP of a notorious Japanese ultranationalist Yakuza boss (Ryochi Sasakawa) who also seemed to have very powerful behind the scenes economic and political influence  in Japan. A filing cabinet full of books and papers that had been assembled with the help of some fabulous librarians was studied. Briefings were obtained about Japan's political system from the Australian who arranged Sasakawa's connections in Australia. A document was produced (Towards an Understanding with Japan) which among other things addressed the intellectual foundations of Japan's rapid economic advancement - which were radically different to those of Western societies. . This was then: (a) taken by contacts with strong Japanese connections and annotated with hundreds of more-or-less supportive notes by a 'philosopher'; and (b) favourably reviewed by various Asia experts (eg Professor Chalmers Johnson, author of MITI and the Japanese Miracle, described it as 'dealing with matters on the leading edge of the social sciences') though it was never published.

Indonesia's Interest in the Difference Between Western and East Asian Paths to Development

This work also led to a 2002 opportunity to present an address in Indonesia which emphasized a systems approach to economic development. The opportunity arose, by a circuitous process, which started with the QUT's linkage to a group in Indonesia (the world's largest Muslim-majority nation) who had been asked by the Sultan of Jogjakarta (Indonesia's cultural leader) to propose a path for Indonesia's economic future. The address was well received (as it was translated and published in a newspaper in Jogjakarta - Indonesia's main university city).

Experience in a high-status central coordinating role within Queensland's bureaucracy also makes it easy to see how China: (a) built its domestic economic strength and administered Asia (as the 'middle / coordinating kingdom') in the centuries prior to Western expansion; and (b) is now using 'soft power' tactics to mobilize international (global?) support for re-establishing itself as a 'middle / coordinating kingdom' as an alternative to the liberal (ie democratic / free market) post-WWII international order (Creating a New International 'Confucian' Financial and Political Order ).

If the core ideas explored here are valid, there is a need to develop them more fully in relation to the issues normally addressed in 'Asian studies' and in other fields.

Early attempts by the present author to develop and explore the economic implications of East Asian traditions were in a book, Transforming the Tortoise: A breakthrough to improve Australia's place in the economic race (1993) as well as in The Cultural Revolution in 'Asia' Needed to Adapt to Western Financial Systems (1998) and Asia Literacy (1998). The book was described in a foreword as 'a major contribution' by Reg Little (a former China specialist with Australia's Department of Foreign Affairs and Trade; perhaps the first Western analyst to anticipate China's rapid economic development (in 1976); author of The Confucian Renaissance; and the source of suggestions in 2012 about the differences between Western and East Asian systems of thought that are mentioned below).

Subsequent attempts have included:

In June 2011 a US observer emailed:

“I would like to thank you for your [CPDS] posts .... Your comprehensive analysis and impeccable attention to detail regarding China and other cultures is most refreshing.  It seems that many cyber-posters and "experts" are content to rehash the same continually misguided perceptions and postulations. I lived in Beijing in 1987, as a student, and then in Taiwan for several years.  I speak Mandarin and graduated from USC in Asian languages and Cultures with a specialization in Mandarin.  Yours should be required reading. “

Similarly supportive comments were offered by a Chinese American in 2012.

Such comments are not an indication of the quality of the present writer's undoubtedly inadequate speculations, so much as a reflection of the near total neglect of the issues by students of the humanities and social sciences (eg see Babes in the Asian Woods).

The core of East Asian cultural traditions seems to be an epistemology (ie a way of thinking about knowledge) based on ancient Chinese traditions that is quite different from the concepts of 'truth' and 'rationality' that Western societies inherited from classical Greece (ie the concept that abstract ideas usefully model reality - which, as noted above, has been critical to effective problem solving in Western societies).

An aside: Interestingly there seems to be a parallel between with 'concrete' thought (as compared with Greek 'abstract' though) that has been seen to have characterised ancient (ie pre 800 BCE) Hebrew society [1] - though an internet search revealed no comments on the relationship between ancient Hebrew and Chinese thought. 

The alternative view may be most simply expressed in terms of the central precept of Daoism (China's traditional religion) which states that 'The Dao (truth / way) that can be named is not the true Dao'. The view that reality is too complex to be understood is also a core ingredient in Buddhism  (a world view that attracts widespread support in both Japan and China). This Daoist / Buddhist view (which is related to Shinto and to Zen) is a statement of the limits to rationality which is equivalent to Hayek's observations about the inability of central authorities to gather the information needed to make reliable economic decisions (see The Use of Knowledge in Society, 1945) that is the basis of mainstream Western economists' rationale for a market economy (a rationale that acknowledged that rationality is limited even though it often works quite well - ie in relatively-uncomplicated environments).

This epistemology / view of knowledge leads to:

  • an intuitive (arational) style of problem solving. One observer realistically described this as an "ancient Chinese philosophical outlook that makes little distinction between theory and practice" [1];
  • traditional perception of education as the absorption / inculcation of desired behaviours rather than as the absorption of ideas as the basis for abstract understanding and independent rational decision making. People would traditionally be expected to lead fairly ritualistic lives in accordance with (say Confucian) customs related to the way people should interact;

The Chinese word of Li has no simple English equivalent, and is usually translated by terms such as 'ritual, rites, ceremonial, etiquette, manners, rules of behaviour, propriety.' (Chard, 2009). Li for many modern people is regarded as prescriptive rules or norms which govern society, and submit people to the order of control. Ritual texts are thus interpreted in some commentaries, to ensure hierarchical power relationship since they usually contain strict description of who should do what in a certain context. In Confucian texts, Li embodies the entire spectrum of cultural phenomena concerning with humans, nature, and material world.   .......... In China, concerns relevant to the western thought of politics, philosophy and ethics would be included in the description of Li. Hall & Ames (1998:269) state, Li is "the determinate fabric of Chinese culture, and further, defines social political order. It is the language through which the culture is expressed." In this paper, we want to explore the epistemological foundation of Li, analogous to the Western notion of reason or rationality, by which the whole fabric of Chinese culture could be made sensible. ..... Education in the Chinese ritual culture means nothing of receiving knowledge and information. The participants do not necessarily have a conscious knowledge of their developing social roles, rather they encounter through ritual practice a deeply personal, experiential and transformative form of hermeneutical experience. As a result, they embodied a situated action-oriented understanding without knowing it consciously. In this sense, the bodily understanding through ritual practice becomes as transformative power rather than propositional indoctrination. (Ritual hermeneutics as the source of meaning: interpreting the fabric of Chinese culture)

  • very considerable communication difficulties between Western and East Asian societies (eg see Why Understanding is Difficult). In East Asia 'information' is traditionally provided to others, not to help them to understand, but rather to encourage them to do things that the person providing the 'information' believes would be advantageous to their ethnic community. The appropriate response to 'information' is not to accept it as 'true' (or even to question whether it is 'false'), but rather to ask: 'Why am I being told this?' 'What does this person want me to do?'  'Information' which it is unwise to rely on as 'truth' includes economic statistics and the financial outcomes of business dealings (see below);
  • a  concept of power as the avoidance of decisions (rather than as being a decision maker) - see Pye J., Asian Power and Politics, 1985.

Extract: "... to illuminate the contention that there are significant differences in concepts of power ... in comparing Asia and the West, and partly to challenge the way in which certain Western and especially American concepts of power have been inappropriately treated as universal scientific concepts, we shall .. spell out some of these differences in understanding of what constitutes power. ... Harold Lasswell's definition of power as "participation in the making of significant decisions" rings true in American culture, as witnessed by the instinctive demands of students in the rebellious sixties to "participate in the decisions that affect out lives". At that time legitimacy seemed to require that power be shared, and thus students were called upon to participate in various forms of decision making. As rational as all this may seem to Americans, in no traditional Asian culture would such a definition of power be acceptable. In most of Asia the concept of power was exactly the opposite: to have power was to be spared the chore of decision making. In such Asian cultures the aspiration that impelled people up the ladder of power was that they might eventually rise above the need to trouble themselves with decisions. Decisions are what vex the mind of the weak and make life troublesome. In Asia achieving power meant becoming free of care and having subordinates who themselves were taxed with the problems of decision-making".(p20-21)

  • the traditional exercise of power by highly educated Confucian bureaucrats (traditionally as the agents of emperors) by accumulating strategic (ie significant) information and using this is a coordinated way to make manipulative 'suggestions' to social elites (or others) who are the bureaucrats' subordinates in a social hierarchy as they reach a consensus, followed by the use of state instruments to enforce that consensus. There is thus an 'information-divergent / chaos-creating' role for leaders in identifying strategic issues concerning which their subordinates in the social hierarchy are expected to reach a consensus, rather than a 'convergent' role in making decisions on a rational basis. There is a communal consensus, rather than as a rational / responsible approach by individuals to processing information. The consequence of this in Japan for example is 'bottom up' economic decision making (by employees within organizations, and by firms on behalf of 'Japan' as represented by bureaucratic elites) whereby subordinates make decisions on behalf of their social superiors - and so overcome to some extent the limits-to-rationality problem Hayek identified. The rigid consensual approach adopted within China's Communist Party (and the consequent inability of leaders to do other than state whatever consensus exists) can also be noted. The application of similar bureaucratic 'consensus forming' methods in the international arena have arguably been the basis of the China-centred trade-tribute regime through which Asia was governed for centuries prior to Western influence (see Acquiring 'Soft' Power) ;
  • a view of spirituality in terms of relationships within a community, rather than as (say) a characteristic of individuals;
  • authoritarianism presumably because, in the absence of any agreement about 'public truth', this is the only way in which a society can be held together. One observer noted that (a)  in the 1980s 'party secretaries' were present everywhere in China and given huge resources - as their role was to 'control thought' and (b) before modern era Chinese governments have always been obsessed with 'correct thinking' by their subjects [1]. The Communist Party's dominance of the knowledge and skills needed to run China has also been noted more recently - a dominance that that makes it likely that ideas about change will be the product of information manipulated by the Party (see China's Bigger Secret);
  • valuing outcomes that are 'real' or 'concrete' - with little importance attached to 'abstracts' such as ideas, ideals, theory, law, contracts, financial returns, statistics or intellectual property;
  • distrust of the concept of law (ie universal rules). Confucianism had basically provided a set of rules for interpersonal relationships without any concept of universal law. East Asia traditionally features a ‘rule of man’, and laws tend to be used (not to govern social and economic transactions amongst independent individuals) but selectively to discipline / punish those who don’t comply with the ‘communal’ consensus that bureaucratically-coordinated social elites have extracted from their subordinates (eg consider 1]. Moreover as noted below, breaking (rather than enforcing) what have been perceived to be 'rules' can be admired in leaders.
  • a tendency to find pragmatic solutions to challenges that do not conform to 'truths' that have been learned from past observations. There is an apparent view that fixed principles or truths are not constructive and that 'rules' are made to be broken - noting the reported criticism of Mao because on his failure to 'break any rules' (ie transform China's society and economy). Illustrations of 'breaking rules' include:
    • disregard for Western economic principles that would have encouraged Japan to focus on its initial area of comparative advantage (ie in labour intensive production). Rather techniques for accelerated economic development were used to develop Japan's ability to challenge in capital intensive manufacturing, which eroded the productivity (ie ability to sustain high wage rates / profits / taxes) of what had been a highly productive functions and resulted in widespread de-industrialization in North America and Europe in the 1960s and 1970s;  
    • establishing non-capitalistic economic models, ie market economies in which economic directions are not determined by independent enterprises seeking profits as Western-style economics suggests, but rather by mobilizing national savings into state-controlled banks and investing in state-supported industries with a nationalistic emphasis on maximizing market share and limited regard for profitability - a practice that could be equated to that by which Western societies have financed wars by the sale of 'war bonds' to the community;
    • the post-1970s transformation of China's (so-called) 'Communist' Party to take the leading role in stimulating 'learning' within Chinese society (see China's Bigger Secret). That role was equivalent to that of a traditional Confucian bureaucracy, but could not be taken by the bureaucracy presumably because under Mao the Confucian bureaucracy had been seen as oppressing the masses.
  • providing information to others that is not necessarily the 'truth' (ie what Western observers would regard as an objective description of the real situation) but rather is intended to induce a reaction from others which is most beneficial to the provider's ethnic community. In particular this includes: the control of information flow to the community by social elites; and
  • presenting unreliable data about economic / corporate performance (eg see 'China export surge spurs scepticism', Business Day, 14/1/13). Such data is not the basis on which decisions are made. Numerous other sources point to the unreliability of the closely-watched 'statistics' that emerge from China, eg in relation to: consumer demand; unemployment; and economic production.  It has been noted that regional officials have career incentives to overstate economic performance.

In 2003 a US professor (Richard Nisbett, in The Geography of Thought) argued " that East Asia and the West have had different systems of thought, including perception, assumptions about the nature of the world, and thinking processes, for thousands of years. Ancient Greek philosophers were "analytic" — objects and people are separated from their environment, categorized, and reasoned about using logical rules. Psychological experiments show the same is true of ordinary Westerners today. Ancient Chinese philosophers and ordinary East Asians today share a "holistic" orientation — perceiving and thinking about objects in relation to their environments and reasoning dialectically, trying to find the Middle Way between opposing propositions. Differences in thought stem from differences in social practices, with the West being individualistic and the East collectivistic."  [Note: A better word might be 'communal'. 'Collectivist' has misleading connotations in terms of socialist theories as it implies 'horizontal' groups (eg all employees might negotiate with all employers), whereas 'communal' can imply 'vertical' groups (eg groups comprising an employer and their employees)].

In 2012 a long-term Australian student of East Asian intellectual traditions (Reg Little) suggested what was different about these compared with Western traditions, and that the former were likely to prove superior (see The Poor Understanding of Two Thought Cultures - and CPDS Comments on that that hypothesis).

Other features of East Asian traditions which to varying degrees are complementary to that epistemology appear to include:

  • An emphasis on order within the society as a whole (built on the order that exists with families / communities) rather than on the welfare and capabilities of individual.  A likely rationale for this was presented by Henry Liu in The Abduction of Modernity (2003).  Western societies were seen to be 'barbarians' because weapons were invented and used which enabled common folk to challenge their aristocratic superiors (a view which was a bit simplistic for reasons suggested above);
  • a focus on the 'relationships' amongst things rather than on the 'things' themselves (the latter being more the way Western observers view the world) - see Look at the Forest Not at the Trees (which suggests that what is happening in East Asia can't be properly understood by looking at individual 'things');
  • societies built on social hierarchy - rather than on the equality of individuals before law;
  • political culture in the [Sinic / Chinese] cultural sphere that was characterised (quoting Samuel Huntington, author of the Clash of Civilizations) as one with 'little room for social or political pluralism and the division of power' and whose 'international politics must be hierarchical because their domestic policies are"; 
  • a claim that 'Asian values' imply that political and economic systems should be based on particularist social relationships rather than on the universal / abstract values (eg  a rule of law) that are the organizational basis for Western societies;
  • a strong (Confucian) concept of to those with whom one has certain relationships obligation - which means for example in Japan that (a) precedence is given to customers' requirements in 'bottom up' decisions and (b) any help provided must be repaid to those who arranged it - so no one asks for help (eg from government) if they can avoid doing so;
  • particularist, rather than universal, ethics. Behind a polite 'face', conscience does not constrain doing evil to those with whom one has no relationship (eg see Chu C., 'Thick Face, Black Heart');
  • likewise the dominance of 'particularist' ethics (and the absence of universalist ethics so that people have obligations only towards those with whom they have a relationship) makes racism (behind a polite face) seem natural;
  • giving priority to the perceived interests of the community over the interests of individuals. Thus the Tiananmen Square massacre of dissidents in China might be seen as necessary for the welfare of the community (because the elites and their connections know and are what is best for the community), rather than as an abuse of individuals' right to express dissent;
  • traditional Art of War tactics in relating to outsiders, which feature deception and efforts to undermine the capabilities of others (especially those who do not accept a subordinate / tributary status);
  • a preference for invisibility (especially to outsiders) by those who are really powerful (eg in Japan it has been suggested that: "The oyabun (leader) does not dance on stage');
  • a Confucian concept of government as teacher and guide, rather than as regulator, and of government by man (as what can be regarded as a virtual 'whole of society bureaucracy') rather than by a rule of law. Society was guided by traditions about the obligations of people to others and in particular to their superiors (rather than in terms of the interests of individuals).  Traditional Confucian government was by a bureaucratic elite selected (by emperors on the basis of performance in the education system). Wisdom in governing was sought by a study of history - and continuing this tradition led to a century of economic decline by China in the face of expanding Western influences. When Daoist / Buddhist ingredients ingredients (which disputed the relevance of even wisdom from a study of history) were added the result, which became the basis of economic dynamism in East Asia, was neo-Confucianism. The latter allowed bureaucratic elites much greater ability to orchestrate their subordinates adaptation (without reliance on understanding) of what what was observed to work elsewhere rather than maintaining traditional practices. [Such arrangements: (a) may exist even where a 'liberal democratic' face shown to the outside world; (b) would be inconsistent with consumerism - which empowered ordinary people in determining economic directions; and (c) remains 'inscrutable' (ie very difficult to perceive / understand) for rationally-oriented Western observers;
  • coordination of economic activity through state-centred hierarchical social relationships under Confucian traditions - with little regard for financial outcomes. Rapid development of economic capabilities were catalysed in Japan through intelligence gathering and networking by social elites in: MITI; trading companies; banks; and corporate management. Not basing investment decisions on profit calculations for particular activities has been claimed to give China advantages because: investment makes the economy more productive (eg in terms of low cost supply capacity); a broad view of the economy in which capital is only one factor generates positive side effects (eg via taxes; saving people from wasting time where infrastructure is poor; moving people to cities where better jobs are available); it is possible to avoid slowdowns associated with a business cycle. Little attention is paid to the profitable use of capital in relation to particular investments - as most importance is attached to the synergistic relationships that can be established between diverse activities;
  • an approach to industry policy which involves social elites catalysing change within whole industry systems. In Japan industry policy long involved (a) 'vision development and administrative guidance' through MITI whose effect was to accelerate learning within firms, rather than to make centralized strategic decisions and (b) similar leadership of change within business groups through banks and trading companies. Likewise in China local officials are seen to have organised the development of industry clusters (see China's economy: What commentators seldom see) though the perception that this involved 'decisions' by those officials seems inadequate - as a Confucian-style catalytic role in enabling regional communities to reach consensus (similar to MITI's 'vision development and administrative guidance' role in Japan) seems more likely. These methods can be seen as the application of traditional approaches to education in an economic environment. They overcome the constraints on industry policy that arise in Western societies where attempts by economic planning to 'pick winners' fail because they are unable to mobilize the tacit knowledge and commitment of practitioners.
  • funding of firms mainly by debt capital with very little equity. This ensures that return on capital does not drive business decisions, but also provides very little buffer in the event of an economic shock;
  • structuring financial systems (at times) to direct funds earned from exports back into additional productive capacity, rather than to consumers;
  • a strong savings ethic based on Confucian teaching that wealth should be acquired by saving and avoiding consumption;
  • communitarian / mercantilist economic goals, ie building the power of particular ethic and cultural communities (and their social elites in particular [1]) rather than improving the economic welfare of citizens as consumers. All components of an ethic / cultural community (business, politics, communities and government agencies) will work together under bureaucratic leadership to achieve these goals. Thus those outsiders engage with in business dealings (or employee as staff) may be discretely playing a 'Game of Thrones' rather than simply engaged in profit-seeking commerce. Even organized crime can likely to be part of this network (see Kaplan and Dubro's Yakuza and Seagrave S. Lord's of the Rim, 1995). [It may be that this emphasis on building communal / elite power derives from the fact that, because of other features of traditional culture, 'harmony' can only be assured if elites have the power to suppress dissent];
  • the need for a strong sense of ethnic nationalism to motivate economic effort - because the benefits to individuals as investors or consumers is of relatively little importance (see Understanding East Asian Neo-Confucian Systems of Socio-Political-Economy);
  • an insider's perception that Japan has a 'non capitalist market economy' (see below);
  • equating economic success with 'real' production rather than with financial returns on capital (ie 'profit' which is the characteristic of 'capitalism'). Preference is given to market share (ie 'real' production / cash flow / power / security) over profitability (ie productivity / economic value added / paper or symbolic gains) [1] as illustrated by references below to Japan and to China (whose economic model Eammon Fingleton suggested was transmitted from Japan in the late 1970s).

Background: In considering the following it needs to be recognised that:

  •  East Asian societies with an ancient Chinese cultural heritage have quite different approaches to the use of information, to problem solving, to social organisation and in particular to the role of money to Western societies' approach to these issues that result from the latters' Judeo-Christian and classical Greek / ancient Roman heritage.The use of abstract concepts (such as profitability / law / universal values) is not traditionally regarded as a reliable basis for decision making. Thus social, economic and political institutions exist involving complex networks which make the expectation about the inadequacy of abstracts / rationality self-fulfilling. (see for example: East Asia: The Realm of the Autocratic and Intuitive Ethnic Hierarchy; Epistemology: A Key Issue; and Understanding East Asia's Neo-Confucian System of Socio-political-economy);
  •  A lack of emphasis on capitalistic 'profits' is in no way incompatible with a desire to become rich - but Confucius taught that one should become rich by saving. And when this approach to becoming 'rich' is applied widely within an economy the effect is a 'savings glut' (ie savings well in excess of spending) and an overall 'demand deficit' that has significant macroeconomic consequences (see Structural Incompatibility Puts Global Growth at Risk, 2003 and Impacting the Global Economy, 2009).

In the context of the Asian Financial Crisis, the present writer speculated about incompatibilities in different approaches to finance in The Cultural Revolution needed in 'Asia' to Adapt to Western Financial Systems (1998). The latter referred (for example) to: fundamental differences in way information is used; the need to change economic goals from economic 'power' to financial returns; the inseparability of economic issues from questions of social / political power; and the lack of appropriate legal systems.

Moreover there seems to be an expectation (eg as indicated in The Rise of the Ferro-dollar and China: Sustaining Growth by Neglecting Profitability) that synergies and externalities can produce better outcomes for an economy as a whole that more than compensate for limited or negative returns on individual capital investments.

Japan

In Japan, for example, a survey found at one stage that profitability was not one of the top 5 goals of the groups of major firms surveyed [1 - though others have suggested that this perception may be exaggerated]. 

Japanese companies have been seen to be aware of issues such as return on capital, but to be happy to spend cash when available without concern for such returns [1]. 

In 1993 Japan was said to be a 'non-capitalistic market economy' by Eisuke Sakakibara (a former senior Ministry of Finance official) in Beyond Capitalism: The Japanese Model of Market Economics (see also Extract from and Comments on 'The Transition from Technocracy to Aristocracy in Japan: 1955 to 2003). 'Capitalism', it may be noted, implies a profit focused approach to investment by independent enterprises.

Japan's inability to de-regulate its financial system has been suggested to be due to characteristics of its financial / economic system that include disregard of profitability (see Why Japan can't deregulate its financial system) - though political factors are also probably involved (see An Unrecognised Clash of Financial Systems below).

Exposure of corporate fraud (and apparent organised crime links) at Olympus by former CEO Michael Woodford (as described in Exposure: inside the Olympus Scandal) has cast doubt on assumptions about how Japan generally operates [1]

Japan's efforts to stave off economic stagnation will fail (according to former Olympus CEO) because essential structural reforms will prove elusive. Japan's biggest problem is 'zombie companies' that only generate enough cash to cover debts - ie have little profit making ability. This is a bigger problem than in other economies - because regulations that prevent takeovers stops such companies improving their fortunes. Capitalism works if you address the weak, but this does not happen in Japan [1]

In 2015 it was suggested that Japan could shake off its reputation for poor balance sheets that harm its productivity and mislead investors. The Japanese government is now seeking to increase corporate efficiency by emphasizing return on equity [1]

China

China's banking system has likewise been seen as unconcerned with return on capital [1], there is no Chinese word for 'unprofitable' [1], those involved in government were seen by an Asia-specialist to despise the notion of 'profit' [1], and China's investments in SE Asia were seen to be driven by the development of relationships, rather than by concern for profitability [1].

It has been argued that not basing investment decisions on profit calculations gives China advantages because: investment makes the economy more productive and generates positive side effects (eg taxes); a broad view of the economy is taken in which capital is only one component; and there are more protections than generally understood (eg see China: Sustaining Growth by Neglecting Profitability). The latter includes notes on a paper which present what may well be China's rationale for its lack of concern for the profitability of individual investment - namely a belief that stimulating growth in the economy as a whole is more important and sustainable.

One observer suggested, after study of China's financial institutions, that a large part of China's economic miracle has been built on ill-considered lending and accounting slight-of-hand [1].

China's private sector grew most strongly in Wenzhou, based on manufacturing exports and financing through traditional (non-bank) techniques that provide money on the basis of connections without concern for collateral - a system that was unravelling in late 2011 [1].

Disputes have arisen since 2011 between China and the US in relation to the apparently shoddy accounting practices associated with Chinese companies operating in the US, and concerns about the Chinese subsidiaries of multinationals that are listed on US financial markets.

Dozens of Chinese companies that entered the United States market via reverse mergers were later accused of fraud or shoddy accounting. The shares of at least 19 were suspended or delisted by Nasdaq, wiping out billions of dollars in stock market value [1]. And in 2012 conflicts between the US and China have emerged over accounting practices, as many Chinese companies have been accused on grossly exaggerating their assets and business performance in their official financial statements. China's Security Regulatory Commission has blocked efforts to check these claims, on the grounds that audit information about Chinese firms falls under China's ambiguous yet draconian State Secrets Law [1]. Widespread fraud is apparent in both mainland and US listed Chinese companies - while many top Communist Party cadre and military personnel have unexplained wealth. China may not be able to comply with US accounting requirements because Chinese politicians and princelings would be implicated in frauds [1] Disputes between US regulators and China about audits of companies in China has spilled over to affect US companies with significant operations in China, which have been audited by firms facing legal action by US Securities and Exchange Commission. [1]

Development of a solar panel industry in China was supported by soft loans and subsidies from government. The result was the creation of global overcapacity (by a factor of two) and an 80% fall in product prices which has rendered those companies insolvent (though government subsidies remain) (Grigg A, 'Suntech shows China's folly', Financial review, 4-5/8/12)

Local governments in China were seen to have borrowed heavily to maintain growth in the aftermath of the GFC without concern for how loans would be repaid [1]. China's response to GFC allowed banks to lend $1.7tr to local governments (25% of GDP). As principal is not repayable, banks are now extending the loan terms. China has growing amounts of unrepayable debt - and most will wind up on government's balance sheet.  The problem was not perceived because of opaque financial system. The problem can only be solved by eliminating loss-making investments, yet China's growth is kept high by borrowing, misallocating the proceeds and allowing debts to rise. The total profits reported by China's state owned enterprises are estimated to be less than 1/5 to 1/8 of direct and indirect subsidies transferred from households  [1].

The failure of building / sustaining a private company in China is becoming apparent. Suntech (a solar energy focused enterprise established in China by an Australian scientist) became the first Chinese company to default on its debts. It was the victim of state industry policy. China's leaders have believed that they are better able than the market to value / price risk - and China has focused on resourcing SOEs which are seldom expected to pay taxes or dividends. Private companies can't get money from China's state-owned finance sector. Many entrepreneurs have only succeeded through corruption. China's government was impressed by Suntech's early achievements provided large credit lines with no need for business plans.  Suntech became the world's largest solar panel manufacturer, and suffered huge losses as prices collapsed and wages rose. This may actually lead to financial system reform in China [1]

'In China the name of the game is market share, and state banks are willing to support the ambitions of brand owners to produce in excess of demand. This means, amongst other things, that Beijing's retail sales number does not reflect the state of consumerism in China. In fact the National Bureau of Statistics includes in this closely watched figure items when they are shipped from the factory, not when they are sold to consumers" [1]

One of China's sovereign wealth funds and two state -owned banks have been found to have a total of $5bn in irregularities - because of their weak financial management [1]

In September 2014 it was reported (with unknown validity) that:

  • short-sellers (who hope to profit from falling prices) started targeting Chinese companies after a three year lull. Researchers (who remain anonymous apparently because Chinese companies have a history of retaliating against people who post negative research) have accused three companies of business or accounting fraud. Those accusations have been denied [1]
  • a German company had ceased promoting listings of Chinese companies because of cases in which it was hard to verify accounting claims, or business owners had disappeared with all the businesses' cash [1]

Foreign investors into China have been stung by a string of suspected fraud cases and problem loans. This has raised concern about the scrutiny that banks apply to borrowers. In China nothing is what it seems to be. Western banks have been lending heavily into China seeking higher returns as global rates remain low. It is very difficult to get a sound understanding of the finances of a Chinese company [1]

Western firms have been hurt by misunderstanding the cost and technological advantages of China's aluminum industry. Rio purchased Alcan on the assumption that China's aluminum industry would shut down. But it increased production and Rio made major losses on its Alcan purchase. Chinese smelters have increased their efficiency in ways that have surprised others. Western observers believe that China's enormous aluminum expansion defies economic logic and this reflects a misunderstanding of the role that industry policy plays. China's local-government investments in expanding capacity set new standards for excesses - and this will put pressure on the industry elsewhere. Much of the industry expansion has occurred inland to meet domestic demand. Falling coal costs and government subsidies are reducing electricity prices. Capital is not a problem in China. Analysts believe that since energy accounts for 40% of aluminum cost it makes no sense for China to be a producer as it has high-cost electricity. However experience has allowed China to now build relatively cheap and very large smelters - and this lowers average costs. However Chalco has been incurring losses and this is likely to continue   [1

Chinese people are interested in acquiring real assets (eg gold and real estate - rather than shares). Financing is seldom an issue. Loans may come from personal connections of Chinese banks with no clear repayment timetable [1].

Many loans to local government financing vehicles in China from state-controlled banks are bad - and if confidence in these were lost this could lead to a cascading financial crisis. However as China has a state-led command economy all banks are responsible to the CPC and the latter can arrange for the PBC to create credit to take over the problem loans (thus causing those problem loans to disappear as the PBC will never require the borrowers to restructure their loans while maintaining the fiction that they will eventually be repaid) [1]  

Eight years ago Xiao Yiqing told Australian Government that Chinalco had acquired 9% of Rio Tinto. China had arrived on corporate stage but was not playing by the rules. Xiao Yiqing soon acquired a senior political role which suggested that what had happened by not commercially inspired but that Chinese state had been pulling the strings all along.  Richard McGregor (former China bureau chief with FT) published a book quoting this as an example of government's ability to direct companies to pursue strategic goals. China's state-owned national champions are commercially run but subject to Party control. Xiao has been appointed to head central government body to manage / regulate China's largest state firms. The poor performance of those firms has been hampering China's economy. Reforms that were being made some years ago have stalled - and huge losses are again being suffered [1

In China loans are not made on the basis of borrowers' ability to repay but on their political connections.  [1]

Limited interest in financial outcomes as such, it may be noted, is quite consistent with:

  • the strong desire for commercial power that exist amongst the Chinese Diaspora in particular;
  • the wealth that that the latter have often accumulated - by spending less than is earned in accordance with Confucius' instructions about becoming rich by saving and avoiding consumption [1] (a preference which, when applied by nations rather than clans, has translated into a macroeconomic obstacle to sustainable global economic growth);

Suggestions about a change in emphasis in China towards a more profit-focused / capitalistic approach are outlined in Is China becoming Capitalistic?. While it may be that such a shift is being attempted, it seems likely to encounter fundamental structural obstacles such as those outlined in Understanding the Cultural Revolution (1998) - eg differences in way information is used; the inseparability of economic issues from questions of social / political power; and the lack of appropriate legal systems.

China's opening of its huge bond markets to foreign investors was seen as: (a) a way to spread the risk associated with the huge debt levels that have been incurred to drive growth; and (b) dangerous to the international financial system. China does not have financial markets as others know them as these are just a political tool.

China's ecommerce giant, the Alibaba Group was under investigation by US securities regulators over its accounting practices [1],

  • maintaining power in relation to other nations by working harder. China's 'tributary' system by which it was the centre of regional economic power until 200 years ago involved symbolic gifts to China by 'tribute' nations who received much more real benefits in return (ie they allowed China to exert political and economic control) [1]. Barbarian invaders were defeated by serving then - so that they became dependent and weak [personal communication]. These features can be observed in the export oriented economic strategies and suppression of domestic demand that have contributed to international financial imbalances in recent decades, and ultimately to the GFC;
  • a capability to exert power invisibly in others domains (because power is exerted by influencing information flows rather than by decision making), for example, providing strategic information / suggestions to political leaders or to educators;

East Asian societies can be said to operate as virtual whole-of-society 'bureaucracies'. Lacking a Judeo-Christian and classical Greek heritage, they have not created the simplified social spaces (through individual liberty, a rule of law, democracy and capitalistic emphasis on profitable use of savings) that are needed for rational problem solving by individuals (ie as citizens, employers, employees entrepreneurs, politicians),   Rather the whole of such societies seems to operate in ways that parallels effective Western bureaucracies, rather than merely those parts that are subjected to serious market failures. Western bureaucracies can, through promoting collegiality and consensual decision making in an hierarchical framework, be very effective in managing the relationships between issues that are too complex for rational analysis - though in practice in Western societies this is seldom obvious partly, but not only, because of the constraints imposed by their socially-stabilizing political accountability, ie by ideas which reflect the level of understanding that has been reached by the 'man in the street' (see Why are Bureaucrats Bureaucratic?).

'Whole of society' bureaucracies involve: (a) government by those who are well educated and informed - but adopt a neutral position; (b) getting together influential stakeholders with complementary interests in some issue (eg the diverse components of an new industry cluster); (c) encouraging that group to develop a consensus in consultation with their social subordinates (eg employees and suppliers); and (e) using state power (and the societies savings) to enforce that elite group's consensus (and suppress any dissent).

While the strength of Western societies is based on the initiative of rational / responsible individuals, there is no emphasis on either rationality or individuals in East Asian societies that have an ancient Chinese cultural heritage. Rather individuals are expected to be compliant components in hierarchical social groups (organisms?), whose directions are determined by arational group intuition / consensus and then autocratically enforced with the use of state power. In Japan (which has been likened to a 'block of granite) those 'social organisms' encompass the whole of the society, while in China (likened to a 'tray of sand') the are many such 'social organisms'. 

Another account of the radically different cultural frameworks which make it difficult for communication about even such issues as the nature of management is 'Contrasts in Chinese and Western Management Thinking', (Garran B. LODJ, V2, N1, 1981). Similar observations about the characteristics of China that (as well as etiquette) are mentioned in accounts of what need to be considered for business success [eg 1]

These traditions and methods, though radically different to those of Western societies are effective in practice, ie they allow production to be organised and are very quick in generating economic change - hence the perception of 'economic miracles' emerging in East Asia. They exploit knowledge, which economics regards as the critical factor in economic growth, in a quite different way (eg see Defects in Economic Tactics, Strategy and Outcomes) - a way that arguably reflects the application of traditional approaches to education in an economic context.

In the 1980s it was widely believed that Western societies would have no answer to the competitive challenges posed by Japan's fast-change abilities - a view which was generally (through not universally) reversed in the 1990s - due to further technological revolutions and radical changes in the organization of production (from hierarchy to networks) which particularly characterized the American 'new' economy and allowed faster learning. 

Furthermore from the late 1980s, it became apparent that Japan's methods could not handle finance as a problem in itself because its methods for problem solving, while extremely effective for 'real' economic variables, were ineffective in dealing with 'abstracts' like money.  Its financial system had in fact been regulated in such a way as to make financial profitability largely irrelevant.

Those traditions and methods can also have other limits (eg reliance on learning from someone else's technology, someone else's markets to provide demand).  In the long term the US / Western emphasis on profitability (based on value-added) is likely to prove to be a more sensitive indicator of resource allocation that provides the basis for continued growth than turnover (volume of production). At least this is the lesson of the decline in support for mercantilist economic strategies in Europe in the 17th and 18th century.

Variations on Japan's methods have been adopted throughout East Asia - permitting: rapid economic development; catch-up to Western societies in ways that no others achieved; the emergence over the last two decades of China as a potential superpower; and the Asian Financial Crisis of 1997-98.

However it is very significant that these differences lead to great difficulties in achieving economic success if this is defined in terms of a positive balance sheet. An attempt to describe this was presented in relation to the Asian Financial Crisis in Understanding the Cultural Revolution (Needed for Success under Global Financial Systems). The latter briefly discussed the epistemological issues, and considered the business, economic and especially financial consequences in more detail. Similar observations appeared independently in Why Japan cannot deregulate its financial system).

East Asian cultural traditions can also make it hard to discuss such issues, as emphasis is placed on maintaining 'face', and strategy for responding to powerful outsiders apparently features deception.

Traditional 'Art of War' strategies for dealing with powerful foreigners emphasise fighting wars without battles [eg see Wikipedia article, a translation of Sun Tzu's writings and an account of 36 stratagems], and this seems to be given effect by:

  • a strong emphasis on deception -  eg concealing strengths; pretending to be what you are not; preventing others understanding one's true 'shape' (eg how societies / economies actually work); indirection (ie achieving goals indirectly, so that what seems like an attempt to achieve goal A actually achieves an unexpected goal B); and holding up a 'mirror' so that when others look, all they see is a reflection of themselves; 
  • attacking the sources of an opponent's strengths without this becoming obvious - and perhaps while such strength are being admired and appearing to the emulated;
  • very long term action (ie over decades rather than years) by working with youth to motivate them to pursue their predecessors' agendas;
  • getting close to enemies;
  • encouraging opposing leaders and people to take steps which are not in their real interest so that they encounter internal failures (ie to 'win without fighting is best') ;
  • seeking ways to turn opponents' apparent strengths (eg democracy, financial system and military capacity in the case of Western societies) against themselves;
  • making no distinctions, so that business, social relationships and even organised crime are part of a 'war'.

In practice the result is that (a) outsiders (who must have difficulty understanding anyhow) are further inhibited from understanding as a matter of basic strategy, and may thus cause significant damage inadvertently, and (b) insiders may believe that they face a choice between either abandoning traditional cultural aspirations or challenging the US-led Western financial regime.

One feature of strategy that has emerged in recent decades is that challenges have been launched against opponents' areas of strength (eg in manufacturing industry in the decades after WWII and later in financial systems).

A Generally Unrecognized 'Financial War'? 

Financial systems have thus been the most obvious focus for a potential 'clash of civilizations' - though this has received essentially no attention from Asia-illiterate Western economic analysts (see also Babes in the Asian Woods).

The production-focused (ie mercantilist) financial systems which have been part of East Asian 'economic miracles' are incompatible with the Western-style profit-focused (ie capitalistic) arrangements that have been dominant globally - and this has led to the use of economic (and perhaps also non-economic) tactics (initially by Japan) in an apparent attempt to eliminate the constraints that a profit-oriented (ie capitalistic) financial system imposed on economic control by social elites.

Financial systems arise because money is used as a means of economic exchange, a store of economic value and a means for signally the need for economic change.

Financial systems have often been a source of problems because of (a) the self-interest of the owners of capital - that can distort the economy and the political system, (b) the inherent 'boom-bust' character of financial markets (due to speculators' use of such markets as a primary way of wealth creation; the 'herd' behaviour of investors; cycles in the 'real' economy; feedback effects between credit creation and asset values; and periodic failures in monetary and credit management) - and (c) the possibility that financial 'busts' can affect the real economy.

However Japan's post WWII economic system involved a mercantilist policy goal of creating production capacity far in excess of domestic demand and with little regard to profitability (see evidence above) through a bureaucratically-orchestrated financial system which mobilized national savings and made them available to state-linked enterprises that were expected to pursue nationalistic economic goals. This resulted in large current account surpluses that have been recycled into further expansion of production capacity and, in recent decades, into investments in $US assets (see Why Japan cannot deregulate its financial system). 

Even more significantly Japan's economic model involved the coordination of production capacity in terms of 'neo-Confucian' social relationships (amongst elites and by subordinates to superiors) with an emphasis on 'real' production (ie cash flows and market share) rather than in terms of symbolic / financial outcomes (such as a search for profitable investments).  This worked in terms of creating 'real' production capacity (but not in terms of ensuring profitability) because the consensual decision making process that social elites (the bureaucracy in Japan's case) orchestrate amongst their subordinates overcame the constraint that central economic decision makers face in Western economies (ie it internalised much of the tacit knowledge that would be inaccessible to central decision makers concerned solely with profitability) - see also Understanding East Asia's Neo-Confucian Systems of Socio-political-economy.

The purpose and outcome of these economic methods is to increase the economic power of ethnic communities (and of their social elites in particular) rather than to increase the welfare of members of those communities (eg as consumers / citizens / savers / investors).

By way of background (see also Broader Resistance to Western Influence) it is worth noting that:

  • in the 1930s Japan had sought international recognition that its radically-different cultural traditions were the equal of those of Western societies - and, when this was not recognised, had launched military attacks in Asia as part of a process of creating what was hoped to be a 'Greater Asian Co-prosperity Sphere' (ie a region in which 'Asian' values and methods would dominate). An in that context the concept of a Yen-bloc had been proposed to break dependence on sterling and $US.
  • in the post-WWII era, Japan's political and economic systems seem to have been arranged by the same imperially-mandated ultranationalist factions that were responsible for Japan's aggression in Asia in the 1930s (see Establishing Japan's Post-WWII Political and Economic Systems);
  • one Japan watcher suggested that the methods used for post-WWII 'real economy' miracles in Japan had been developed by the Japanese army in Manchuria in the 1930s.  This is plausible (though not certain) as those methods for accelerating market-oriented 'real economy' learning depended on control by a nationalistic bureaucracy which was not subject to democratic (ie interest group) influence. Such a situation would have existed in Manchuria - and was a feature of Japan's post-WWII institutions that had no precedent elsewhere

In Asia outside Japan, variations on the model Japan demonstrated had been adopted since the 1960s. China in particular eventually became very successful in attracting foreign investment and growing export-oriented manufacturing industries - after it was reportedly convinced to adopt a variation on the Japanese system of socio-political-economy in 1979 (though with the so-called Communist Party, rather than the bureaucracy, apparently taking the social-elite role). 

In 2008(?) Eamonn Fingleton,  a long term close observer of East Asia (especially Japan), speculated about the possible future global political and economic dominance of 'Asian authoritarianism'  [1]. In brief he suggested that:
  • East Asian economic systems are radically different to Western capitalism yet, to the surprise of economists, they are very effective in boosting exports and growth, so there is a need to understand why this is so. Characteristics include (a) a lack of commitment to truth, and a manipulative approach to citizens and outsiders; (b) authoritarian government control of the economy (through regulation / market rigging / selective enforcement of regulations); (c) suppressed consumption (through small living spaces / tight control of credit etc) which leads to high savings rate; and (d) a key role for cartels in ensuring that favoured investments are profitable and controlling industrial capacity;
  • these systems were originated by the Japanese military in Manchuria in the 1930s and subsequently spread throughout Asia - with China's authorities having become convinced in 1979;
  • while East Asian economic systems have advanced their people's welfare, the suppressed consumption that they are based on adversely affects others. Western and East Asian economic systems are incompatible and need to be kept apart (as was done with the former Soviet Union). This could be achieved by gradual introduction of tariffs - as something quite severe is needed to overcome structural trade imbalances;
  • despite theatrical bickering, Japan did all it could to boost China's development - because it would prefer China as the world's superpower. East Asian societies prefer to be isolationist - eg they will ignore others human rights abuses. Western / US influence is resented for it forces a pretence of (say) democracy. Moreover it is believed that China will outlast the US empire as it has done many others in the past;
  • Western societies have never before had to cope with Asian authoritarianism. But China's leaders believe they have to become the world's dominant power, as external influences are now so significant that isolationism is not an option.

CPDS Comment: Fingleton's conclusion (ie that East Asian and Western economic models are incompatible) parallels the present writer's conclusions in Structural Incompatibility Puts Global Growth at Risk (2003). And the possibility that those methods originated with the Japanese military in Manchuria in the 1930s is given some support by the apparent role of Ryochi Sasakawa (a notorious ultranationalist who had reputedly been in Manchuria in the 1930s) in supervising / financing Japan's Ministry of International Trade and Industry which had a key role in putting them into effect.

However Fingleton's suggestion that the erection of defensive tariff barriers would be best / only solution seems suspect, because:

  • there is doubt about the future sustainability of the demand-deficient economic models that Japan originated and spread throughout East Asia - for reasons outlined in Are East Asian Economic Model's Sustainable?  For example, the fact that East Asian economic models involve coordination of economic activities by social relationships amongst elites (rather than in terms of 'abstracts' such as financial outcomes) can be an advantage in organising production systems in response to external market demand. But this depends critically on outsiders providing strong demand and scope for investing savings. In isolation, suppressed consumption would lead to macroeconomic catastrophe. And, given the limited role of price signals, these models contain no internal arrangement for managing the relationship between supply and demand that would be any more reliable than in the former Soviet Union - and so could not be viable on the basis of domestic consumption;
  • societies such as the US and Australia have pro-active options for developing the supply side of their economies by accelerating 'learning' within whole economic systems - perhaps along the lines suggested in A Case for Innovative Economic Leadership (which deals with the Australian context). Information is regarded as the key factor in economic productivity and growth. However just as information can be used to drive innovation within enterprises, it can also potentially be used to drive productive change within whole economic systems - providing leadership in this process can be successfully disentangled from political systems.

Thus, in future, it is possible that aid to East Asia in establishing more sustainable economic models may be more necessary than the fear that Fingleton expressed about Asian authoritarianism.

Another obvious possibility is that China's post-Mao leaders were convinced to adopt of variation of the methods Japan had first demonstrated by off-shore Chinese groups. Singapore might well have been China's 'tutor' in this regard as its authoritarian regime has clearly been based on a Confucian-style social hierarchy 

However whoever the catalyst had been, China apparently adopted a variation on the Japanese system of socio-political-economy under which the Communist Party itself took role of the top level in a social hierarchy that had been taken by the bureaucracy in Japan's case (ie by MITI and the MOF in respectively orchestrating responses to economic opportunities and in holding assets created through state-linked banks) and by the Lee family in Singapore's case. In China's case also this allowed large current account surpluses and holdings of foreign currency reserves to be accumulated - and so allowed China's financial institutions (though they potentially carry huge quantities of bad debts [1] which put their solvency at risk) to continue providing credit - because there has been no requirement to seek external capital and financial outcomes could be rigged.  

An aside: Arrangements seem to have been put into place to allow major institutions in China to appear profitable at the expense of the rest of the economy through the same sort of social; networking used for organising production

The different (relative to US / Western) characteristics of Japan's and some other East Asian economic systems first started to have obvious impacts on financial systems in the 1980s, when:

  • Japan built a financial bubble by increasing the availability of credit on the basis of property values which were in turn sustained by this credit. Industrial capacity was created and many foreign investments were made - which were often unprofitable;
  • in 1985 the US encouraged Japan to revalue its currency by 50% and to boost the availability of credit under the Plaza Accord in the vain hope that this would overcome a trade / current account deficit which had emerged  (due to the US's rapid consumer driven growth, and the communitarian / mercantilist character of Japan's economy). This hope had to be in vain because:
    • currency revaluation can have only a minor impact on trade flows if production / distribution capacity does not exist;
    • Japan's financial system is set up so that, domestically, any stimulus must mainly flow into industrial capacity rather than into consumer demand ('Why Japan ..' op cit);
  • the $US fell by around 50% against major currencies in the two years after 1985 [1];
  • Japan adopted a 'dump the $US' policy from early 1987 [1] and the withdrawal of some $400bn from US Treasury bonds in 1987 led to increasing interest rates (ie 30 year Treasury bond yields rate from about 7% to over 10%) - see diagram. Though other factors (such as newly-developed program trading which accelerated any shift), the rapid rise in interest rates from August 1987 (which reset the benchmark for yield on equities) was presumably a major factor in triggering a crash in the value of US equities in October 1987.
  • This crash was interrupted when authorities (eg US Federal Reserve - and later IMF) developed methods to prevent this and later financial busts from affecting the real economy - through providing liquidity to prevent losses compounding. Ultimately those techniques enabled an asset bubble to grow in the 1990s especially in the USA because:
    • P/E ratios escalated as investors concluded that they could virtually ignore equity risks;
    • cheap credit cut corporate costs, increased consumer spending and boosted profits; and
    • increases in asset values fed-back into consumer spending.

Japan's financial bubble burst with a collapse in equity and property values around 1990, leaving Japan's financial institutions with large portfolios of bad loans, and considerable risk of insolvency. A decade of stagnation has followed with: impeded bank ability to invest in industry; heavy public spending to maintain growth (resulting in very large public debts); growing unemployment; and apparent difficulty in overcoming the bad debt problem. The problem could have been resolved by writing-off the bad debts, but this would have required:

  • a 'fire sale' of assets to investors - and reduced control of Japan's economy;
  • a loss of status and control of financial institutions by the 'merit-aristocratic' elites in the bureaucracy and their business networks that are at the top of Japan's social system;
  • challenging the socially and politically powerful ultra-nationalistic gangsters [1, 2] who dominate Japan's politically-and economically-important construction (and leisure) industries - and play a key role in enforcing discipline on behalf of Japan's social elites.

Across East Asia foreign investment grew rapidly in the 1980s and 1990s - until the Asian financial crisis emerged in 1997 as foreign investors found that profits were often likely to be limited (see The Asian Financial Crisis). Many events can be seen to have triggered that crisis, however it also reflected the institutional characteristics of  the  East Asian economies that have followed versions of the Japanese development model.

Sakakibara, a senior official in the Ministry of Finance which developed Japan's financial model, proposed an Asian Monetary Fund to protect against the effect of capital outflow - and under the Miyazawa Initiative assistance was provided to some countries [1].

The 1997 crisis was widely interpreted by nationalists in Asia as a deliberate US attack on the 'Asian' economic models though:

  • it has been suggested that the financial weaknesses in SE Asia that gave rise to the 1997 crisis were exposed  by the withdrawal of Japanese capital from 1995 on because of Japan's domestic financial predicament (see Hartcher ‘Look East, Dr Mahathir, for the source of Asia’s decline’, Australian Financial Review, 25-26/10/97); and
  • the author saw no evidence suggesting that culturally-introspective US analysts even properly understood how the Confucian / 'Asian' economic models worked;

A cultural revolution would have be required for many East Asian economies to operate profitably under Western / US financial principles, because of (for example): fundamental differences in way information is used; the need to change economic goals from economic 'power' to financial returns; the inseparability of economic issues from questions of social / political power; and the lack of appropriate legal systems. However:

  • under East Asian traditions such difficulties would never be disclosed to, or discussed with, outsiders - (a) to save face and (b) because (given a lack of universalist ethics) there would be no expectation of a sympathetic response - but rather that any sign of weakness would merely be exploited;
  •  instead of a cultural revolution, all that has happened is that Asian countries adopted IMF principles for financial market liberalization and transparency in varying ways - while all countries in East Asia concluded that suppressing consumption so as to acquire substantial foreign exchange reserves (as Japan and China had done) was the key to avoiding a repeat of the financial crisis.

After 1990:

  • the US continued to draw upon:
    • cheap imports which kept inflation under control; and
    • external capital inflows generated by: the strength of its financial system; the different economic character of East Asian economies; and the US's rapidly growing consumer-driven economy. This inflow has been offset by large US current account deficits, and has also further boosted the value of US assets; 
  • a great deal of the latter capital came through:
    • investment of the current account surpluses generated by Japan's (and greater China's) non-consumer-oriented economies;
    • the Yen 'carry-trade' which has resulted from the creation of cheap credit by Japan, which (because of the structure of Japan's financial and monetary systems which primarily directs capital to production) could never boost domestic consumption, but only boost the availability of credit (and the increase of debt) in capital importing countries;
  • Japan led efforts to establish an AMF (an Asian Monetary Fund) which would operate under 'Asian values' (ie the rule of ethnic social elites) as an alternative to the IMF (which is based on democratic-capitalist values) - See Note 17 of Queensland's Challenge ;
  • Japan continued as the world's major source of capital - because of its high savings rate (eg see Abegglen J. 'Prospects for Japan's Economy, Journal of Japanese Trade and Industry, Sept / Oct 2001) - a role which could well be founded partly on poor accounting practices if the losses in its financial institutions were as bad as expected;
  • large financial losses remained in Japanese financial institutions (and have also accumulated in Chinese institutions - see China's Development: Assessing the Implications);
  • Japan seemed to have been going to extra-ordinary lengths to create large quantities of credit that are made available to US consumers to maintain East Asian current account surpluses [1];
  • there was periodic concern that financial difficulties like those at the time of the Asian financial crisis could be re-occurring (eg Hughes H. 'Tigers return to endangered list', Australian Financial Review, 3/8/01);
  • unexpected withdrawal of Japanese capital apparently played a significant role in triggering both the stock market crash of 1987, and the Asia Financial Crisis of 1997;
  • Japan shifted in the 1990s to a policy of 'internationalization' and suddenly presented itself as a firm ally of US (quite the reverse of its tense economic rivalry of the 1980s). Getting close to one's enemies is reputedly a tradition 'Art of War' tactic, and provides much greater scope for insider influence. Moreover the methods for exerting influence that Japan seeks to use would not involve overt 'lobbying', but would seek to be invisible (eg by providing access to strategic information to influence others' thinking without stating what conclusions should be drawn);
  • the US Federal Reserve was clearly subject to Japanese influence in setting its low interest rate policies which contributed to the development of an asset bubble and ultimately the GFC. Fed chairman, Alan Greenspan, often referred to the need to prevent deflation as justification for setting very low interest rates - though this was a risk that only Japan faced. It wasn't a US problem. Thus it is clear that US Fed was seeking to use US monetary policy to keep global growth going in the face of deflationary demand deficits in East Asian economies. Greenspan also periodically expressed the hope that associated financial imbalances would eventually be resolved by market forces.

It eventually became obvious to financial authorities (eg Bank of International Settlements, World Bank) that the continued dependence of global economy on US demand and escalation of US debts could not continue - and that the global economic system itself was at risk. In this regard Structural Incompatibility Puts Global Growth at Risk (2003) suggested that:

  • major East Asian economies (eg Japan and others who have adopted variations on the Japanese model such as China) contain an inbuilt demand deficit (ie a massive surplus of production for export over domestic consumption). Consumption of this production has been maintained by the US by creating credit - which has also flowed into escalation of asset values. In the process the East Asian economies built up current account surpluses, and claims against the foreign debts of the US;
  • Western societies are increasingly developing largely symbolic, rather than real, production capabilities - and the former are of no use if the global financial system disintegrates;
  • the demand deficit in the major East Asian economies is the result of a deliberate mercantilist policy (ie one that seeks to build national power by economic means, and one which views economics as a win-lose contest between nations rather than as a win-win partnership). Furthermore, it is likely that such economies were never intended to be sustainable - because economic capacity has been created with little regard to financial profitability (resulting institutions that could be exposed as insolvent of their strong cash flows moderated).

This situation can even be interpreted as a 'clash of civilizations', which is presumably 'invisible' to Western economists and bankers who lack understanding of East Asian social and governance arrangements (see Babes in the Asian Woods), and thus can't conceive that:

  • ultimate control of a society might be exerted by elites (eg bureaucrats) - because their superior ability to handle information allows them to shape the way others think;
  • the bureaucracy, who had shaped Japan's militarism in Asia in the 1930s (in an attempt to create an 'Asian Co-prosperity Sphere' - particularly by mobilizing support from China, Japan's 'big brother') and who were then entrusted with managing Japan's post-WWII recovery, might have continued to pursue the same goals through economic means. It can be noted that: (a) traditional 'Art of War' tactics involve particularly deception, and long term efforts to 'win beforehand' by weakening opponents; and (b) East Asian traditions apparently involve defeating strong external powers by serving them, and so weakening them;
  • financial profitability might be considered irrelevant in societies where economic activities are coordinated by social relationships;
  • economic dealings could be used to construct a 'bomb' to destroy the global financial system - which is in some ways the 'nervous system' of Western societies;
  • masterless samurai could view destruction of their dead master's enemies - as a worthy, even if suicidal, goal (eg consider 'The Tale of the 47 Ronin', Japan's most popular folk tale) 

Speculative scenarios that suggest how such an 'invisible clash' might relate to the September 11 2001 attack in America could also be considered - particularly because: (a) the Jewish interests who are often claimed to dominate the US financial system also appear to support Israel as a Jewish homeland in the midst of Islamic societies; and (b) reducing the constraints that Western-style financial markets place on the exercise of power by social elites would have appeal to elites in both East Asia and the Muslim world.

With the benefit of hindsight it appeared in 2011 that (in the unproven event that there was any relationship between the 911 attacks and the clash between Western and East Asian financial systems) the 911 attack was not intended to affect the West's financial institutions directly (as had appeared possible in 2001). However, based on shared interests and some suggestive indicators, it remains possible  (though not certain) that it might have been a diversion to reduce the US government's ability to focus on Asia and financial systems. As noted in Preparing for Economic Warfare (2011), the distorted financial systems that has been established decades earlier in major East Asian economies were:

  • likely eventually to disrupt the established US-sponsored international financial system and thus the Western-style international order (see also Structural Incompatibility Puts Global Growth at Risk, 2003), and thus what was already in place was potentially much more powerful (though much slower to have effect) than any direct attack on financial markets;
  • essentially invisible to average Asia-illiterate Western observers. 

Later developments that related to the invisible clash of financial systems referred to above are considered in Global Financial Crisis: The Second Test (noting the section on Seeking a GFC Solution in particular).

The latter includes reference to the so-called Currency War as a possible manifestation of the undeclared / unrecognised 'Financial War'.  The latter suggested:

  • several stages of quantitative easing (QE) by the US Federal Reserve from 2010, while required to compensate for likely decline in the availability of credit from the US's stressed banking system, also seemed likely to put extreme pressure on countries with poorly developed financial systems who had previously relied on current account deficits to protect their domestic institutions. This pressure would arise by stimulating a reversal of the 'carry trades' of cheap credit had played in the development of the asset bubbles (in countries like US) that had contributed to the GFC;
  • the latter resembled the 'pedal to the metal' tactics used by the US to expose weaknesses in the USSR's economy (ie lets go flat out and see whose economy fails first), which led to the end of the Cold War; 
  • countries who were potentially exposed to these risks labeled these tactics a 'currency war';
  • concerns were emerging in 2012 and became intense in 2013 about the risks that these efforts were creating for emerging economies - China in particular;
  • the very large-scale quantitative easing  initiated by Japan under 'Abenomics' in early 2013  seemed likely to be an attempt to restore the outward 'carry trades' that would reduce the that rapidly increasing risk that current account deficits that would potentially create financial crises in Japan.

Speculations concerning North Korea's threats to attack the US and South Korea in 2013 include one scenario under which the latter event might relate to the unrecognised 'Financial War' outlined above. Similarly the possibility that the brutality exhibited by ISIS in Iraq in 2014 might play a role in attempts to impede efforts to maintain a liberal international order were considered in Is the Barbarity of ISIS Another Attempt to Ensnare the US in the Middle East? (2014).

Apparent efforts to create a new authoritarian international order administered from China which would be similar to the trade-tribute regime by which Asia had been governed prior to Western expansion was outlined in Creating a New International 'Confucian Economic and Political Order.

In 2014 a new BRICS Development Bank was established (with $100bn capitalization) which will be modeled after the Washington DC - based World Bank and the IMF which emerging economies have seen to be too Western in their approaches to economic assistance [1]

In 2015 China apparently started to reverse its accumulation of US Treasury bonds (see The Problem is Financial, Not Currency, Manipulation ) in much the same way that Japan had done in 1987 (see above). This is seen to be leading to a loss of liquidity in China and to be increasing its risk of fiscal contraction / deflation [1]

Signs of An Emerging East-Asian International Order?

Regional efforts to create an alternative international order now seem to be gaining support.

China has incorporated other countries in the Asian region within its economic system by increasing imports (eg of components), in such a way that its overall current account surplus was small (eg perhaps $US 30bn pa) - though its surplus with the US was large (eg over $US 100 bn pa). This had the effect of sharing around the 'protection' offered by a current account surplus to countries who would also have difficulties operating under Western financial principles.

In 2005 a 'Confucian Union', similar in scope to the EU, was suggested for East Asia based on the concept of a 'worker caste system' in which bureaucrats / technocrats would have power which would be different to the 'merchant caste' system in which capital is the source of power [1, 2].

This seems to parallel Ministry of Finance views (publicly expressed by Sakakibara) of Japan as a 'non-capitalist' market economy [1].

In 2009, increased substance appeared to be given to Japan's late-1990's proposal for the creation of an Asian Monetary Fund (AMF) as a 'virtual AMF' was emerging as a result of the Chiang Mai initiative whose existence and implications seemed to attract little attention in the West.

A 'Virtual Asian Monetary Fund'

An Asian Monetary Fund is taking shape as nations pledge to help one another. ASEAN, China, Japan and Korea agreed to expand the scope of the Chiang Mai Initiative - an agreement amongst their central banks to advance funds in times of crisis. The Chiang Mai Fund was expanded to $120bn - 80% of which is to be provided by China, Japan and Korea. This is growing into an Asian Monetary Fund - like that Japan suggested at time of 1997 Asian Financial Crisis (which US opposed). China and Japan are main buyers of US government bonds. They have saved and lent so US could borrow and spend. Regional integration will increase regional stability. Asian crisis occurred because foreign capital lost confidence in region with world's highest savings rate. If Asia had kept money at home it would not have needed foreign capital. Recent step increases sovereignty and reduces scope for IMF intervention (which seeks to expand the role of markets and reduce role of governments - policies that have produced few development successes). All countries in East Asia prospered through government intervention that Washington consensus would never have permitted. An Asian Monetary Fund will allow Asia to steer its own course, and be good news for Australia as its linkages into the region increase [1]

However, what has been going on and what a "virtual AMF's" prospects for success are, can't be understood without considering the cultural framework in which this  has been developing. As noted above , there are differences in the nature of knowledge, power, governance, strategy and economic goals in societies which lack Western societies' classical Greek heritage but rather are derived from ancient Chinese traditions.

This is essential to understanding the implications of a 'virtual AMF' because it would involve the creation of credit and the control of monetary systems by social elites operating under neo-Confucian traditions whose concern was with building the power of their ethnic communities rather than with generating profits by meeting the needs of their citizens as consumers.

The monetary and financial systems which have been the basis of economic miracles in East Asia have not taken the profitable use of capital seriously - primarily for cultural reasons related to difficulties in handling abstract concepts.

This was the reason for the 1997 Asian Financial Crisis (see Understanding the Cultural Revolution Needed for Success under Global Financial Systems). The fact that the region is characterised by high savings does not imply that that those savings would be used productively or that sound bank / corporate balance sheets would be seen to be needed.

It was also the reason for the global financial imbalances that have arisen, as the US (mainly) tried to sustain global growth in the face of the macro-economically unsustainable demand deficit that has been necessary in major East Asian economies to protect banking systems from having to demonstrate the sound credit rating needed to borrow in international markets (see Financial Imbalances in Financial Market Instability: A Many Sided Story). Some have seen those imbalances as significant in causing the global financial crisis.

Establishing a 'virtual AMF' seems to be part of attempts that are being made to permit Asia's nationalists to continue economic growth by creating credit and using savings without serious concern for return on capital.

However this would not be economically viable under a Western-style global economic regime in the absence of sufficient final demand for the production capabilities that are being established (eg see China: Victor or Victim?). It may be that efforts are in place to overcome that constraint which would not be easily understood by Western observers, and may not be effective either (see After the GFC?).

Feedback: An observer with considerable background in Asian culture and history suggested that:

..  we are witnessing the success of superior East Asian strategies and culture that are re-establishing the global order that existed 200 years ago, when China was the world's dominant production economy and technological leader, having more or less held that position for several millennia.

Western conceptual (particularly economic) structures and theories are a handicap for Westerners in trying to understand all this but are an ally for Easterners, because they are so predictable and clumsy. The East learned much from 1997 but the West nothing.

To talk of return on capital as a meaningful rationale for any community in the midst of the ongoing farce on Wall Street smacks of a form of racial and intellectual insensitivity and arrogance that can only lead to disaster. China already has critical and unrivalled leverage in global consumer, commodity and financial markets. Indeed, it has already established a tributary relationship with America, where it manages the 'barbarian' by giving more than it receives. This allows it to progress much more than what the Americans denied the Japanese in 1997 - in fact the Chinese and like-minded neighbours have established a nascent alternative global financial system. The game is already over, but the Chinese will move discreetly and slowly.

By May 2009 it appeared that China may have responded to the global financial crisis by implementing a plan for a new international 'Confucian' economic order involving socially-coordinated economic activities - that would operate in parallel with the global system based on Western financial principles (and also that the socially-coordinated order faced severe risks).

In late 2009 the leader of Japan's newly elected government (of the Democratic Party Of Japan) suggested that Japan 'wanted its identity back' - and Japan's traditional 'identity' did not involve a Western-style democratic capitalism (see Which Identity Does Japan want Back?).

In December 2011 Japan arranged direct currency swap deals with China and India without intermediate involvement of $US - a step that was seen as likely to boost the role of Chinese yuan as an international currency [1]

Islamic societies: The Realm of the Self-repressive Tribes?

Islamic societies are the largest single cultural group to have had limited economic success - probably due to the above factors, and particularly to cultural features such as:

  • widespread acceptance of enforcement of moral legalism through community and family pressure which constrains individual behaviour (and allegedly sometimes leads to the violent suppression of minorities when in the majority) (see Is There Religious Legalism in Islam?). Moreover:
    • a Muslim contact indicated that it is necessary to comply with the 'letter' of religious laws - rather than complying with the 'spirit' of divine law - a revolutionary notion (ie love for God and others) that was introduced by 'Isa (Islam's greatest prophet, who Christians call Jesus) ;
    • the Islamic notion of 'guardianship' [Custody and Guardianship in Islam] applies in its basic form to children, women and the disadvantaged, but can apparently be extended to an expectation that the state should be the moral guardian of the entire community (see Guardianship of the Islamic Jurists);
    • people seem to be presumed (by Hibz ut Tahrir) to be morally responsible 'for others' (rather than 'for themselves', the Christian tradition, or 'to others', the East Asian tradition);
    • One observer argued that rejection or punishment of those who deviate from the authority that others exert over them is only partly supported by the Koran and arises mainly from Islam's Arab tribal background - where there was concern to preserve the cohesion / honour of the tribe at the expense of individuals [1]. Moreover honour killings (which world-wide are mainly, but not only, associated with Muslims) are seen as primarily a  reflection of the critical importance of honour in tribal societies and the view that women are property with no rights of their own - as such killings can't be justified through the Qu'ran (except perhaps in relation to the concept of gheerah - which involves men's responsibility for women) - see Honour Killings;
    • One observer argued that mainstream Muslims believe that it is up to God to decide who is a true Muslim - but that groups such as Islamic State believe that it is up to humans, not God, to do so;
    • A Middle Eastern Australian suggested that violence by Islamic radicals to promote their religion was a pervasive feature of the Middle East (and had its origin in what was taught in mosques);
    • Irshad Manji (a Canadian Muslim) argues that the Islam's current problems can be traced back to the late 11th century when a caliph banned 'independent thought' because it was seen to be politically disruptive;
    • However no matter what their origin, such practices may well make it impossible for institutions and attitudes to emerge which enable change that is fast enough to promote economic prosperity or to avoid general backwardness in a changing environment. Enforcement of a single set of moral laws encourages a more uniform way of life amongst a people which, while promoting harmony, inhibits change; 
  • the world-view which was elaborated around the religion of Islam either (a) to justify enforcement of moral legalism or (b) because of an apparent rejection in pre-Islamic Arabic thought of the possibility / desirability of free will (if the Islamic world-view is the result of an interpretation within the framework of Arabic thought of a revelation to Muhammad that was similar to the Judeo-Christian message). About Arabic Thought and Islamic Science) attempts to outline some aspects of the resulting world-view, and speculates about consequences including an inability to adequately understand reality, because of an unrealistic assumption that it has to be simply viewed as a direct manifestation of Divine will;
  • autocratic governments who suppress initiative because:
    • the ideal ruler is seen as one who imposes (Divine) law on his subjects (ie Islamic scholars' interpretation of 7th century Islamic texts), rather than responding to human wishes as would apply under democratic systems;
    • pressure by the Islamist minority committed to Divine sovereignty to apply fundamental religious laws to the management of social and economic affairs - whose complexity such laws can NEVER adequately deal with (see above);
    • the major factions in Islam are Sunnis who advocate 'following the well-beaten path' (which is not a formula for change) and Shiites who favour following inspired religious leaders (which is not a formula for market-responsive economic management);
  • a fatalistic view that all outcomes are the will of Allah (which apparently results from Islam's basic precept of submission to God, and a discounting of human efforts).

The enforcement of religious legalism either through family / community pressure (or through the state under Islamist ideologies) creates a complex environment for individuals in which rationality (ie the use of abstract concepts as models of reality) can't be used effectively for social, economic or political problem solving - because individual judgments is relation to such matters are always constrained by pressure from families / communities whose understanding of the situation may be incomplete or out of date (and thus no more likely to be correct than the judgments of those who have attempted central economic planning). There are limits on rationality in complex situations (as noted above). Western societies have been able to create simplified environments in which individual rationality works fairly well - because the expectation of direct individual accountability to God for the morality of their actions is a feature of Christianity. In East Asia methods for problem solving that do not rely on rationality have been deployed, through the creation of bureaucratically-orchestrated social, economic and political hierarchies. Neither of these methods for achieving constructive responses to a changing environment have been available to Islamic societies.

Effective intellectual progress also appears to have been stifled by a constant focus on the importance which Arabs and the Arabic language are presumed to have - on the grounds that these are the people and the language through which God chose to reveal his message [1].

The movie Kingdom of Heaven suggested a useful distinction between Islam and the West's Christian tradition. One character stated that "Islam says 'Do this', whereas Jesus said 'Decide' ".

[[An aside: The corresponding 'East Asian' tradition might be 'Get your subordinates to decide, and enforce their decision']] 

Those who were optimistic about the post-colonial era in the Middle East have seen their hopes dashed by: corruption, mediocrity; murderous regimes; a brain drain; and a cultural class in hiding [1]

Some fundamentalists have interpreted their societies' weakness as resulting from punishment for their lack of adherence to Allah's words to the Prophet as recorded in the Qu'ran - and sometimes sought strict Islamic legalism as a response. This is a reasonable thing to do under what seems to be a central element in traditional Arabic thought (ie that reality conforms at all times to God's will - which is inherently just). On that assumption the only available alternative explanation is that weakness must be the result of the actions of evil foreigners - an assumption that makes conspiracy theories inevitable.

However in practice these responses (which do not lead to any direct focus on political or economic reform) presumably further weakens their performance.

While the September 11 attacks have been seen to be due to Arab grievances over Palestine and western policies in middle east, the real cause of Islamist terrorism has been suggested to be ideological and socio-economic and rooted in the Arab world's self-inflicted wounds [1]. More specifically it has been suggested that success is impeded because: modernity is despised; mobility is hated; liberty and autonomy are distrusted; those who deviate from norms are persecuted; conformity is imposed on how people work, love and live;  and women are dis-empowered from education - so that children are brought up by people who know little of the world [1]

These difficulties may be essential background to understanding both a general resentment of the West by Islamic societies and the motivations of Islamist terrorism - which are speculated in Discouraging Pointless Extremism.

Eroding the West's Cultural Foundations +

Eroding the West's CULTURAL Foundations?

The philosophical and theological foundations of Western societies have also been under challenge, eg:

Challenging The Foundation: Christianity

Advances in scientific understanding in the 19th century (especially the evolution debate) called into question the literal interpretation of the creation story in the Christian Bible. The defensive reactions of fundamentalists to this contributed to a century long decline in the intellectual credibility and practice of Christianity - the foundation stone of Western societies which was particularly significant to Western economic and political advancement for reasons outlined above (eg because widespread adherence to Christianity uniquely allowed legal and government systems to emerge based on individual liberty and the latter in turn enabled rationality and analysis to be effective tools for problem solving).   There has been a challenge to Christian adherence in countries such as Australia by neo-pagan beliefs and a search for inner happiness [1] with the emergence of a large diversity of 'spiritualisms' [1] as well as Atheism as a new evangelical religion.

These challenges to the philosophical and theological foundations of Western societies have arguably weakened adherence to Christian ethical ideals to the point that they can no longer provide the foundation of moral interpersonal relations and thus of the system of law and government based on individual liberty that has provided very political and economic advantages (see Moral Foundations of Individual Liberty).

Unbelief Translates Into Cultural Masochism?

It has been suggested that 'cultural masochism' has become a common phenomenon in university humanities faculties - ie that a privileged group within Western society wants to see the system that sustains them defeated because they have lost belief in their society's foundations.

In 1944 Orwell suggested that the entire Left intelligentsia was dismayed when Britain won a victory against Hitler. This phenomenon (which can be called 'cultural masochism') can currently be observed in university humanity faculties. This is a product of unbelief - of the death of God (ie of a higher power that directs the human world) and collapse of institutional religion. In early 20th century many leading philosophical and literary figures were driven to despair by cultural decadence. Their culture was seen to have no authority, nothing to justify their existence. Now youth takes with idealistic enthusiasm to the Green political movement. What they are enthusiastic about does not matter - merely that they are enthusiastic about something. Their causes could only be supported by affluent people who are not exposed to any threat. Conrad's Heart of Darkness suggested that people go mad unless they have something outside themselves to bow down to. Politically there is a need for an established order. Failing belief can lead to hatred of the dying god. The longing for authority leads to hostility to that authority when it is challenged. In the 1960s brutal dictators such as Mao were idealized and supposedly peace-loving students demonstrated violently against the Vietnam war. In the 1930s the ultra Right (ie Hitler) exploited the need for something to believe in. Since then this has mainly been a Leftist phenomenon - though extreme right-wing parties could again arise. And Muslim youth's attraction to Islamic State reflects a similar phenomenon. Psychologists have developed theories about this (eg that the weak envy the strong and those who are discontent seek a cause). In the modern world patriotism results in wanting one's country to succeed. But when identification with a country fail, hatred of the nation is possible. In Western countries this results in hatred of US - the West's leading powers. Nietzsche argued that the 'clerisy' (the clergy and intelligentsia) is impotent (as compered with those who lead active /decisive lives) and this tend to cause them to become moralistic. Clergy in mainstream churches don't talk about their main mission (faith redemption and God - and providing convincing answers to big-meaning questions about life and death). Rather they emphasize with the disadvantaged and complain about government callousness. The intelligentsia has turned against Western high culture of true / beautiful and good. Rather the emphasis has shifted to criticizing society (eg there must now be hundreds of PHD theses in Australia being written about the oppression of refugees. This fundamentalism splits the world into good and evil - with no shades of grey. The powerful are seen to embody monolithic evil. The question is whether humans are more than Nietzsche claimed. There can be sympathy for others who are suffering. There is a need to consider the impact of unbelief in a secular age - where the axis of belief / unbelief is tipping to the latter and making it difficult to find metaphysical inspiration. However unbelief can also be presented as a rational / honest response to a disenchanted reality. Most people now at best believe that there is 'something there'. Dostoevsky' character Stavrogin illustrates the paralyzing anxiety that that can arise when someone believes in nothing.  Stavrogin was cursed by his inability to find anything that could constrain him. Australia's politics is now dominated by those who lack any commitment to anything but their own careers. However despite this many do find rich fulfillment in life - and this is an example of the transcendent (ie of the 'something there') that Stavrogin could not find. [1]

In 1929 Belloc equated Europe with Christianity. This was broadly correct at that time though it overlooked Judaism's contribution. It would not be correct now. Christianity is declining in Europe and North America - while it rises in Africa, South America and Asia. Christianity is under constant attack by born-again atheists (many of whom were brought up Christians). While agnostics acknowledge a lack of knowledge, atheists have unequivocable conviction opposing religious belief as irrational / dangerous. They don't criticise Islam - but prefer the soft target of Christianity. Christians are now being physically targeted by Islamist extremists - who also see themselves as at war with European states. The latter support freedom of speech and religion - and these are also being targeted. Multiculturalism has failed in Europe. Trevor Phillips who chaired British Equality and Human Rights Commission whose Runnymede report introduced the term Islamophobia now warns that Muslims have not integrated and are becoming 'a nation within a nation'. Large numbers do not accept Western mores while a minority see themselves at war with their adopted nations [1]

See also outline of University courses make student teachers hostile towards the West

Confusion of knowledge:

The certainties of classical (19th century) scientific understanding and the presumed universality of human nature and knowledge were in turn challenged in the late 20th century - by:

  • advances in science (which showed that reality was not simply a 'machine');
  • advances in the philosophy of science (which, for example, cast doubt on humanity's ability to identify universal laws of nature); and
  • postmodern views of knowledge as primarily a 'social construct' which reflects political assumptions.

Postmodernism (see Wikipedia view) arguably reflects a retreat by the social sciences and humanities into philosophical 'idealism' in the face of exposure to complexities (eg associated with the traditions of non-Western civilizations) which seemed to make 'realism' (ie attempts to 'truths' about reality) too hard.

A sense of what is involved can be gained by considering the implications of 'postmodern' views about knowledge.

A distinction can be made  between philosophical 'realism' (ie that knowledge reveals something about what is 'really' true, and that it is thus primarily assessed against empirical / 'does-it-work' tests) and philosophical 'idealism' (ie the concept that knowledge is mainly assessed against individual or cultural preferences and has political implications in reflecting a world-view that advantages elites). The 'realist' view was arguably a key cultural factor in the strength that Western societies acquired (eg as the foundation of science).

However in recent decades there has been significant change in emphasis by students of the social sciences and humanities. This has been described as 'postmodernism' [1], or post-structuralism or relativism. This view is partly justified by limitations in philosophical 'realism'. For example:

  • there are limitations in the methods that scientists use in attempts to develop positive knowledge and in human rationality (see How Solid are 'Science, Reason and Critical Thinking');
  • all knowledge of reality is ultimately filtered through our senses;
  • there are endless different ways of interpreting historical events - and thus no way of identifying a useful / universal theory to explain history [1]
  • some knowledge reflects arbitrary human judgments;
  • the nature of knowledge depends on a society's world-view;

But postmodern assumptions are also a massive over-reaction to those limitations. Though there are real limits on human understanding, there are practical advantages in using abstract ideas as a basis for rational decisions (for reasons suggested above) even if they are only approximations. Moreover:

Scientific conclusions that work in all known cases are useful, even if no one can prove they will work in all cases. Thus in the physical sciences there is a high level of 'positive even-though-approximate knowledge'. For example:
  • though it seems intuitively obvious from daily experience that heavier objects fall faster than lighter objects, experiments show that they fall at the same rate (in a vacuum). Thus simple positive, but non-intuitive, statements can be made about gravitation which are useful;
  • the effects of gravitation can be understood sufficiently for practical purposes through Newton's law (which regards gravitation as action at a distance) even though Einstein's theory of General Relativity showed that Newton's law was not completely accurate in dealing with extreme situations and that 'action at a distance' occurred because of the distortion of space-time.

Even in social systems where 'knowledge' may be more-or-less a product of society's assumptions, those assumptions have real consequences. Moreover:

  • claims about what is true of social systems are tested by experience over time. Whether claims withstand this test does become obvious;
  • ways of understanding can be constructed which give deep insights into aspects of reality which allow useful positive statements to be made, eg:
    • Paul Krugman argued that economies that grow rapidly through increased inputs of labour and capital (rather than through increasing the productivity with which those inputs are used) must eventually stagnate. This applied to the rapid growth in the Soviet Union in the 1950. Thus useful (but non-intuitive) advice could be given to others who might be going down a similar path (as he argued applied to many economies in SE Asia in the 1990s) [ref?]
    • Muslim nations often experience political authoritarianism and economic failure. However a core assumption in Arabic thought has apparently been that free will is impossible - a formula for fatalism (which makes economic initiative uncertain) and authoritarianism. Thus almost the entire problem of disadvantage and political failure in the Middle East - and the potential 'clash of civilizations' - could probably have be avoided if someone had bothered to consider whether this Arabic world-view is consistent with the way to universe works.
  • cause / effect relationships can often be counter-intuitive because of the complexity of the systems involved. Thus it can be essentially impossible for even the most expert analyst to define superior alternatives to established wisdom on the basis of rational analysis, and potentially dangerous to proscribe arbitrary changes to cultural 'truths';

The fact that historical events reveal no 'theory of history' in themselves, does not mean that they do not yield useful understanding when viewed in a utilitarian framework (ie in terms of positive knowledge derived from experience about what is required to achieve particular practical outcomes). Thus if one knows, for example, what is required to create a technologically advanced society, then a point of reference is available for understanding history. And the continued functioning of the society (or the achievement of similar outcomes by others) requires that that knowledge be able to be shared. Moreover it is 'truth' because it describes what works in practice. Also

The concept of 'fuzzy logic' implies that, while oversimplified models (such as natural language and traditional logic) may not fully describe complex systems, there is no better way of doing so.

In spite of this it seems that some students of the humanities have taken postmodern insights too far and argued that all that is possible is subjective interpretations, and any attempts to identify objective facts should be abandoned [1].

Postmodernism has parallels with epistemologies adopted in non-Western societies such as those with an ancient Chinese cultural heritage which are based on the view that abstract concepts are too simplistic to be useful. The latter assumption is correct in societies that lack a liberal social foundation (eg those in East Asia which are built around social hierarchies rather than individuals) but not valid for practical purposes in Western-style societies where liberal economic and political institutions are able to be built on a liberal social foundation.

Postmodernism has critics. For example:

"One of the many things ailing the present university ... is the emergence of what we might term vampire disciplines. These new disciplines are parasites on existing bodies of knowledge and tend to justify themselves in terms of critique, deconstruction, contextualism, discourse analysis and other approaches that don't add very much to the total sum of knowledge a society or civilization possesses about itself" (De La Feuente B., 'Vampire latch on to learning', The Australian, 26/5/10)

See also outline of Kessler C., 'Caught between a postmodernist and a hard case' (The Australian, 8/6/10) in A Case for Restoring Universities - which includes a CPDS view of the need for 'realism' in the social sciences and humanities.

Effects of Confusion in the Social Science and Humanities: In practice the confusion about knowledge associated with uncritical postmodern assumptions has also undermined and threatens key institutions, including effective government; community; liberty; democracy; egalitarianism; the rule-of-law; and education. It also arguably limits: the advancement of empirical knowledge; liberty; and progress.

Government

Public administration (see the Decay of Australian Public Administration) has been affected by practices that have postmodern parallels such as:

  • managerialism - which sees management as a generalist activity and assumes that one does not need to have knowledge of a subject in order to manage it;
  • politicisation - which values political compliance by senior administrators over the knowledge of practical realities gained through professional experience. This makes sense only on the uncritical postmodern assumption that the claims which members of a profession make to valuable specialized knowledge and experience merely reflects their own political agendas.  A practical example involves the failure of an electricity distribution because the organization involved was required to comply with directives from persons who did not understand the need for network maintenance (see Failure in Queensland's Electricity Distribution Network

Community

Community suffers dysfunctions that emerge because behavioural standards and truth are seen as matters of personal taste (ie humanity is again 'Eating of the tree of knowledge of good and evil' - with apologies to Genesis 2-3).

The view that 'right' or moral behaviour is merely a matter of opinion seems to have justified a radical individualism. The problem with this is that good moral judgments are anything but easy for individuals to make no matter how much they try to understand other's interests,  because the cause / effect relationships involved are so complex.

Individual rationality is a good guide to economic decision making only because this takes place in a framework of law, contract, accounting systems and standardized weights and measures (etc) which bridge the gap between individual considerations and beneficial society-wide outcomes.

Without a system of agreed moral law which individuals subscribe to the same can not apply to moral judgments. This is presumably the reason that the writers of Genesis 2-3 saw  trying to make moral judgments about impossibly complex situations on the basis of local considerations as humanities' 'original sin'. The problem of complexity can perhaps be illustrated by debates about the acceptability of homosexual behaviour - where (despite 20 years of debate) the apparently very real linkages between homosexual behaviour and child abuse and neglect has not been publicly considered though it seems critical to making any moral judgment (see Public Acceptance of Homosexuality).

Liberty

Individual liberty is facing several threats which are outlined below.

Democracy

Democracy has become less viable because in the absence of 'public truth' it is impossible to justify public support for a 'right' course of action or to contest the autocratic opinions of the powerful [1].

For example, anyone who argues (in effect) that all texts reflect a hidden political agenda [1], automatically invalidates any policy they might suggest. What could anyone gain (apart from an insight into its author's prejudices) from an 'analysis' which assumed that a positive or useful account of reality is impossible. This approach could reasonably be described as a 'negative circular argument' (ie one whose basic assumption disproves any conclusion).

Such assumptions make political debate meaningless so that power must revert to those who are strongest. An uncritical 'postmodern' disbelief in the relationship between ideas and reality (ie in 'truth') seems to be a characteristic of societies that have an ancient Chinese cultural heritage (as many do in Asia) - see Asia literacy. Such such societies are traditionally despotic, and subject to the rule of elites rather than a rule of law.

Egalitarianism

Similarly social equality must be at risk, because in the absence of 'public truth', national unity can only be assured by social hierarchy, which once again is characteristic of many societies in Asia.

Rule of Law

The rule of law is at risk because the words out of which laws or contracts are constructed might be seen as having only arbitrary or personal meanings.

The credibility of institutions has also been undermined - noting concerns that have been expressed in Queensland about distrust of decisions made by major institutions because of the view that they reflect bias [1].

Education

Education suffers because of the uncertainty about the relevance of educational content. This problem is illustrated by:

  • the perception that all cultures' assumptions are equally valid (see also The Importance of Values Taught in State Schools)
  • the trend towards outcomes-based education which emphasizes the ability to use knowledge rather than whether particular knowledge has been learned. This approach is useful in that it improves the integration of knowledge. However (a) it is easier to give a misleading impression of having knowledge in a generalized activity (eg writing a letter about a subject in which the subject is only 10% of the activity) than it is in answering probing questions about the subject alone and (b) a person's ability to acquire higher-level knowledge depends on their ability to relate new information to detailed knowledge which they have already acquired. Outcomes-based approaches may produce a cohort with restricted ability to learn - a serious handicap for a knowledge base economy.;
  • the conflict that has emerged at QUT about the nature of social knowledge - see A Crisis in Education at QUT?
  • the national history curriculum developed in Australia which appeared to provide students with a huge amount of information, but not with understanding of what was actually important (see Australia's Proposed National History Curriculum: Information without Understanding?).

Retarding the Advancement of empirical knowledge

The advancement of knowledge, especially in relation to cultural issues, has also been impeded because of the view that knowledge is purely a politically motivated reflection of cultural assumptions, and that all assumptions are equally valid.

This leads to problems such as:

Critics have suggested that postmodern assumptions grew to dominate the humanities because English professors (who were the first to accept this were poorly trained) - in that they lacked basic knowledge of philosophy. [1]

In particular multiculturalism has been widely emphasised within Western societies out of a noble desire to be accepting and tolerant of all people. However accepting all cultures because individuals identify with them, and thus failing to consider the consequences of cultural assumptions leads to serious problems (eg see Cultural Ignorance as a Source of Conflict and Moving Australia Beyond Traditional Multiculturalism). It is not possible to both value the welfare of all people and to accept the validity of all cultures, and people are more important than their traditions and ideologies (eg consider Mark 2:27).  

Ideals of individual freedom, human rights and democracy which Western societies espouse may have been losing their theological and philosophical foundation (See Why Freedom?)And:

Individual liberty in particular (which as noted above has had a critical economic role) is facing several threats.

Firstly (as above) the uncritical postmodern challenge to 'public truth' could remove the major instrument that can be used to resist authoritarians. 

It has been correctly said that 'The truth shall set you free' - and it seems likely also that 'The loss of truth will enslave you'.

Furthermore conspiracy theories, which are often circulated as an alternative to proposing serious global public policy alternatives, appear to have postmodern roots (because the latter encourages the view that disadvantage results from exploitation - because 'any argument that policy X is better than policy Y merely reflects the fact that some elites would be politically advantaged by policy X'). And those conspiracy theories in turn provide some of the 'rationale' for terrorists and other extremists   (see Discouraging Pointless Extremism).

Secondly individual liberty could well become socially and politically intolerable, as it seems to translate into immorality and irresponsibility where the Christ-ian ideal of individual self-denial / putting-God-and-others-first ('responsible liberty') is displaced by a radical individualism ('expectant liberty').

In Moral foundations of individual liberty  it is suggested that this trend has the potential to undermine systems of law and government which have been built on the concept of individual liberty - because in societies where a put-others-first ethical ideal is not embedded in individual consciences, legal and governance systems need to be deeply involved in determining and enforcing the nature of moral interpersonal relationships - and liberty is a foreign concept

Moreover where individuals focus on what they can get at others' expense (instead of contributing to the individual, communal and collective welfare of others by meeting their individual responsibilities) a gap between is likely to emerge between what is 'expected' and the resources available to meet those expectations.

Thirdly weakening morality associated with radical individualism provides at least some explanation of attacks against Western societies by Islamist extremists [1,  2].  And the alienation from the 'new Christendom' (ie that in the third world) could lead to even more significant frictions in future [1]

Progress: A rationale for the view that Western societies with their belief in ideas and progress might have been a temporary, and out-dated, phase in human history was argued by Eisuke Sakakibara (an ex-senior official with Japan's influential Ministry of Finance, known Mr Yen because of his role in manipulating the Yen / $US exchange rate)  in 'The end of progressivism: A search for new goals' (Foreign Affairs, Sept-Oct 1995). Sakakibara was also the author of a book, Beyond Capitalism: The Japanese Model of Market Economics - which presented the case for Japan being a non-capitalist market economy;

A distinctive characteristic of Western societies it may be noted has been a belief in the possibility of progress (eg see Robert J. The Triumph of the West, 1985).

Sakakibara's argument was based on the existence of supposed intractable difficulties in resolving global environmental conflicts and social inequalities (ie the types of issues pursued by anti-globalization demonstrators). A similar view the West should abandon its belief in the possibility of further progress (ie history) has been expressed by Fukuyama [1].

Evil: The attacks in the US on September 11 indicate shaking of the foundations of the West that has been indicated for a century. The 50 year Golden Age from the 1950s may be over. Conrad's 'Hearts of Darkness' has been studied for 100 years - concerning people who believe that their lives in cities are not worthwhile, seek freedom in the wilderness and discover evil. In the 1960s a generation realized the excesses of the world and the cities about them - and sought a different path. For 200 years Encyclopaedia Britannica presented knowledge and progress to everyone. Now Al Qaeda has an encyclopaedia for guerrilla war and terrorism (Carroll J., 'With terror in our hearts', FR, 6/9/02)

Some suggestions about how these difficulties might be resolved are made below.

Cultural Ignorance as a Source of Conflict (Religion Needs a Less Superficial Analysis) Cultural Ignorance as a Source of Conflict

Differences in cultural assumptions, and particularly the inability or unwillingness to discuss the practical consequences of those differences, can result in conflict (see The Second Failure of Globalization?).

It is very difficult for citizens of any country and their political leaders to perceive the implications of a fundamentally different culture because doing so requires moving outside the way they normally think and see the world (which few can do).

By way of example of the intellectual difficulty in cross-cultural understanding, consider the suggestion (by an Australian academic arguing for debate about the causes of the September 11 attacks) that the most essential element of human culture is 'the capacity to reflect, argue, speak and mediate the aggression of the ego and bring it under the jurisdiction of symbolic law'. [1

Such an approach seems perfectly reasonable from a Western cultural viewpoint (the product of classical Greek thinking).

But it is not correct, because from (say) an East Asian viewpoint (ie  in societies with an ancient Chinese heritage), the notions of abstract ideas and symbolic law are not the most essential element of human culture. For example: government under Confucian traditions is by man (eg social superiors, elite bureaucracy) rather than by law; power is defined as the avoidance of decision making (see Pye, Asian Power and Politics) because abstract understanding is distrusted;  decisions in Japan are seen a preferably coming from 'the belly' rather than the head; the core precept of Daoism is 'the Dao (way / truth) which can be named is not the true Dao" - which is a statement of the limits to rationality; and silence can be seen as more useful than speaking (see Matsumoto, The Unspoken Way). (see also Asia Literacy).

Furthermore any attempt to seriously discuss the practical implications of cultural differences has been impeded by:

  • the complexity of the issues involved;
  • uncritical postmodern theories that have assumed that cultures are purely a matter of personal preference and are equally valid (see above). Edward Said's influence on Middle Eastern studies appears to have been part of that phenomenon. The practical consequences of uncritical postmodern theory include:
    • a ('relativistic') blindness to the practical implications of different cultural traditions; and
    • a preference for finding scapegoats for people's problems, rather than solutions;
  • the 'social' limits to the range of consequences of cultural differences that seem to be considered by those who have taken a more positive approach to the study of society - an approach was apparently initiated by Emile Durkheim (as the principal architect of social science and the father of sociology);

Religion Needs a Less Superficial Analysis - email sent 25/12/12

Nick Cater
The Australian

Re: ‘Believe it or not’, The Australian, 24/12/12

I should like, with respect, to suggest that there is a need for a less superficial commentary on the significance of religion than your recent article.

My interpretation of your article: For some Australians Christmas is not a time for rejoicing but for hand wringing and torment. Hard core secularists are troubled by the survival of religion in this scientific age. About 1/5 of Australians said that they had no religion at last census. The numbers actively hostile to religion are hard to guess. Secularist evangelists gather at international conferences to denounce other’s foolishness (ie believing in the divine), and are challenged by intelligent opponents. Intellectual frustration at the survival or religion has varied. It was strong at start of 20th century (at dawn of self-conscious modernism). Human sciences (eg psychology / sociology) allowed intellectuals to contemplate religion’s demise. This was premature – as conflicts in the 20th century saw an increase in human faith. The Marxist explanation (that religion was the opiate of the masses dispenses by the ruling class). A century later scientists still can’t explain the religious instinct. Some saw ‘memetics’ (the passing on of cultural ideas) as a way of viewing religion as a spreading virus (ie as an illness). Sociologists have done much better by viewing religion as a social necessity (rather than as a psychological prop or political instrument). The sociological explanation was first put forward by Emile Durkheim (in The Elementary forms of Religious Life, 1912) – and was based on Aboriginal totemic culture. Aborigines were seen to practice simplest form of religion – uncomplicated by the supernatural. He described Aboriginal religion as ‘primitive’ but suggested that there were no essential differences between primitive thought and that of civilized man (as all mechanisms of judgment and rationality are imminent in even the most rudimentary civilizations). Durkheim saw religion as groupthink – a set of facts / principles / manners that are accepted without question by those in a group which both ensured harmony within the group and distinguished the group from others (eg in terms of identification with a ‘totem’). This notion of shared assumptions within a group can be applied well beyond the scope of traditional religion (eg to political groups). Craig Matheson (Flinders University) applies this to cultural differences between Treasury and other public service departments. It has also been used to explain phenomena such as Islamophobia and Twitter. Oppositional moral communities, each with its own ‘totems’ (such as ‘compassion’ or ‘choice’) can be applied to political debate. If religion is not seen as tied to the supernatural, then shared assumptions within any group can be viewed that way. Western individualism purports to reward free and independent thought, and yet complaint is frequent when views and attitudes converge. Religion may be impossible to abandon, as it will simply re-invent itself in way suitable for the modern world.

While it is indeed possible to define religion as merely the shared opinions within a particular group and to note that not all groups will have the same opinions, this is an extremely superficial approach because ‘religion’, in the sense of particular groups’ world-views, is a primary determinant of their ability to be materially successful and live in relative peace and harmony (see Culture Matters).

The ‘post-modern’ approach that seems to have spread amongst students of the humanities and social sciences in Western universities has led to the view that the practical consequences of differences in cultural / religious assumptions should be ignored because culture / religion is simply a social construct. This has had very serious consequences (eg perpetuating the disadvantages of those who suffer from dysfunctional cultural assumptions, and periodically contributing to violence) – see Ignorance as a Source of Conflict.

It is irresponsible to treat religions as just ‘oppositional moral communities’ without looking at the very real and significant practical consequences of the assumptions and traditions they embody (eg consider The Challenge of Aboriginal Advancement, 2002, Erosion of the Moral Foundations of Liberal Institutions, 2003+, Saving Muslims from Themselves, 2012 and Competing Thought Cultures, 2012). It was also overly-simplistic for social scientists to presume that ‘religion’ in a supernatural sense should not survive in a scientific age (eg see How Solid are Science, Reason and Critical Thinking?).

John Craig

  • accusations of racist motives (in those societies that see racism as immoral) about any attempt to examine the practical implications of culture (see Complexities in the Refugee Problem);
  • sensitivity to discussing issues that threaten a groups' sense of identity, or could bring accusations of cultural imperialism.

Moreover endorsement of diverse cultures (providing they are (say) consistent with Australia's democratic traditions) has often been seen as an essential feature of a tolerant society. However this 'tolerance' is often espoused by persons who are unaware of what cultural features are actually required to sustain democracy [1], or that those features are not universal.

The absence of analysis and serious discussion of the practical implications of culture has most unfortunate consequences.

For example

Moreover a failure to analyse or discuss the practical implications of culture may also lead to perceptions that the problems facing indigenous communities are primarily the result of discrimination or racism (see The Challenge of Aboriginal Advancement).

The above argument suggests that the potential for a 'clash of civilizations' arises from both (a) limitations in the democratic capitalist model of political economy which is being globalized, and (b) the practical political and economic consequences of differences in cultural assumptions.

It also leads to the conclusion that serious problems have arisen mainly because Western students of the humanities, who were the only ones positioned to analyse such difficulties, have either failed to do so or have taken a far-too-narrow approach in doing so.

Risks in a Clash with Islamist Extremists

RISKS IN A 'CLASH' WITH ISLAMIST EXTREMISTS

Islamist extremists apparently inflicted a new 'Pearl Harbour' in the US by a 'kamikaze' attack on some key financial and military structures on September 11, 2001.

Though many people in Islamic countries (and conspiracy theorists elsewhere) prefer other explanations (see About Conspiracy Theories) there seems to be enough admissions of responsibility to settle the matter [1, 2, 3, 4].

The human and economic damage that was inflicted was significant, but not critical.

For every view that damage will be severe (eg Hartcher P. 'Global economy faces harsh reality', Financial Review, 28/9/01), there seemed to be a counterview (eg Stelzer I. 'American economy may yet defy the pessimists, Courier Mail, 6/10/01 )

The US proposed a 5-10 year Operation Noble Eagle to eliminate terrorist networks involving military, diplomatic and economic responses - in which military action would play only a small part (eg see Evans M. 'Battle lines redrawn', Courier Mail, 22/11/01).

But the situation is risky as detailed in Risks in a 'Clash' with Islamist Extremists, because:

  • the likely inadequacy of primarily military solutions to terrorism by Islamist extremists.  For example, the terrorists seem to be seen as struggling on behalf of radical Islamist ideologies that have had significant influence in the Muslim world - which reflect resentments that are partly justified. Far more could be achieved in other ways.
  • the impossibility of stabilizing a country such as Afghanistan by military means;
  • the difficulty of limiting the scope of conflict;
  • the threats to the viability of the global economy that could arise;
  • the lack of any effective system for global governance; and
  • the need for devoting resources to overcoming environmental constraints on global population and economic activity rather than on futile conflicts.

There is moreover considerable risk that a 'clash' with Islamist extremists might divert the attention of world leaders from other risks, and even a possibility that this may have been intentional.

Defusing a Clash

Defusing a 'Clash'?

Though sustainability problems are arising under current systems of political economy, it is unlikely that any of the extremists who might see advantages in trying to 'clash' civilizations out of a desire to replace the dominant democratic-capitalist order (or to prevent its feared impact on their cultural traditions or out of a desire for profit) have got much to offer to humanity generally as an alternative.

The following is preliminary speculation about evolutionary change to Western-styles of democratic-capitalism that might lead towards a world in which all can reasonably hope to succeed. Suggestions of a similar nature have begun emerging from other sources (see Beyond MADness)

Effective Democracy

Democracy appears to be seen as a 'good thing' by many different types of peoples - and has been widely adopted.

None-the-less this view is by no means universal. For example:

  • democratic government does not prevail in most Islamic countries [1], and, even though it has been suggested that a majority of Muslims would favour this [1],:
    • deep divergences in political culture seem to flow from Islam and Christianity: “The virtues of Western political systems are, to a certain kind of Islamic mind, imperceptible—or perceptible, as they were to Qutb and Atta, only as hideous moral failings. Even while enjoying the peace, prosperity, and freedom that issue from a secular rule of law, a person who regards the shari‘a as the unique path to salvation may see these things only as signs of spiritual emptiness or corruption.” (Scruton R., The West and the Rest);
    • the traditional ideal ruler under Islam was one who imposed (divine) law autocratically on the people, rather than one who responds to their wishes [1];
    • democracy is intrinsically evil, but none-the-less perhaps a necessity to enable Muslims to achieve other religious duties [1];
    • Australia's Islamic Youth Movement described democracy as a 'Satan-based' system [1];
    • there is a division within Islam between Sunnis (the traditionalists who emphasize the traditional practices of Islam rather than inspired leaders) and Shias who seek divinely guided leaders - preferably those drawn from the prophet's family [1]
    • it appears that at least some Islamist extremists believe that democracy is inconsistent with Islam, and that a world-wide Caliphate should be established to guide Islam (and some favour Osama bin Laden to fill the position of Caliph) [1]
    • Malaysia's Prime Minister (Mahathir) described democracy (as well as human rights) as Jewish inventions to make it seem wrong to persecute them [1]
  • democracy is not respected in much of the Middle East because it is associated with Western societies who have long dominated the region [1];
  • democracy exists primarily 'for show' in East Asia (where real government is by bureaucracy with the powerful (Emperors in the past, elected governments or Communist Parties now) given status as long as they do not interfere with government). (see Asia literacy)
    • [Aside: The author has a  Chinese acquaintance (an amateur 'philosopher') who argues that most of the problems in the world are the result of the ignorance and base instincts of those who gain power in democracies];
    • it has been argued that Western societies are 'barbarians' because the development of advanced weapons allowed common folk to be the equal of their aristocratic betters [1]
  • democratic reforms have been seen as inadequate in themselves in Latin America - and to be being at risk of rejection in favour of authoritarian alternatives due to their inability to ensure equal distribution of wealth [1]
  • concepts such as political liberty can be seen as Western cultural imperialism [1];
  • in non-Western societies it has been said that there is always a market-dominant ethnic minority (which controls most wealth) and an impoverished indigenous majority. Free market democracy increases the wealth of the former, and the resentments and political power of the latter - often with explosive results [1]
  • without the support of sophisticated civil institutions the combination of free markets (which create inequality) and democracy (which allows the resulting resentments to be given expression) can be an explosive combination  [1]
  • constitutional liberty has been described as better for developing countries than democracy [1]

Furthermore democracy can (and in practice does at times) 'fail'  where organized interest groups influence popular opinion by gaining control over information channels and using these to present favoured explanations of events and ideas for future actions. The political system in the USA (whose leaders claim to champion democracy globally) appears to be particularly badly distorted by organised lobbying on behalf of interest groups.

Moreover the power which a democratic mandate provides can at times result in poor strategic decisions in the absence of a politically independent civil service [1]. And the quality of democratic government also depends on the civil institutions that can provide analysis and policy inputs (see Queensland's Weak Parliament and Restoring 'Faith in Politics').

The effect of inadequate institutions can be illustrated by the US's response to the potential 'clash of civilizations' issues discussed in this document. Western societies face significant challenges from the practical results that East Asian societies are achieving under radically different paradigms - yet this (which requires cultural and economic skills) has received virtually no attention because challenges from Islamist radicals (who have essentially no prospects of achieving practical outcomes) have better suited the (military and industrial) skills of influential institutions.

Civil Institutions and Islam: it may also well be that the major cause of the general failure of democracy in Islamic societies could be that only poor quality advice is available from civil institutions - because (a) many do not believe that Islam envisages a separation between religion and state and (b) as noted above, it is impossible to understand or govern complex social and economic systems on the basis of the simpler rules appropriate for individual behaviour

For this and other reasons (eg see Fatal Flaws which comments on cultural preconditions) democratic government does not always ensure material prosperity and national strength - and this could be one reason that it is often resisted (eg in the Middle East [1]).

However despite such dissent, democracy has in its favour that:

  • the failures associated with authoritarian and elitist alternatives seem to be even worse (as Winston Churchill once argued); 
  • it requires that elites take account of the needs and aspirations of common people;
  • powerful organized interest groups are forced to compete with one another, and can be challenged by anyone who invests the effort required to develop better explanations of past events and options for future action;
  • political stability is promoted because a substantial fraction of the population has to be supportive of those who rule, and there will be no other potential ruler who has greater support;
  • it does not in itself imply any particular social or religious order, but can accommodate whatever world-view is dominant in a community;
  • it can provide some political legitimacy to what may be quite naive policy agendas, and enable the weaknesses of those agendas to be made obvious to potential supporters rather than festering in secret (see also comments on Discouraging Pointless Extremism ). For example, democratic legitimacy was the means whereby the radical agendas of One Nation in Australia were defused. 

However, unless it is supported by appropriate institutions (a competent bureaucracy, a developed civil society and cultural traditions which facilitate change), democracy can be ineffectual or self-serving (or be used to 'legitimize' narrow-minded populism). Thus it can always be made more effective by developing those institutions. 

It may be that defeating Islamist terrorism mainly requires exporting effective democracy to the Muslim world (See Reform in Islamic Societies). However this is not an easy thing to do (see comments on Afghan reconstruction.)

Creation of effective democracy would need to be accompanied by cessation of Cold-War-style covert operations to achieve geo-political objectives which make it difficult for such societies be certain that they are not the victims of 'grand conspiracies' (see About Conspiracy Theories).

For example: Malaysia's PM has stated that any attempt by Australia to launch pre-emptive strikes against terrorist bases in Malaysia would be seen as an act of war (Cheesman B 'Pre-emptive strikes are acts of war: Mahathir', FR, 4/12/02)

Under the Bush administration the US sought to promote democratic government in the Middle East through advocacy and by invasion of, and subsequent efforts to 'reengineer', Iraq.

Perhaps a more powerful method of achieving this goal could involve imposing a 5% tariff on imports from all countries that lack an effective democratic style of government, and increasing this a further 5% every three months indefinitely.

Ethical renewal

The radical individualism which has threatened to make individual liberty (and its political and economic advantages) unsustainable could be abated if the Christ-ian put-God-and-others-first ethical foundations that Western societies have tended to lose in the 20th century were rediscovered - and expanded into the international arena.

One reason to suspect that this is possible is that the philosophical objections to those ethical foundations are themselves in trouble. In particular 19th century science's ideas of a 'clock-work universe' have lost credibility. Moreover the basis of scientific worldviews that are seen to make metaphysical speculations futile are also suspect because it seems that many (and perhaps all) of the 'deterministic' causal relationships in nature which science seeks to identify (ie scientific laws) are both changeable and an inadequate basis for explaining such change.

These points are developed further in Problems in an internally deterministic scientific worldview (including Does Quantum Mechanics Explain Creation?)

Also as argued above the limitations on the value of empirical knowledge and 'truth' that uncritical postmodern and post-positivist philosophers have emphasized apparently reflects an over-reaction by students of the humanities to limitations in philosophical realism (ie the concept that ideas are judged by empirical tests) which has led to an over-emphasis on idealism (ie the concept that ideas are judged in terms of cultural or personal preferences).

Moreover there are clear signs of new debates about values and metaphysics in Western societies - which at present has no clear outcome.  And the tide of public opinion may already be turning against radical individualism. For example:

  • some research implies that the (so called) 'Millennial' generation (those under 18 who can be seen as the 'victims' of dysfunctional social arrangements in the baby boomer generation) appear to be intent on 'rebelling' by rebuilding society [1]; 
  • youth have been described as leading a return to Christian values [1];
  • a previously unfashionable mood of seriousness and sincerity is being reflected in movies [1]

The attacks by Islamist extremists may offer good prospects of accelerating the rediscovery of Western societies' put-others-first ethical foundations, and thus reduce the potential risks to the social and political acceptance of individual liberty that have been accumulating, and which would have been economically disastrous. 

Enhancing Communication

Facilitating some depth of cross cultural communication about important issues would also be useful as concerns which one culture may have may prove too hard to express in terms of others' language and cultural icons - so that the points being made seem trivial, nonsensical or primitive though they may actually be very significant in others' world-views if properly expressed. Moreover, Islamist extremists appear to be as much revolutionaries against the mainstream of their own societies as they are against anyone else - and to be gathering support because they offer a glimmer of hope that no one else does. That support base could well evaporate if:

  • reputable Islamic citizens and scholars seriously discussed the issues involved in advancing the status of Islamic societies with support from Western experts and scholars (see Discouraging Pointless Extremism );
  • efforts were made to remove the stumbling block represented by the role of religious issues in official discussions. The virtual complete absence of religious discourse amongst secularized Western institutions (who carry to extremes the limits to which it is possible to understand social and economic systems in terms of fundamental principles) inhibits real communication with Islamic societies (who are committed to 'submission to God' - and frequently ignore those limits altogether).

The activities of Al-Jazeera (the independent Arab satellite TV channel) appears likely to be quite useful in promoting effective communication as (a) it appears to seek balanced news coverage (which has apparently given rise in parts of the Middle East to reports that it is secretly sponsored by Israel) and (b) it is seeking a global coverage.

Reform of the Global Order

Since their origin at the start of the 18th century, market economies and capitalism have spread  because of their economic efficiency, and this has repeatedly forced changes in social and political arrangements - which has led to resistance because of their effect on earlier values and institutions. There is nothing new about anti-globalization protests [1].  

Attempts to create a global order to reduce such stresses and the potential for conflict have been made for a century. The first truly global order (a unilateral system, the British Empire on which 'the sun never sets') had ceased to be effective by around 1900. The second, a multilateral system established following the world war of 1914-18, was the League of Nations which had failed by the 1930s. The post WWII global order involves the United Nations and the financial institutions emerging from the Bretton Woods agreement (ie the IMF, World bank and what is now the WTO).

This global order has not been working well apparently for reasons suggested in The Second Failure of Globalization?. In particular:

  • there is no agreement about what form of socio-political-economy should be the basis of a global order. Current multilateral institutions reflect the universalist individualist democratic capitalist values that the US (who orchestrated their creation) favoured;
  • the United Nations, is too often of little practical value (being inadequately staffed, under-funded, pursuing ineffectual 'political' formalities, irresponsibly influenced by tin-pot despots and single-issue NGOs, and unable to enforce its security resolutions);
  • global financial institutions have been heavily influenced by the US to pursue its preferred liberal democratic capitalist model, and have attracted as much criticism as the UN system.

The security issues raised by the 9/11 attacks in America were seen by some as likely to force reform of the global order [1, 2, 3]. Other reasons for such reform include:

Making constructive progress in the Middle East would appear to be particularly useful in reducing the potential for global terrorism [1] - as some Islamic communities appear to believe that this is a fundamental motivation [1].

Global institutions arguably need to be reformed to take account of (say):

A method to progress such reform of global institutions, and simultaneous adjustment by individual societies, is suggested in A New 'Manhattan' Project for Global Peace, Prosperity and Security.  

Effective Development Practices

Development of economic (and community) capabilities could be accelerated by:

  • systematic study of the practical implications of different cultural assumptions - which appears to have been neglected because (a) cultural relativists prefer to assume that such differences should make no difference (b) cultural leaders prefer not to have the world-view under which they can dominate challenged (c) economists prefer to assume that an economy is a 'machine' which can be constructed to an ideal blueprint and (d) outside political and business leaders fear being accused of 'imperialism'.
  • the use of methods like those suggested in Defects in Economic Tactics, Strategy and Outcomes and Developing a Regional Industry Cluster: A Possible Generic Process. The latter describe possible developmental processes in Australia which focus on information and the development of economic systems rather than on investment. These might be equally relevant as a new style of foreign aid.  It is unlikely that massive aid payments would be of any real help as the key issue is the development of institutional capital, rather than merely building physical capital in an environment of established institutions (see also Towards a New Global Financial System );
  • encouraging the view that the economic rents derived from natural resources should be the possessions of humanity generally rather than of those who control particular territory, thereby (a) eliminating the distortion of local political and business elites in favour of simple resource extraction which is the basis of the (so called) 'resource curse', and thus making effective economic development easier; (b) reducing the incentive for wars fought for control of rich natural resources; (c) reducing, but not eliminating, the 'Dutch Disease' (ie the distortion of exchange rates associated with resource exports which can undermine the position of other industries); and (d) providing financing for international institutions. .

The suggested presence in all societies which lack Western traditions and institutions of an economically dominant ethnic minority and an impoverished ethnic majority needs to be considered [1].

Reviewing the Role of Money

A key future development issue may involve adjusting the role which money plays as a means of exchange, a store of value and a driver of economic change in democratic market-oriented economies, given:

  • the effect that that measuring value in monetary terms has on forcing rapid technological change which arises because high economic productivity requires constantly seeking competitive advantages (as the latter are transient because competitors soon catch up and cause prices and profit margins to decline). Technological advance, in turn, allows economic output and human populations to expand and this can have negative environmental impacts;
  • the cultural and other difficulties which some societies have in achieving success in monetary terms (ie in earning the income required to achieve an equitable share of consumption); and
  • the self-reinforcing effect which money flows can have on an economy's performance - which can lead to bubbles and busts (ie a high level of investment - or withdrawal of investment - can be self-justifying because of its effect on overall demand) [ 1 ].

A related question involves appropriate means for governance of companies in a democratic market-oriented economy (ie should 'capitalists' have control) given:

  • problems in corporate governance that arose in the 1990s (mainly in the US) when corporate managements were given incentives (by stock options) to give priority to shareholder value;
  • uncertainty about whether those who provide finance should be considered to be the 'owners' of business - when the latter's major assets are the knowledge and skills of its staff [ 1 ]

However changing the role which money plays could be difficult because:

  • money provides a means for calculating appropriate economic actions which would defeat human rationality because of the complexity of economic systems;
  • money can provide two 'grass roots' indicators of desired economic directions through empowering both consumers and a democratic electorate;
  • economic change that was required by the productivity slowdown of Western societies in the 1970s was only achieved when emphasis shifted to shareholder value in the late 1980s;
  • money would need to be replaced by some other means of arbitrating economic 'success' - and this could allow abuses by giving power to human elites with even more selfish and less 'grass roots oriented' agendas.

Furthermore technological advance also has the potential to reduce environmental impacts if:

  • a 'demand' for this, and information about what is required, can to be organized; and
  • cheap and 'clean' energy were able to be deployed - as increased energy intensity appears to allow other environmental impacts to be reduced.    

In future attention might need to be given to (a) improving the economic productivity / incomes of the least developed economies - which is a 'learning / organizing' issue rather than an investment issue (b) arranging financial 'demand' for environmental values and grass-roots access to relevant information (c) seeking cheap and clean energy sources (d) promoting value systems that do not 'worship' money and (e) inhibiting the 'self-justifying' character of large money flows.

While alternative traditions of political economy appear to have contributions to make, they do not appear to offer better universal solutions.

For example:

Traditional Islamic societies have much to teach others in terms of moving away from materialism and their ideal of submission to God.

However a very high rate of creative processing of matter and energy (which there are no traditional Islamic models for achieving) is required for the survival of the majority of humanity (especially those in cities) and, to a greater or lesser extent, to maintain the living standards of all. Current human populations are now around 6bn, and pre-modern economic styles would probably sustain much smaller numbers (eg only (say) 50m hunter-gathers or (say) 500-1000m in agrarian economies - noting the historical global populations at which humanity found it necessary to shift to more energy-intensive economic styles).

Also (if anyone thought seriously about the cultural issues involved) there is probably no reason why methods could not be developed for Islamic societies to be more successful under a democratic-capitalist model than they have been to date. For example:

  • a new-found dynamism which appears to have affected Islamic banking ;
  • there may be models to be discovered in the experience of countries such as Malaysia, which appears to have been economically successful with a majority Muslim population and a democratic capitalist framework (though to some extent results may have come through the networks and methods of Malaysia's 40% ethnic Chinese minority); and
  • Comparative Development Theory: Indonesia and Australia suggests that discovering ways to achieve market-relevant changes to economic systems is likely to be of key importance. Challenging the assumption that fundamental and relatively-unchanging religious principles can allow more complex and rapidly-changing economic and political requirements to be analyzed or deduced could be one key to progress (see detailed note in Discouraging Pointless Extremism )

East Asian societies have much to teach others about social relationships and the process of social and economic change. However traditional East Asian models (to oversimplify hopelessly): 

  • tend to be based on particularist ethics (ie on obligations only to those with whom one has a relationship) - and thus do not lead to a concern for outsiders and can not be universal. Moreover particularist ethics allows deceptive 'Art of War' strategies (to erode an opponent's political and economic systems to advantage oneself) to be seen as an acceptable thing to do and result in a profound lack of trust between societies. For example, the Prime Minister of Japan is reportedly believed by his Asian neighbours to be 'a dangerous populist and nationalist leader using his charisma to steer Japan back towards imperialism and re-militarisation' (see also - Reverting to the Soul of a Samurai? ). And unfortunately (though this possibility can not easily be seen by Western eyes) such Asian suspicions are not impossible. Japan's history, culture and traditions probably doom its leaders to be seen in this way irrespective of their intentions;
  • give power to social elites - who can be hard to remove peacefully even if they cause failures. Also it appears that (Confucian) political authoritarians may be (incorrectly) ascribing East Asian economic progress to themselves (ie to those who learn strategy from the study of history), rather than to the opposing Daoist traditions (which emphasize learning from others); and
  • have difficulty dealing with finance as a problem in itself - because of concern for 'reality' rather than for abstracts. Whether the latter is a fundamental constraint is impossible as yet to say, though as noted above the use of money (if control of it is widely distributed amongst citizens) does avoid the need for elites to have to make impossible (or self-serving) judgments about what is in the 'community' interest; 

There may however be general gains to be made by ceasing the worship of false 'gods', such as: 

  • money - though it is a useful tool for coordinating economic activity through providing a means of exchange, a store of value and a means for signaling the need for economic change, many have made Mammon their god and pursue him ruthlessly;  
  • self - though a positive self image is healthy many now seek God in themselves, and their self-absorption leads society to failure - and others, having learned something of the process of creation and used this to gain power, see themselves as unique Sons of Heaven; 
  • law - though it is a useful tool for simplifying the reality individuals face, some have seen strict adherence to a law (as compared with acting in its spirit) as the path to God, or preached martyrdom whilst killing others in the name of such a legalism as the path to salvation; 
  • nations - though useful containers for the institutions which particular cultures require, they are not the basis for presuming superiority over others; 
  • democracy and other political styles - though they may be useful tools for managing aspects of human affairs, some expect far more of the institutions of democratic states than they can ever deliver. 

While it is very necessary for citizens to keep a close eye on leaders in democratic societies, such societies are not the main repository of megalomaniacs in the world - and are thus not the main source of any risk of a futile 'clash of civilizations' (see About Conspiracy Theories) 

Those who believe that an alternative world order would be better and wish to achieve it by revolution are the ones who mainly need to "pause, breathe deeply and reverse their megalomania".   So while it is convenient for citizens to put well-informed pressure on leaders in democracies - there is much more to be gained by finding ways to pressure those who favour revolution into considering the evolutionary alternative.  

The best way to contain megalomaniacs who favour revolutionary solutions could be for:

  • global elites to really listen to what the disadvantaged communities that the megalomaniacs purport to represent have been trying to say.

One suggestion: War on terror needs to address social foundations of al-Qaida and remedy the unequal relationship that has kept Muslim societies on the receiving end, with no input into the agenda and values that govern an increasingly integrated world. Defeating terrorism by military means is a pure illusion. A multi-dimensional approach is needed that includes both Islamic political philosophy and international relations [1]

  • subjecting the ideas of the 'spiritual leaders' of those who resort to terrorism to judgment by a jury of their peers after expert inputs - as suggested in Discouraging Pointless Extremism.

However the most critical requirement for heading off a 'clash of civilizations' must be for social scientists to review the limitations of uncritical postmodern assumptions and get involved in seeking to develop practical solutions rather than seeking scapegoats.

Attachment A: Some Historical Views of Wealth

Attachment A: Historical views of wealth

The world's greatest 21st century problem and danger is the gap in wealth and health between the rich and poor. It is in everyone's interest to narrow this gap - yet doing so requires recognition that inequality has its roots in the past 800 years of world history. The Wealth and Poverty of Nations (Landes D, Harvard) suggests that the industrial revolution is the key to national wealth. It was begun in Britain in the 18th century - and has spread around the world. However even more important is what conditions allowed the industrial revolution to occur. Landes dismisses conventional explanations such as natural endowments (landscape, soil, water minerals). An industrial revolution always depended on a society' culture.  The first industrial revolution arose in a society that had developed: a sense of national cohesion; a capacity to compete; a respect for empirical technical knowledge; a preference for advancement by merit or competence; and ability to use (not just acquire) money. Other societies could follow by copying Britain's example, perhaps because they shared a medieval legacy of: curiosity; inventiveness; multiple sources of initiative; and could forego current consumption for future gain. Other societies have proven unable to generate within themselves the necessary conditions for wealth. Religion is a major obstacle - as both Roman Catholicism and Islam have: elevated authority and suppressed initiative; and discouraged experimentation. Islam's coincidence with oil riches and its authoritarian governments that have attracted little loyalty, and a capacity to discourage investment in skills and knowledge has been very damaging. Landes argues that many common theories are false - dependency theory; new economic historians who neglect older trends and the industrial revolution; econometricians; multiculturalists; and ethnologists who deny that there are reasons for speaking of weaknesses in any cultures. He admires Weber (who developed theories based on the protestant work ethic) and Wittfogel (who studied 'oriental despotism'). Culture makes all the difference, and success or failure is ultimately determined from within, not imposed from outside. Conventional explanations of Western success and the relative failure of others include: conquest of the Americas; European diseases; slavery; the imprisoning effect of Western scholarship on oriental societies - which have had only limited effect. This is not to deny that problems associated with colonization were not real, but that they did not ensure failure (noting many successes in East Asia; mixed results in Latin America; and general regression in much of Africa). Imperial rule was neither new nor uniquely linked with capitalism. Colonization delayed opportunities for development, but did not stop late-comers cultivating the values that count - work, thrift, honesty, patience and tenacity. Economics can not explain wealth without a study of history (Porter A 'Culture has everything to do with the wealth of nations', FR,  27/3/98)

Until 300 years ago there was little growth in per capita income that was not eventually reversed. This was the basis of Malthus' grim theories about the limits to population that were based on observing history. Adam Smith founded scientific economics - and his Wealth of Nations suggested that growth required peace, easy taxes and tolerable administration of justice. 50 years later John Stuart Mill listed three requirements for less industrialized countries to catch up (a) better government and property law (b) less superstition (c) growth of mental arts and (d) hospitality to foreign arts and capital. The economists believed that growth was natural - except for prejudices which could be displaced by scientific knowledge. However this left unanswered the question of why Western civilization was more successful. Sociologists argued that growth required overcoming cultural obstacles - namely objections to making money. Weber suggested that this shift occurred in Western Europe through Protestantism. An aptitude for making money was seen to explain growth. Since 1945 economics has advanced relative to sociology. Weber's theory emerged when Europe alone experienced significant growth - and growth could be explained in terms of its unique characteristics. This conclusion had been reinforced early in 20th century by failures of centrally directed plans. Japan's miracle provided materials for an alternative theory of development based on export led growth. It was followed by other East Asian economies. This seemed to show that if western standards of good government were created, then growth would follow automatically. Liah Greenfield's Spirit of Capitalism and Robert Lucas' Lectures on Economic Growth reflect the two main traditions for thinking about growth. Greenfield sees growth as explained by the history of ideas and the sociology of culture. Lucas sees growth as automatic as knowledge accumulates. Greenfield denies the naturalness of human behaviour. The modern economy has to be seen as a problem in the cultural construction of reality. Why is individual self interest seen as producing collective good? The harnessing of greed to efficiency and ethical goals requires a Factor X. Weber's Factor X was Protestantism. - which converted greed into frugality. Calvinism abolished the distinction between the sacred and profane - and extended ascetic ideals to everyday life. Greenfield accepts the need for a Factor X, and Weber was right to see that it required a new morality. But the mechanism was nationalism, not Protestantism. Nationalism freed money from subordination to religion Britain's success made it a superpower which triggered a reactive nationalism elsewhere - and greatly contributed to the formation of economic civilization. Nationalism is seen to promote the social structures that societies need to develop - eg equal rights, social mobility, market forces. Nationalism also leads to perception of international competition. Greenfield attacks economics on the basis that economic behaviour is shaped by cultural values, and that growth resistant cultures can not simply be explained by ignorance and superstition. There are three reasons to doubt that nationalism is a better explanation than Weber's protestant ethic. (a) how does nationalism change individual behaviour (b) protestant ethic explains why growth occurs in some societies but not others - which nationalism doesn't (c) Britain developed the core institutions of capitalism long before nationalism emerged as political doctrine - at the time of French Revolution. And far from being egalitarian and democratic, England was an hierarchical society headed by a monarch who suppressed parts of dominion by force.  Some have seen the political foundations of capitalism in Europe's failure to establish a central authority after fall of Holy Roman Empire - and the resulting feudalism saw many competing jurisdictions, which coalesced in the16th century into competing national monarchies. Feudalism checked arbitrary rule leaving space for the growth of free cities, European markets and private property, while military competition stimulated national feeling and rulers concern for national wealth. Greenfield tries to show that economics can't explain growth without nationalism - by reference to Holland. Lucas by contrast presents an economist's explanation - based in mathematics. Lucas seeks explanation which is not only reasonable in explaining growth - but based on individual rational behavior. Post 1940s, growth models have sought to link growth and capital accumulation - which (because eventually the marginal product of additional capital declines) was traditionally seen as predicting income convergence. Lucas rejected this on the bass that it did not explain the income divergence that occurs in practice, and made growth depend on two external factors : population and technology. Lucas's alternative is 'endogenous' growth theory. This distinguishes between physical and human capital. Human capital is not subject to diminishing returns. However this model cannot explain the catch-up that arises under East Asian economic miracle. Lucas assumes that this is due to spillover effects of human capital development to other countries. However he also looks at population. Modern growth theories look only at income. Earlier ones also looked at population. A more integrated approach follows from treating decisions about numbers of children as economic choices. Lucas' more general view is that growth requires that people experience changes in the possible lives that they imagine for themselves and their children. This is opposed to Greenfield's view that growth requires exceptional circumstances - which means that there is no universal solution. Lucas believes that growth is open to all cultures and races - and that inequality is at a peak. His effort is to derive growth purely from attempts by households to maximize their wellbeing. Greenfield and Lucas take different approaches and so help build understanding. Greenfield questions whether growth is rational. There is evidence that wants are insatiable, and that greater wealth does not make people happier. Lucas assumes that little is required from governments for countries to break out of poverty. But government actions with respect to law, taxation, education, heath care, infrastructure etc are important. In many poor countries governments lack the capacity to implement appropriate policies. Lucas's endogenous growth theory prepares the way for new forms of intervention in which Western countries take over some part of of the development of human capital. The language of 'failed states' is the embryonic language of new imperialism (Skidelsky R., 'The mystery of growth', FR, 21/3/03)

Attachment B: Rethinking Warfare: From Hard Power to Soft Power +

Rethinking Warfare: From Hard Power to Soft Power - email sent 2/6/12

Peter Oborne
The Telegraph

Re: The new way of warfare is killing the West's reputation, BrisbaneTimes, 2/6/12

Your article raises valid questions about the effectiveness and ethics of the methods that have been used in an effort to defeat Islamist extremists.

I should like to suggest that an alternative that would be likely to be more effective and much cheaper would involve shifting the emphasis from military (ie ‘hard power’) tactics to ‘soft power’ methods. How this might be given practical effect was suggested in Discouraging Pointless Extremism (2002). It basically involved creating an environment in which extremists’ potential supporters could have an opportunity to understand that the extremists’ political agendas would not benefit them. This is (in effect) what ultimately led to the ‘defeat’ of Communism. The fact that there were limits on what could be achieved in Iraq (for example) by the use of ‘hard power’ methods had seemed obvious in 2001 (see Fatal Flaws).

‘Soft power’ methods can’t be applied by the current defence establishment – but requires quite different capabilities. The fact that those who should be able to apply ‘soft power’ methods (mainly but not only students of the social science and humanities in Western universities) have not been encouraged to take up that responsibility is arguably the reason that the West is left with ineffectual and unsatisfactory ‘hard power’ tactics (see Ignorance as a Source of Conflict).

As you will be well aware, the US has concluded that its future strategic focus should be in the Asia Pacific region – and this includes an increasing military focus on that part of the world. Comments on Australia's Strategic Edge in 2030 (2011) includes suggestions as to why ‘soft power’ methods are likely to be more effective (and cheaper) than conventional military strategies in dealings in Asia as well as in the Middle East.

I would be interested in your response to my speculations.

John Craig


Response received 3/6/12

Soft Power is nothing new. Having spoken to, and listened to the original exponents of soft power, it was always predicated on having the Military Force to defeat an enemy should he not acquiesce to your demands. Teddy Roosevelt’s “Talk Softly but Carry a Big Stick. Prior to the First World War, Germany’s occupation and influence in New Guinea and the South West Pacific was referred to as ‘Peaceful Penetration. The use of missionaries to expand imperialist powers in Africa and Fiji are well documented.

The best regional example of soft power was the response of the United States, Australia, France and other to the tsunami, especially in Aceh. Indonesians saw that it was Western Powers, and not the oil rich wealthy Arab nations, that provided support. The most conservative Muslim province in Indonesia were shown that the West was its friend and defeated any thought of extremism.

A bonus for amphibious warfare advocates in Western nations. China has the unique ability of shooting itself in the foot when it tries soft power. It is poor at it as the anti-satellite test and its bullying of the Philippines in the South China Sea shows.

Martin Andrew
China Land Power Specialist
Air Power Australia


Reply sent 3/6/12

Martin

Thanks for your observations about this. Would you allow me to reproduce your comments on my web-site?

While it is correct that ‘soft power’ is nothing new (and cultural expressions through the popular media are one form), there are situations where it could have been used to great effect (such as the examples I cited in my earlier email) , but has not because the potential has not been appreciated.

Also I don’t think that the use of ‘soft power’ by China is a clumsy as you suggest (eg consider its rapid economic advancement which has changed military funding capacity). And Japan’s use of soft power since WWII seems to have been perceived by very few. Coalitions of Interest outlines my speculations about what seems to have been going on.

Regards

John Craig

Attachment C: Wars are not only Fought with Battles

Wars are not only Fought with Battles - email sent 27/1/13

Patrick Stokes
Deakin University

Re: Love thy neighbour: religious groups should not be exempt from discrimination laws, The Conversation, 17/1/13

Your reference to research by Stephen Pinker (The Better Angels of Our Nature) was interesting, but raises questions. While I have not seen his evidence, both your article and an online review of that book suggest that: (a) his research shows that we have been living in a relatively non-violent / peaceful era; and (b) Steven Pinker believes that this refutes the arguments of those who claim we face moral decline.

However, there seem to be many indicators that, in Australia at least, the ethical basis of moral interpersonal relationships has been eroding (see Erosion of the Moral Foundations of Liberal Institutions). Thus it is more likely that the relative non-violence of recent years is not so much proof of sound individual morality as of (say):

  • the unacceptable consequences of war in an environment of nuclear armed states – a factor which certainly limited the Cold War (which ultimately won mainly because liberal democratic capitalism demonstrated better economic performance than Communism's economic planning); and
  • the general spread of economic prosperity across much of the world in recent decades, which provided a positive incentive for maintaining peace.

Such alternative explanations are fairly obvious. However there is another less obvious factor that arguably needs to be considered (ie the emphasis on ‘winning beforehand’ that is part of traditional East Asian Art of War strategies ). The latter involve encouraging internal weakness / dissolution / division in one’s enemy prior to, or as a means to avoid, conflict – and would naturally be associated with a prior period of relative peace.

There are indications that the US-sponsored global order which has permitted a general spread of economic prosperity and peacefulness is at risk (see The Second Failure of Globalization?). The latter refers to risks of a breakdown of the post-WWII international order similar to the breakdown of the UK-sponsored international order which preceded WWI. Major indicators of those risks include:

  • violence by Islamist extremists against the outsiders they naively blamed for the inability of autocratically-governed Muslim-dominated societies in the Middle East to benefit from the world’s rising prosperity; and
  • a financial crisis which has put economic growth worldwide at risk.

While the former gave rise to a ‘war against terror’, the latter is arguably more serious because (amongst other things) it reflects fundamental incompatibilities in the way economic activity is organized and financed (eg see Structural Incompatibility Puts Global Growth at Risk, 2003; Understanding East Asia's Neo-Confucian Systems of Socio-political-economy, 2009; and Impacting the Global Economy, 2009).

Though this economic / financial incompatibility is anything but easy to understand (see Why Understanding is Difficult), there seems to have been a growing contest for control of the global financial system for several decades, as financial systems have become increasingly unstable (see Unrecognised Clash of Financial Systems). And more recently there has been:

There may be ways to avoid conflict over this fundamental incompatibility (eg as suggested in Progress Towards Ending the Global Financial Crisis? and A Better Australian Response to US Defence Proposals?). However it is naïve to ignore such risks of conflicts and claim that the world’s relative peacefulness in recent years is evidence of moral progress.

I would be interested in your response to my speculations.

John Craig

Attachment D: A Bright Outlook?

A Bright Outlook? - email sent 31/12/13

The Editor
The Australian

Re: A grim outlook for Christianity, The Australian, 26/12/13

Your editorial highlighted the fact that Christians are the most widely persecuted religious group world-wide – and suggested that this should be a wake-up call to those who value the principles of religious freedom enshrined in the UN’s Universal Declaration of Human Rights. However your editorial presented only a narrow view of the issue. Christianity’s potential contribution remains huge.

My interpretation of other points in your editorial: Christianity could face extinction in the Middle East where it originated. In many parts of the world attending church is only for the brave. Religious groups face harassment in 160 countries according the Pew Research Centre – with Christians the most targeted. Coptic Christians are attacked in Egypt. Many Christians have fled Syria and Iraq. The Arab spring is turning into a Christian winter. Christians have to worship in secret in the newly ‘democratic’ Afghanistan. Christians are under threat in Pakistan, Nigeria, North Korea and Myanmar. 80% of all religious persecution is against Christians according the German International Society of Human Rights. Prince Charles has blamed ‘Islamist fundamentalists’ for the problem. The Pope has expressed concern. The international community needs to defend the religious freedom and tolerance that is at the heart of Universal Declaration of Human Rights.

I should like to suggest for your consideration that:

  • From the very start Christ’s followers faced intense and often lethal persecution because Jesus’ Gospel (about the coming of the Kingdom of God) challenged human authorities’ ambition to be the ultimate power;
  • However that Gospel triumphed over His followers’ early oppressors (eg the rulers of the Roman Empire) because of the dynamic grass-roots influence of the faith community that Jesus had established. What it offered to individuals and their communities proved irresistible (eg spiritual power and signs, testimony of Jesus' resurrection and of individual salvation through Jesus as well as a basis for caring relationships that extended beyond families and tribes had many practical benefits). And its universal ethics and concern for the those on the bottom rungs of society were revolutionary – and apparently remain so in many parts of the world (eg see Mangalwadi V., The Book that Made Your World which highlighted modern Indian authorities’ obstructive reactions, based on their belief in caste and ‘karma’, to that author’s efforts to organise help for the victims of a disaster);
  • Your editorial is years behind the times in reporting on the surveys of modern violence directed against Christians in many parts of the world. That is very old news to anyone who has paid attention;
  • It would be futile to rely on the UN’s Universal Declaration of Human Rights to protect Christians – though the reasons for this are somewhat complex, ie:
    • The liberal institutions that Western societies have established: (a) are essential if abstract concepts are to be used successfully by a society – because the use of abstracts (such as the notion of ‘rights’, law, profitability) tends to fail except in the simplified social spaces that liberal institutions facilitate; and (b) could not have been built without the foundation of uniquely Judeo-Christian expectations about responsible behaviour by free individuals (eg see Cultural Foundations of Western Strength: The Realm of the Rational / Responsible Individual and Christian Foundations of Liberal Western Institutions);
    • Without widespread Christian adherence / influence, there would be no ‘universal declaration’ on anything. For example universal ethics do not traditionally characterise tribal societies, or those countries that have the lead position in a potential ‘Asian Century’ (where obligations exist only towards those with whom one has a specific relationship);
  • While there is persecution of Christians in many countries, Christian adherence has reportedly been growing strongly in the developing world (eg see Onward Christian Soldiers, 2002). For example, Christianity is repressed by the Chinese state (presumably because of its universalist emphasis on the welfare of individuals) yet adherence has grown to something like 10% of the population at a rate which, if continued, would see it around 30% by 2030. And Christian communities in (say) Africa and Asia have become a source of missionaries – including many headed for Europe (where Christian adherence has significantly declined) and the Middle East;

The Muslim world seems to be headed for chaos – apparently due to disagreements about how to overcome centuries of failure to modernise. And the attacks on Christians that the surveys your editorial mentioned reported are arguably a reflection of the very characteristics that have impeded Muslim progress (eg see Discouraging Pointless Extremism, 2001). Family / community / state coercion of individuals to comply with tribal expectations not only puts those of other faiths at risk of violence but also suppresses the initiative that is needed in a community for political and economic progress. As was suggested in the 2001 reference, the solution to this problem arguably lies in less military / security responses to violence by ignorant Islamist extremists, and more in efforts to enable affected communities to change as they come to understand the source of their historical problems.

Your editorial advocated, in effect, seeking to make Christians into a protected species in the darker parts of the world where oppressors still seek to ignore the welfare and capabilities of individuals. However, for a real and sustainable solution, it would seem wiser to encourage Christians (who have a head start – see John 16:33 - and an ability to get more help if they ask for it – John 14:16-17) to do even more on Jesus’ commission to proclaim the Kingdom of God.

There are at least two specific ways in which Australia’s Christians could be encouraged to do more to contribute.

Firstly Australia is exposed to a symptom of the Muslim world’s increasing chaos, ie boatloads of refugees and asylum seekers. But its response to date to that humanitarian disaster (ie either encouraging or discouraging people smugglers) has hardly been helpful. Better options are arguably available through Christian efforts to do more to constructively change the societies that are the source of refugees (eg see Refugees: What did Jesus Do?).

Secondly Christians could more seriously address domestic weaknesses in Australia. The breakdown of responsible individual behaviour as adherence to Christian principles has declined is: (a) generating social stresses; (b) undermining the foundations of the liberal institutions that have generated social, economic and political advantages (see Erosion of the Moral Foundations of Liberal Institutions); and thus (c) likely to limit Australia’s ability to play a useful international role in future. Taking religious education more seriously (for example) seems critical to reducing these current and growing domestic weaknesses (see Religious Education: The Need for a Bigger Picture View).

Reducing Australia’s domestic weaknesses in this respect would probably also contribute to creating a more stable and peaceful international order in future (because, as demonstrated by Islamist rhetoric, individual irresponsibility in countries such as Australia gives non-Western societies a sound reason to reject liberal Western-style institutions in favour of authoritarian alternatives). In Defusing a Clash (in Competing Civilizations, 2001) the present writer suggested that ethical renewal on a Christian foundation in countries such as Australia (and its expansion into the international arena) would help create a viable liberal international order. Other suggested requirements included: making democracy more effective; improved cross-cultural communication; reform of international institutions; more effective economic development practices; and a review of the role of money.

John Craig