It was one of the last great campaigns, a final Mad Men masterpiece before the art of TV advertisements was forever destroyed by Google and Facebook. Filmed in 1997, the year of Tony Blair’s Third Way, it starred Mikhail Gorbachev and his young granddaughter. Six years after the peaceful dissolution of the Soviet Union, its former leader walks into a cyrillic-logoed pizza restaurant in Red Square, and is spotted by a Muscovite family, triggering an inter-generational political row with an eerie contemporary relevance.
“Because of him we have economic confusion,” the grandfather claims. “Because of him, we have opportunity,” his son retorts. The argument goes on, entirely in Russian: “Political instability … freedom … complete chaos … hope.” The grandmother intervenes, arguing that “because of him we have many things … like Pizza Hut”, a statement which unites her squabbling family. The entire restaurant stands up, greasy slices of the American dream in hand, and hail Gorbachev over and over again: the end of communism might have been traumatic, but globalised, Western-tinged capitalism was now the unbreakable consensus, the End of History, the new world order from which all else flows. There was no going back.
Fast-forward 25 years, and this naive utopia lies shattered by Vladimir Putin’s abominable war crimes in Ukraine. Globalisation in its current incarnation is ending. Pizza Hut has effectively quit Russia, as has McDonald’s, which was so famously greeted by immense queues when it opened what was then its largest restaurant in the world in Red Square in January 1990.
Autarky, isolation and an economic, cultural and media Iron Curtain are back: Russia is being cut off from the world, as it was during the Soviet era. Russians are losing access to the apps, the technology, the banking, the travel, the news and information and the consumer goods they had grown used to. It amounts to an extreme, almost instant deglobalisation of a kind more radical even than that meted out to Iran’s mullahs.
Russia, which in 2011 was included by Goldman Sachs’s then economist Jim O’Neill as one of the four leading emerging economies – with Brazil, India and China – that made up the Brics, is now a pariah, its GDP shredded to smithereens, an economic no-go zone as far as the West’s largest companies are concerned. The world is no longer one market.
In his Golden Arches theory of peace, first enunciated in 1996, Thomas Friedman argued that no two countries with a McDonald’s would ever go to war. Disproved in South Ossetia, paradoxically a version of this thesis has become almost true again: McDonald’s won’t stay in a country that launches a hostile war on its neighbours.
We’ve known since the First World War that economic integration and the free movement of people, goods, services and capital aren’t enough to prevent total war. I fear that this Capitalist Theory of Peace, supported by classical liberals from Montesquieu to Cobden, is too much of a truism to be useful: peaceful countries that want to trade and put a premium on economic growth don’t go to war. Failed, corrupt, authoritarian states such as Russia that reject markets and the rule of law eventually give up on commerce, and resort to aggression.
One monster is to blame for this calamitous turning back of the clock: Putin, a 21st-century Benito Mussolini. Putin is a fascist, not a consumerist, a collectivist, not an individualist, let alone a capitalist: he has no interest in the well-being of his citizens, or their pursuit of their happiness, or progress through peaceful commerce. Like all authoritarian despots, he worships the state, and himself. He has presided over what Daron Acemoglu and James Robinson describe in Why Nations Fail as extractive (rather than inclusive) political and economic institutions, dominated by a small cadre of rent-seeking allies. His kleptocratic, KGB gangster-state has run out of road, and is now explicitly imperialist in a desperate drive to steal human, mineral and agricultural resources.
The West’s mission must be to contain and ultimately defeat Putin and his hideous ideology, while avoiding an all-out third world war that would terminate civilisation. The Russian president has nuclear weapons and it is unclear under what circumstances he would use them. An uncontrolled implosion of his regime, leading to mass atomic proliferation, would also be cataclysmic.
We must also stand prepared for the Great Fragmentation: one globalised economy will be replaced by several competing systems, slashing growth and living standards everywhere. The planet won’t be a single, interdependent spontaneous order but will serve as the stage for a chaotic battle for supremacy, marred by fights for resources and neo-imperialism.
The tools of economic war being deployed by the West against Russia are proving hugely effective. It’s not just state action: companies are voluntarily withdrawing and ceasing their activity, at great cost. Putin cannot possibly have conceived of such a reaction, and it will hopefully hit him hard.
But this is also causing collateral damage. The Chinese will be concerned: they believe US multinationals are being weaponised as a tool of foreign policy, and are aghast at the fact that national reserves can be seized. They fear that software, credit cards and even electric cars can simply be switched off from America. Property rights have become more diffuse. The internet, they worry, is American, and far more centralised than once thought.
Beijing will thus continue to create an alternative economic, technological and financial system: it will build its own walled internet, banking system and reserve currency. It may bail out Russia, buying its oil and gas, turning it into a partial vassal. India will construct a rival civilisation-state, and Japan will reassert itself.
Given the gravity of the situation, better institutions are urgently required to defend the West. The World Health Organisation became a toxic joke during Covid because of China’s influence. Why is Russia still playing a key role in the Iran nuclear talks? What of the World Trade Organisation? The UN seemingly refuses to call Russia’s invasion for what it is.
World affairs are entering a terrifying cycle of disintegration. To paraphrase another famous pro-capitalist commercial, we will soon miss the time when we could buy the world a Coke.