World on Fire: How Exporting Free Market Democracy Breeds Ethnic Hatred and Global Instability, by Amy Chua Publisher: Doubleday (2002) Price: $26.00
Much has been written about Amy Chua's first book, World on Fire, since its appearance in January of last year--so much in fact that additional reviews might seem superfluous. There is a significant lacuna, however, in the discussion generated by Chua's book, one which is also present in the book itself. Specifically, this discourse has ignored an important way in which free markets impact certain cultures.
World on Fire centers on the discussion of what Chua labels "market dominant minorities." Market dominant minorities are ethnic groups which comprise a minority of a country's population yet control a vastly disproportionate amount of the wealth. In the Philippines today, ethnic Chinese account for 1 to 2 percent of the population, yet "control all of the Philippines' largest and most lucrative department store chains, major supermarkets, and fast-food restaurants ... With one exception, all of the Philippines' principal banks are now Chinese-controlled." (1) In Brazil, less than 0.01% of the population, all of them unmistakably white," (2) own most of the country's land. The Tutsi, a 14 percent minority in Burundi, "control approximately 70% of the country's wealth." (3) Other instances abound.
Chua's thesis boils down to this: in countries such as these, the sudden tandem introduction of free markets and democracy can have disastrous consequences. Free markets and democracy--at least in the form traditionally exported--are not the panaceae they are thought to be. Instead of closing wealth gaps, unregulated free markets tend to enlarge them. Accumulated wealth translates into increased bargaining power and investment opportunities, thus favoring the further accumulation of wealth by those who already possess it. The impoverished masses may benefit from some sort of trickle-down effect, but, as Chua points out, such effects may actually increase resentment when it is realized how much more of their country's newfound prosperity is being seized by the already well-off.
Introducing democracy into this mix--at least in the form of direct and universal suffrage--can lead to serious problems. In countries with market dominant minorities, democratic empowerment is often the spark that ignites the powder keg of indignation brewed by extreme economic disparity. The fact that this disparity occurs along conspicuous ethnic lines heightens the tension. In countries with market dominant minorities, opportunistic demagogues seeking office exploit this latent (and sometimes not so latent) tension, painting the market dominant minorities as "outsiders" who have seized the nation's wealth from its "rightful owners." As Chua documents, the sudden empowerment of these angry majorities tends to lead to reprisals against the markets which are seen as reinforcing and indeed as causing the wealth disparity. Robert Mugabe's Zimbabwe, U Nu's Burma, and post-Suharto Indonesia are all examples of this.
Of even greater concern are those instances where democratic empowerment has resulted in reprisals against the market dominant minorities themselves. The genocide in Rwanda was of a market dominant Tutsi minority by a democratically empowered Hutu majority. Gregoire Kayibanda, one of the authors of the Hutu Manifesto, became the first president of Rwanda, which was granted full independence in 1962. Kayibanda stirred up the Hutu masses to kill the Tutsis, so much so that already by December 1963, "highly organized Hutu massacres...