To the Editor:

The central point missing from Richard Pipes’s review of Daniel Patrick Moynihan’s new book, Pandaemonium: Ethnicity in International Politics [Books in Review, September 1993], is also missing from the book itself: recognition that the principal ingredient in the recipe for ethnic bloodshed and strife in the last half of the 20th century has been economic mismanagement by the world’s power elite.

Senator Moynihan would have us believe that the Yugoslav nightmare, for example, was the inevitable outcome of culture clash in the Balkans’ ethnic stew. This analysis, while almost universally accepted, ignores how the International Monetary Fund (IMF) waltzed into Yugoslavia in 1989, passed around the poison pill of currency devaluation, and suddenly Serbs and Croats and Muslims and Catholics who had been getting along just peachy were at one another’s throats.

A sound currency is a prerequisite to federation of varied ethnic and racial groups. If Alexander Hamilton had devalued the dollar instead of persuading George Washington to fix the dollar to gold, the United States might not have held together and certainly would not have become a melting pot for the Old World’s huddled masses. In late September, multiethnic Russia flirted with political and civil chaos. That the Yeltsin government and the “reactionary” parliament had each other in the crosshairs was the natural result of the IMF’s shock-therapy scheme that wiped out the savings of the population—the market value of the ruble collapsing from six to the dollar in late 1991 to about 1,300 to the dollar two years later.

Federal Reserve Board Governor Wayne Angell and I were in Moscow four years ago at the invitation of the Soviet central bank, urging it to fix its currency against gold, as the United States had done in its infancy. I told our hosts about the game of musical chairs, and how we learn as children to become competitive when we know we must fight for the dwindling number of chairs. Take the advice of the IMF, allow the currency to depreciate, we told them, and the Soviet Union will fly apart.

If Russia erupts in civil war, we will undoubtedly be told it was the tragic, unavoidable outcome of the culture clash between ethnic, “hard-line” Russian nationalists and pro-reform, West-leaning, democratic modernizers. This is nonsense. If Russia disintegrates further, we can thank the IMF and the Harvard-trained economists, hooked up to their Keynesian demand-side computer models. The first splinterings will be between identifiable racial, religious, and ethnic groupings, but as the number of chairs dwindles to the vanishing point, it becomes brother against brother, father against son, a reversion to the pre-civilized jungle.

All growth is the result of risk-taking, yet almost every economist trained in the West since World War II has been taught that government can manage growth by manipulating aggregate demand. This makes them useless when confronting the problem of economic stagnation. Either tax and spend or tax and invest—the individual risk-taker does not exist, only the consumer. Yes, there are factors of production associated with demand models. But it is not possible to incorporate the concept of risk in a mathematical model, so the computers that serve the global economic bureaucracies systematically reject the very essence of growth.

The problem today in Eastern Europe or Russia is not different from the problem of Harlem and the South Bronx. The government computers that crunch the numbers that are killing Congressman Charles Rangel’s district in Manhattan are programmed by the same folks who program the computers at the IMF and World Bank. The policy advice so constrained crushes the dreams and aspirations of Africans, Haitians, and African-Americans in the same way it prevents the Eastern bloc from enjoying a relatively easy transition from a welfare state to thriving capitalism. China, advised on transition by its diaspora in Singapore and Hong Kong, where risk-taking is seen as being the essence of growth, is now the fastest-growing economy in the world. . . .

Jude Wanniski
Polyconomics, Inc.
Morristown, New Jersey

_____________

To the Editor:

Both Richard Pipes’s review and Senator Moynihan’s book, Pandaemonium, are a refreshing contrast to the characteristic liberal tendency to belittle both the volatility and significance of what is currently called “ethnicity” in human affairs. But I fear that this new (actually old) insight into the (now post-Soviet) world has difficulties of its own. . . .

One can only applaud Mr. Pipes for urging the nations of the West to take a large view of their national interest, and particularly for reminding us that Great Britain’s failure to grasp the worldwide significance of “local” Nazi persecution of the Jews in Germany and of Hitler’s ultimatum to his neighbors in Czechoslovakia was catastrophic. But the advice he gives us along the way—such as “devise ways that will encourage people to stay put in their native habitat” (emphasis added)—seems more worthy of gamekeeping than statesmanship. . . .

Not once does Mr. Pipes credit the humane and just political principles of the Western world either for its own apparent “controlled” nationalism or to support his enlarged view of it. Rather, we are reminded of the abiding character of ethnicity (also called nationalism or regionalism), and taken down into its “deeper level” in the “‘territorial imperative’ that distinguishes the behavior of all creatures, from protozoa to primates.” . . .

But Mr. Pipes’s “deeper” premise fails him in his analysis of the premier example of ethnic disintegration—the collapse of the Soviet empire. Not surprisingly, Mr. Pipes asserts that “the multinational Soviet empire was bound, sooner or later, to meet the fate of all the other European empires and disintegrate.” But if this is so obvious, why has not . . . the same fate befallen the United States of America, a nation of diverse ethnic groups? It will not do to remind us that “the USSR was not a free comity of nations, like the United States, but an empire held together by Russian Communists.” For how can Mr. Pipes explain such “comity” in an otherwise wholly “ethnic” world?

Mr. Pipes’s attempt to explain why ethnicity is such a potent force in the 20th century is murky, if not incoherent. How, in fact, has “[t]he universal franchise . . . shifted the center of decision-making to the regions”? Why necessarily does “[t]he principle of popular sovereignty in and of itself institutionalize national difference”? . . . Is it not more accurate to say that the ethnic splintering that has begun to occur even in the West results from the abandonment of the unifying principles of modern republicanism and constitutionalism rather than from their consistent application, as Mr. Pipes seems to be suggesting?

Whatever solutions Western statesmen are able to devise for the anarchic tendencies resulting from the replacement of the bipolar world of the superpowers with the multipolar world of regional blocs and numerous despotisms, one thing is, or should be, evident: the only alternatives before us are not the extremes of narrow ethnicity and some sort of utopian universalism that fails to respect human limitations (a false dilemma unacknowledged but tacitly assumed by Mr. Pipes). The prudent, principled middle in international affairs will continue to be the strong, faithful defense of the Western heritage which, alone among the nations, is grounded in a knowledge of the universal principles of justice and in an appreciation of their limits in a world of admittedly furious passions.

Richard H. Reeb, Jr.
Barstow, California

_____________

Richard Pipes writes:

Without disputing the merit of a sound currency, I find Jude Wanniski’s explanation of ethnic strife as caused solely by economic factors, especially currency devaluation, simplistic and unhistorical. After all, there had been ethnic and religious strife and persecution long before there was a Harvard economics department and a “world power elite.” Ancient Assyria comes to mind, as well as pre-Colombian Central America and medieval Jewry. The Soviet Union fell apart, not because the ruble had been devalued, as Mr. Wanniski contends, but because it was an empire kept in place by a Communist-KGB apparatus that had lost its grip. The depreciation of the ruble—in Ukraine, for instance, over 125,000 times—has produced no ethnic conflict in the predominantly Slavic areas. Where such conflict has broken out, notably Transcaucasia, the causes are centuries old and revolve around religious animosities of ancient vintage between Christians and Muslims. Does Mr. Wanniski seriously believe that the exchange rate of the shekel or any other economic policy of the Israeli government lies behind the Israeli-Palestinian conflict?

I do not know what Richard H. Reeb, Jr. means by “the humane and just principles of the Western world” and why he praises it for “controlled” nationalism. Far from setting an example to the rest of the world, as Mr. Reeb suggests in his concluding remarks, the West has from the French Revolution until the end of World War II infected the world with the virus of nationalism. It is true that it has by now learned the evils of excessive nationalism, but only after two world wars and the Holocaust claimed the lives of tens of millions.

There is no analogy between the ethnic structure of the United States and that of the Soviet Union. Except for native Indians and the descendants of slaves, the population of the U.S. is made up entirely of voluntary immigrants and their offspring. They are scattered throughout the vast country without occupying or claiming specific territories. The Russian empire, and its successor, the USSR, were built on conquests of historic nations inhabiting their native lands since time immemorial.

The connection between democracy and nationalism is not my discovery: it was noted a century and a half ago by Metternich, who tried to stem the rising tide of nationalism precisely because it implied popular sovereignty. If the people are sovereign, then it follows that they can claim for their native culture the status of a state culture. Where peoples of different ethnic cultures live side by side under one political authority within distinct territorial confines, the adoption of democracy is likely to lead to cultural (i.e., ethnic) self-assertion and strife. Where foreigners encroach on the territory of another people, as commonly happens in the modern industrialized world (e.g., Germany and France), the results tend to be similar.

_____________

Correction

In the December 1993 Letters section, an error occurred in Patrick Glynn’s reply to Alex N. Dragnich. On page 8, column 3, the sentence that starts on line 35 should open as follows: “To be sure, the turn toward democracy in Slovenia and (more uncertainly) in Croatia. . . .”—Ed.