When the West emerged victorious from the Cold War, an American political scientist, Francis Fukuyama, declared the “End of History”, proclaiming the triumph of “Western liberal democracy”. Free markets and liberal democracy had triumphed over state socialism and authoritarianism as the ideal form of political organisation. Even if in many cases it was only an electoral democracy that had come to be established, an increasing number of states would now be encouraged to ensure the rule of law, where political leaders are not above the law, Fukuyama foretold.
Around the same time, the American economist John Williamson proclaimed that a “Washington Consensus” would henceforth define economic policy worldwide. This “consensus”, comprising a set of economic principles that emphasised fiscal discipline, privatisation and free trade, was imposed by international financial institutions on debtor nations. Western victory in the Cold War, it was widely claimed, had established the superiority of free markets and private enterprise and was a rejection of inward-oriented state capitalism.
Even as the “Fukuyama Man” was still standing, the transatlantic financial crisis of 2008-09, misleadingly dubbed the Global Financial Crisis, shook the foundations of Williamson’s “Washington Consensus”. Not only did governments in the US and Western Europe jump to rescue private banks and firms, but they dumped the principles of fiscal discipline that they had been assiduously imposing on developing countries around the world, and printed money to rescue private enterprise.
Overnight, long-buried ideas of John Maynard Keynes became popular, and Keynes’ distinguished biographer, Robert Skidelsky, quickly published his Keynes: The Return of the Master. The then US Treasury Secretary, Hank Paulson, reached out to China for help in dealing with the financial crisis and duly acknowledged China’s supportive role in a series of books published between 2011 and 2014. In his 2014 book, Dealing With China: An Insider Unmasks the New Economic Superpower, Paulson paid handsome tribute to China’s “state-controlled capitalism”. It was a mix of policies that economists and editors soon dubbed the “Beijing Consensus”.
If the transatlantic financial crisis encouraged Western governments to step in and support their economies, the growing differential between the economic size of the US and China offered yet another justification for state intervention in Western liberal economies. Geopolitical analysts like Edward Luttwak and Robert Blackwill advocated the deployment of economic statecraft by the US in order to ensure what Luttwak called “the geo-economic containment of China”.
These ideas shaped the mercantilist trade policy of President Donald Trump in his first term (2017-21). The emergence of China as the second-biggest economy, overtaking Japan in 2009, and then becoming a “trading superpower”, overtaking the US to become the world’s largest exporter and importer, further empowered those advocating state capitalism at home and mercantilism overseas.
Among the many actions the US took, during Trump-1 and during the Biden presidency, was to aggressively promote US exports, especially defence and oil. The traditional distinction that US diplomats often liked to make between the state and private sector in defence was given up, and the US government became a sales agent for the American military-industrial complex.
Even the High Priests of the Washington Consensus in the International Monetary Fund and the World Bank dumped their ideological blinkers and chanted the mantra of fiscal liberalism, public investment and fair trade. Non-governmental organisations and the foundations of billionaires like Bill Gates and consultancies like McKinsey became the new policy wonks that governments paid attention to. The distinction between a Washington Consensus and a Beijing Consensus blurred as everyone began copying China to get ahead.
Then came Trump 2.0. If in his first term, Trump buried the ideas of Williamson, in his second term, he has cremated Fukuyama’s liberal democracy. The assault on human rights and freedoms, the constraints on press and media, the assertion of White American racial superiority, the acquiescence in Israel’s genocide in Gaza and making a mockery of democratic institutions show that Western liberalism is giving way to fascism and authoritarianism.
Much used to be said about the downside of China’s impressive rise, namely the absence of human rights and individual freedoms. As these shrink even within democracies like India and the US, what makes them stand apart from the authoritarian states they have long despised? Every state, whatever its legal format, is becoming a surveillance state. What China does blatantly, New Delhi, Washington, and so many other so-called “liberal democracies” do surreptitiously. Keep an eye on the citizen. In the name of national development, the state plays favourites with billionaires. In the name of national security, it curtails the freedom of individuals.
The ostensible adherence to democratic systems and practice has in many countries become a garb for the aggrandisement of power by an individual or a coterie. In theory, everything is according to law and the Constitution. In practice, political power is getting centralised to a point where most institutions of democracy are becoming defunct or compromised. In the US, a key agency of the law is being used to protect the President from prosecution. In India, important agencies of the government are being used to hound critics and the political opposition.
China’s rise, to be sure, is about more than state capitalism and authoritarianism. Its roots run deep into a knowledge-based society that has systematically invested in human capital. However, the framework of state capitalism and authoritarianism that it has come to represent is finding admirers in several embattled democracies. Who cares for Fukuyama and Williamson, we are all marching towards a “new Beijing Consensus”.
China has not yet overtaken the US as the biggest economic and military power, and that may well take a long time. But China’s worldview of curbing individual freedoms in the name of economic development and well-being is fast emerging as the dominant global ideology today. The pursuit of a distant dream of economic well-being — call it Make America Great Again, or the China Dream or Viksit Bharat, all chimaeras and promises for the future — are deployed to deny human rights and freedoms today, in the name of economic progress and political stability.
Baru was Editor, The Financial Express. His most recent book is Secession of the Successful: The Flight Out of New India
