The Commanding Heights: The Battle Between Government and the Marketplace That Is Remaking the Modern World

Cover......Page 1
Title page......Page 5
Copyright page......Page 6
Dedication......Page 7
Contents......Page 9
Introduction:  At the Frontier......Page 11
Why the Shift?......Page 13
The Power of Ideas......Page 16
Relinking Past and Future......Page 17
Critical Tests......Page 18
2  Clement Attlee, a former social worker in London\'s East End, touched a chord among voters that Churchill could not......Page 23
5  German finance minister Ludwig Erhard created the social market economy, making Germany the economic motor of Europe. With France\'s Charles de Gaulle and German chancellor Konrad Adenauer.......Page 24
7  Onetime cognac salesman Jean Monnet became the \"Father of Europe.\" He also created the economic plan that propelled France into the modem age.......Page 25
9  James Landis worked feverishly around the clock during the New Deal to design securities and electric-power regulations......Page 26
13  \"Now, I am a Keynesian,\" said Republican president Richard Nixon in 1971. With Treasury secretary John Connally shortly before announcing wage and price controls.......Page 27
15  Electric power comes to rural India in 1962......Page 28
16  Queen Elizabeth II, visiting Ghana in 1961, was hailed as \"the greatest socialist monarch in the world.\" President Kwame Nkrumah, calling himself the Redeemer, achieved political independence for Ghana but ruined the country\'s economy......Page 29
18  \"Minister of Thought\" Keith Joseph, intellectual architect of the Thatcher Revolution......Page 30
21  Set the stage for the 1979 victory by Margaret Thatcher—and the Thatcher Revolution in Britain and around the world......Page 31
24  The Iron and Steel Complex in Anshan, China, employs more than a quarter of a million people......Page 32
27  Deng Xiaoping overseeing construction in Shenzhen......Page 33
30  In 1996 President Roh Tae Woo and Chun Doo Hwan stood convicted of massive corruption......Page 34
33  Jiang Zemin and Junichiro Koizumi, leaders of China and Japan in 2001......Page 35
36  The world\'s tallest buildings—the Petronas towers in Malaysia\'s capital, Kuala Lumpur—symbolize Asia\'s economic aspirations......Page 36
39  In the 1970s, international companies were driven out of India. In the 1990s, CocaCola, along with other firms, was happy to return to a market of nearly 1 billion people.......Page 37
41  With Argentina on the edge of economic collapse in 1989, President Carlos Menem appointed Domingo Cavallo finance minister......Page 38
45  It took Alejandro Toledo two elections (the first was botched by fraud) to replace Alberto Fujimori as Peru\'s president......Page 39
49  The currencies of East and West Germany were unified on a one-to-one basis in June 1990—at a very great cost......Page 40
52  Yeltsin\'s hand-picked successor, former KGB head Vladimir Putin, was convincingly elected in 2000 and brought Russia some welcome stability......Page 41
57  Gary Becker developed the concept of \"human capital.\"......Page 42
60  The clash between the Clinton administration and the Republican Congress shut down the federal government in the winter of 1995......Page 43
64  President François Mitterrand after his 1981 election victory......Page 44
67  The euro raised onto the European Central Bank headquarters. In January 2002, twelve national currencies were retired for good.......Page 45
69  Although overshadowed by war, the Doha summit saw China\'s accession to the World Trade Organization......Page 46
1  Thirty Glorious Years: Europe\'s Mixed Economy  [1]......Page 47
Toward the Mixed Economy......Page 49
Britain: Making Good on the Promise......Page 50
Conquering the Commanding Heights......Page 53
\"We Work Things Out Practically\"......Page 54
France: \"The Levers of Command\"......Page 55
The Cognac Salesman......Page 57
The Plan: \"Modernization or Decadence\"?......Page 58
Germany: Lucky Strikes and \"Chicken Feed\"......Page 60
The Ordoliberals and the Social Market......Page 62
Erhard: \"Pay No Attention\"......Page 63
The Wirtschaftswunder......Page 64
Italy: The National Champion......Page 65
\"The Encroachment\" of John Maynard Keynes......Page 67
Trade and National Power......Page 70
\"You Never Had It So Good\"......Page 72
2  The Curse of Bigness: America\'s Regulatory Capitalism  [28]......Page 74
The Rise of Regulation......Page 76
The People\'s Lawyer......Page 77
Normalcy, \"Not Nostrums\"......Page 78
The New Deal: \"I Never Felt Surer of Anything\"......Page 79
\"The Prophet of Regulation\"......Page 81
Keynes\' American Beachhead......Page 83
Toward Full Employment......Page 84
Regulation and Reform......Page 86
The Last Liberal Administration......Page 88
Malaise and Inflation......Page 92
3  Tryst with Destiny: The Rise of the Third World  [49]......Page 95
Nation Building......Page 96
Nehru\'s Discovery......Page 97
\"Tractors and Big Machinery\"......Page 99
\"The Idea of Planning\"......Page 100
The Permit Raj......Page 101
\"An Agenda for a Better World\": The Development Economists......Page 103
\"The Bank\"......Page 106
The Rise of the State-owned Company......Page 108
\"The Wind of Change\"......Page 109
\"First the Political Kingdom\"......Page 110
Marketing Boards: The Tools of Control......Page 112
The Volta Dam: The High Tide of African Socialism......Page 113
\"Third Worldism\"......Page 115
Good-bye, Coca-Cola......Page 117
The End of an Idea......Page 118
4  The Mad Monk: Britain\'s Market Revolution  [74]......Page 120
\"My Closest Political Friend\"......Page 121
\"The Minister of Thought\"......Page 122
The \"U-Turn\"......Page 123
The \"Conversion\" of Keith Joseph......Page 125
The Leadership Battle......Page 128
\"No Time to Be Mealy-mouthed\"......Page 129
\"There Are No Trains Today\"......Page 131
\"Now for the Real Battle\"......Page 133
The \"Wets\" Versus the \"Drys\"......Page 136
\"The Lady\'s Not for Turning\"......Page 138
The Falklands War: \"The Unexpected Happens\"......Page 139
The Decisive Battle......Page 141
The Birth of Privatization......Page 142
But How to Do It?......Page 145
A Far Bigger Program......Page 146
\"A Bit of an Institution\"......Page 149
\"Always with Beliefs\"......Page 151
5  Crisis of Confidence: The Global Critique  [107]......Page 153
Crisis of Confidence......Page 155
The Debt Crisis and the Lost Decade......Page 158
The National Champions......Page 161
Red Star Sinking......Page 165
Asian Star Rising......Page 167
New Zealand: \"You\'ve Got No Economy\"......Page 168
Friedrich von Hayek and the \"Battle of Ideas\"......Page 169
The Road to Serfdom......Page 171
The Chicago School......Page 173
Grudging Respect......Page 177
The Emergence of Emerging Markets......Page 179
Financial Integration......Page 183
6  Beyond the Miracle: Asia\'s Emergence  [139]......Page 185
Japan: \"I\'ll Go for Income Doubling\"......Page 188
The Iron Triangle: \"The 1955 System\"......Page 191
A \"Suicide Act\" for Bureaucrats......Page 193
The Lost Decade......Page 195
Korea: The Pros and Cons of Picking Winners......Page 197
Taiwan: Confucian Capitalism......Page 204
The Supertechnocrats......Page 206
Singapore: The State as Venture Capitalist......Page 210
Malaysia: The Sons of the Soil......Page 214
Asia, Inc......Page 218
The End of the Miracle?......Page 223
Becoming \"Relevant to the World\"......Page 229
7  The Color of the Cat: China\'s Transformation  [185]......Page 231
Catching Mice......Page 233
The Reform Begins......Page 235
\"Bird in a Cage\"......Page 236
\"Socialism with Chinese Characteristics\"......Page 239
Reform and Retrenchment......Page 240
Tiananmen Square......Page 242
The Nanxun: Deng\'s Last Campaign......Page 243
The Two Economies......Page 244
\"A New Tiger\"......Page 246
\"One Country, Two Systems\"......Page 247
Breaking with Conventions......Page 250
China Adapts......Page 253
8  After the Permit Raj: India\'s Awakening  [212]......Page 258
\"Up the Marxist Mountain\"......Page 259
The Dynasty......Page 261
The Crisis......Page 263
\"No Head for Figures\"......Page 264
Waking Up......Page 265
\"A Functionless Capitalism\"......Page 267
\"A Vastly Different Role\"......Page 269
Sunset of the Permit Raj......Page 271
Drawing on Its Best Brains......Page 272
The Hindu Rate of Growth......Page 275
9  Playing by the Rules: The New Game in Latin America  [231]......Page 277
Shock Therapy: Decree 21060......Page 278
Dependencia Rules......Page 280
The New Consensus: \"We Asked Too Much\"......Page 282
The Technopols......Page 284
Chile: The Ambiguous Role Model......Page 285
The Paradox of Argentina......Page 288
The Broom Maker\'s Son......Page 290
Privatization......Page 292
Peru: The Agronomist and the Book Writer......Page 295
Fujishock......Page 299
Market Economy \"with a Human Face\"......Page 301
Brazil: Dependentista Turned Inflation Slayer......Page 302
Mexico: The Diffusion of Power......Page 305
\"We Must Change Things\"......Page 310
Rediscovering the State......Page 313
10  Ticket to the Market: The Journey After Communism  [270]......Page 316
Poland\'s Crisis: The Beginning of the End......Page 317
The Phone Call......Page 319
\"My Ludwig Erhard\"......Page 320
Market Revolution......Page 321
\"Stop Looking to the Top\"......Page 322
The Two Václavs......Page 324
The Soviet Command Economy......Page 326
The Marriage of the Hedgehog and the Snake......Page 328
Market Making......Page 330
An Orderly Transition?......Page 333
Revolution—Or Radical Reform......Page 335
Everything—As Rapidly as You Can......Page 336
The Essential Element: Creating Private Property......Page 338
A Ticket to the Free Economy......Page 340
Communists on the Rise......Page 343
Privatizing the Commanding Heights......Page 344
\"I Would Do The Same Tomorrow\"......Page 345
Russia Defaults......Page 346
\"Successful Product of Soviet Education\"......Page 349
No Turning Back......Page 352
The End of Isolation......Page 353
11  The Commitment: Europe\'s Search for a New Social Contract  [309]......Page 355
The Double Retreat......Page 357
France: \"The Break with Capitalism\"......Page 358
M. Delors and the Second Left......Page 359
\"Cash-Flow Incinerators\"......Page 360
The Great U-Turn......Page 361
Socialists \"Efface the State\"......Page 362
Stagnation and Euro-pessimism......Page 363
The Single Market: Relaunching Europe......Page 364
Flying in the Face of History?......Page 366
Buba Knows Best?......Page 367
\"The D-mark Comes\"......Page 370
The Commitment......Page 372
Privatization and Restructuring......Page 374
New Leaders for New Europe......Page 376
The Costs of the Welfare State......Page 379
Europe\'s New Quest......Page 382
12  The Delayed Revolution: America\'s New Balance  [338]......Page 384
\"Big Government Is Over\"......Page 385
The Outsider......Page 388
\"Mugged by Reality\"......Page 389
The Central Banker......Page 391
Beyond Tax and Spend......Page 394
From Capture to Competition......Page 399
\"Plums \"and \"Dogs\"......Page 401
\"Marginal Costs with Wings\"......Page 403
For Whom the Bell Tolls......Page 405
Where the Money Is......Page 408
Electricity: The Collapse of the \"Compact\"......Page 409
\"We\'re Teachable\"......Page 411
Social Regulation: Expanding Its Reach......Page 413
The \"Rights Explosion\"......Page 417
Going Private, American-Style......Page 418
Education and the Welfare Frontier......Page 420
\"As Old as the Country\"......Page 422
13  The Age of Globalization: The Battle for the World Economy  [379]......Page 425
The New Line-up......Page 427
What, After All, Is Globalization?......Page 429
How New? The First Age of Globalization......Page 430
Reconnecting: Postwar Foundations of Globalization......Page 433
After the Seventies: From Trade to Capital Markets......Page 435
The Closed-Economies Relink......Page 437
The Second Age of Globalization......Page 439
New Concerns......Page 441
Not the End of Government......Page 442
14  The Balance of Confidence: The New Rules of the Game  [399]......Page 445
A New Consensus?......Page 449
The Woven World......Page 451
The Company in the Mobile Economy......Page 452
1.  Delivering the Goods?......Page 454
2.  Ensuring Fairness?......Page 456
3.  Securing the Environment?......Page 458
4.  Coping with Demographics?......Page 459
5.  Upholding Identity?......Page 460
The Balance of Confidence......Page 462
Chronology  [419]......Page 465
1  Thirty Glorious Years: Europe\'s Mixed Economy......Page 471
2  The Curse of Bigness: America\'s Regulatory Capitalism......Page 473
3  Tryst with Destiny: The Rise of the Third World......Page 474
4  The Mad Monk: Britain\'s Market Revolution......Page 475
5  Crisis of Confidence: The Global Critique......Page 477
6  Beyond the Miracle: Asia\'s Emergence......Page 479
7  The Color of the Cat: China\'s Transformation......Page 482
8  After the Permit Raj: India\'s Awakening......Page 483
9  Playing by the Rules: The New Game in Latin America......Page 484
10  Ticket to the Market: The Journey After Communism......Page 486
11  The Commitment: Europe\'s Search for a New Social Contract......Page 488
12  The Delayed Revolution: America\'s New Balance......Page 490
13  The Age of Globalization: The Battle for the World Economy......Page 492
14  The Balance of Confidence: The New Rules of the Game......Page 493
Interviews  [449]......Page 495
B......Page 497
C......Page 499
D......Page 500
F......Page 501
H......Page 502
K......Page 504
L......Page 505
M......Page 506
O......Page 507
S......Page 508
V......Page 510
W......Page 511
Y......Page 512
Acknowledgments  [467]......Page 513
B......Page 517
C......Page 518
E......Page 520
F......Page 521
G......Page 522
H......Page 523
I......Page 524
L......Page 525
M......Page 526
N......Page 527
P......Page 528
R......Page 529
S......Page 530
T......Page 532
W......Page 533
Z......Page 534
About the Authors......Page 535