Foreign and Defense Policy

Entrepreneurship and American ‘Soft Power’

afghanistan-marketIf the United States hopes to build stable and decent societies in postwar Afghanistan and Iraq, it will have to scrap prevailing doctrines of international development. Indeed, long-term U.S. national security interests will depend on the robust application of American-style, free-market capitalism. That is the thesis of an article by Carl Schramm in the current issue of Foreign Affairs. “Entrepreneurial capitalism is messy, since it is highly organic rather than centrally planned or centrally managed,” writes Schramm, president of the Ewing Marion Kauffman Foundation. “By contrast, the problem with international development today is that it is dominated by the theory and culture of grand central planning.”

Without ever mentioning modern liberalism or the Obama administration—which treats grand central planning almost as religious dogma—Schramm indicts this ethos as a great obstacle to human flourishing. Political and economic elites, enamored by their own expertise, do not trust ordinary individuals to start businesses and generate economic growth. In international economic development programs, Schramm writes, indigenous companies and potential entrepreneurs typically are overlooked. The result is a massive failure to encourage the growth of local, individual firms that not only thrive, but birth new businesses and industries.

Schramm, co-author of Good Capitalism, Bad Capitalism, argues that this pattern frustrates U.S. efforts in war-torn nations because dynamic economic growth is essential to social and political stability. An occasional advisor to the Defense Department, Schramm proposes a doctrine of “expeditionary economics,” in which future military action would be framed by sober thinking about the requirements for long-term economic development.

If there is a weakness in Schramm’s argument, it is perhaps a tendency to downplay the absolute necessity of defeating the forces of Islamist radicalism and violence in countries such as Afghanistan and Iraq. Borrowing from Nobel laureate Robert Lucas, Schramm writes persuasively that people “must experience changes in the possible lives they imagine for themselves and their children”—changes that allow them to act differently, take risks, and chart new entrepreneurial paths. But none of that is likely until people experience a basic and sustained level of personal security.

Nevertheless, Schramm offers an unapologetic defense of American capitalism as a model for developing nations, as he did during a recent interview on “Charlie Rose.” The remarkable economic growth of countries such as India and China, he said, can partly be explained by the power of the American example. “If the United States lets its economic performance slip or if it drifts away from the principles of entrepreneurial capitalism, it will endanger the standard that others view so highly and create the conditions for less America-friendly views to prevail in the world.”

In other words, if the United States fails to uphold and promote its deepest ideals abroad, we can expect more anti-Americanism, not less. This is a brash endorsement of American exceptionalism: the belief that American economic and political principles carry a universal appeal and represent a precious export to developing countries. These concepts, however, are held in contempt by team Obama and its liberal Democratic base. Hence a grotesque contradiction in Obama’s foreign policy: American “soft power”—which includes its capacity to promote economic development—depends precisely on this view of American exceptionalism.

To reject it—to replace it with an ongoing “apology” for U.S. leadership—is to eviscerate an indispensable feature of American influence in the world. Soft power, then, becomes a soft surrender to the forces of stagnation, disorder, and thuggery.

Joseph Loconte is a lecturer in politics at the King’s College in New York City and a contributing editor to THE AMERICAN.

Image by AfghanistanMatters.

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