Spotting the Losers: Seven Signs of Non-Competitive States

RALPH PETERS

© 1998 Ralph Peters


From Parameters, Spring 1998, pp. 36-47.


When you leave the classroom or office and go into the world, you see at first its richness and confusions, the variety and tumult. Then, if you keep moving and do not quit looking, commonalties begin to emerge. National success is eccentric. But national failure is programmed and predictable. Spotting the future losers among the world's states becomes so easy it loses its entertainment value.

In this world of multiple and simultaneous revolutions--in technology, information, social organization, biology, economics, and convenience--the rules of international competition have changed. There is a global marketplace and, increasingly, a global economy. While there is no global culture yet, American popular culture is increasingly available and wickedly appealing--and there are no international competitors in the field, only struggling local systems. Where the United States does not make the rules of international play, it shapes them by its absence.

The invisible hand of the market has become an informal but uncompromising lawgiver. Globalization demands conformity to the practices of the global leaders, especially to those of the United States. If you do not conform--or innovate--you lose. If you try to quit the game, you lose even more profoundly. The rules of international competition, whether in the economic, cultural, or conventional military fields, grow ever more homogeneous. No government can afford practices that retard development. Yet such practices are often so deeply embedded in tradition, custom, and belief that the state cannot jettison them. That which provides the greatest psychological comfort to members of foreign cultures is often that which renders them noncompetitive against America's explosive creativity--our self-reinforcing dynamism fostered by law, efficiency, openness, flexibility, market discipline, and social mobility.

Traditional indicators of noncompetitive performance still apply: corruption (the most seductive activity humans can consummate while clothed); the absence of sound, equitably enforced laws; civil strife; or government attempts to overmanage a national economy. As change has internationalized and accelerated, however, new predictive tools have emerged. They are as simple as they are fundamental, and they are rooted in culture. The greater the degree to which a state--or an entire civilization--succumbs to these "seven deadly sins" of collective behavior, the more likely that entity is to fail to progress or even to maintain its position in the struggle for a share of the world's wealth and power. Whether analyzing military capabilities, cultural viability, or economic potential, these seven factors offer a quick study of the likely performance of a state, region, or population group in the coming century.

The Seven Factors

These key "failure factors" are:

Zero-Sum Knowledge

The wonderfully misunderstood Clausewitzian trinity, expressed crudely as state-people-military, is being replaced by a powerful new trinity: the relationship between the state, the people, and information. In the latter phases of the industrial age, the free flow of quality information already had become essential to the success of industries and military establishments. If the internationalizing media toppled the Soviet empire, it was because that empire's battle against information-sharing had hollowed out its economy and lost the confidence of its people. When a sudden flood of information strikes a society or culture suffering an information deficit, the result is swift destabilization. This is now a global phenomenon.

Today's "flat-worlders" are those who believe that information can be controlled. Historically, information always equaled power. Rulers and civilizations viewed knowledge as a commodity to be guarded, a thing finite in its dimensions and lost when shared. Religious institutions viewed knowledge as inflammatory and damnable, a thing to be handled carefully and to advantage, the nuclear energy of yesteryear. The parallel to the world public's view of wealth is almost exact--an instinctive conviction that information is a thing to be gotten and hoarded, and that its possession by a foreign actor means it has been, by vague and devious means, robbed from oneself and one's kind. But just as wealth generates wealth, so knowledge begets knowledge. Without a dynamic and welcoming relationship with information as content and process, no society can compete in the post-industrial age.

Information-controlling governments and knowledge-denying religions cripple themselves and their subjects or adherents. If America's streets are not paved with gold, they are certainly littered with information. The availability of free, high-quality information, and a people's ability to discriminate between high- and low-quality data, are essential to economic development beyond the manufacturing level. Whether on our own soil or abroad, those segments of humanity that fear and reject knowledge of the world (and, often, of themselves) are condemned to failure, poverty, and bitterness.

The ability of most of America's work force to cope psychologically and practically with today's flood of data, and to cull quality data from the torrent, is remarkable--a national and systemic triumph. Even Canada and Britain cannot match it. Much of Japan's present stasis is attributable to that nation's struggle to make the transition from final-stage industrial power to information-age society. The more regulated flow of information with which Japan has long been comfortable is an impediment to post-modernism. While the Japanese nation ultimately possesses the synthetic capability to overcome this difficulty, its structural dilemmas are more informational and psychological than tangible--although the tangible certainly matters--and decades of educational reform and social restructuring will be necessary before Japan returns for another world-championship match.

In China, the situation regarding the state's attempt to control information and the population's inability to manage it is immeasurably worse. Until China undergoes a genuine cultural revolution that alters permanently and deeply the relationship among state, citizen, and information, that country will bog down at the industrial level. Its sheer size guarantees continued growth, but there will be a flattening in the coming decades and, decisively, China will have great difficulty transitioning from smokestack growth to intellectual innovation and service wealth.

China, along with the world's other defiant dictatorships, suffers under an oppressive class structure, built on and secured by an informational hierarchy. The great class struggle of the 21st century will be for access to data, and it will occur in totalitarian and religious-regime states. The internet may prove to be the most revolutionary tool since the movable-type printing press. History laughs at us all--the one economic analyst who would understand immediately what is happening in the world today would be a resurrected German "content provider" named Marx.

For countries and cultures that not only restrict but actively reject information that contradicts governmental or cultural verities, even a fully industrialized society remains an unattainable dream. Information is more essential to economic progress than an assured flow of oil. In fact, unearned, "found" wealth is socially and economically cancerous, impeding the development of healthy, enduring socioeconomic structures and values. If you want to guarantee an underdeveloped country's continued inability to perform competitively, grant it rich natural resources. The sink-or-swim poverty of northwestern Europe and Japan may have been their greatest natural advantage during their developmental phases. As the Shah learned and Saudi Arabia is proving, you can buy only the products, not the productiveness, of another civilization.

States that censor information will fail to compete economically, culturally, and militarily in the long run. The longer the censorship endures, the longer the required recovery time. Even after the strictures have been lifted, information-deprived societies must play an almost-hopeless game of catch-up. In Russia, it will take at least a generation of genuine informational freedom to facilitate an economic takeoff that is not founded hollowly upon resource extraction, middleman profits, and the looting of industrial ruins. Unique China will need even longer to make the next great leap forward from industrial to informational economy--we have at least half a century's advantage. Broad portions of the planet may never make it. We will not need a military to deal with foreign success, but to respond to foreign failure--which will be the greatest source of violence in coming decades.

If you are looking for an easy war, fight an information-controlling state. If you are looking for a difficult investment, invest in an information-controlling state. If you are hunting a difficult conflict, enter the civil strife that arises after the collapse of an information-controlling state. If you are looking for a good investment, find an emerging or "redeemed" state unafraid of science, hard numbers, and education.

A Woman's Place

Vying with informational abilities as a key factor in the reinvigoration of the US economy has been the pervasive entry of American women into the educational process and the workplace. When the stock market soars, thank Elizabeth Cady Stanton and the suffragettes, not just their beneficiary, Alan Greenspan. After a century and a half of struggle by English and American women, the US economy now operates at a wartime level of human-resource commitment on a routine basis.

Despite eternally gloomy headlines, our country probably has the lowest wastage rate of human talent in the world. The United States is so chronically hungry for talent that we drain it from the rest of the planet at a crippling pace, and we have accepted that we cannot squander the genius of half our population. Even in Europe, "over-skilling," in which inherent and learned abilities wither in calcified workplaces, produces social peace at the cost of cultural and economic lethargy, security at the price of mediocrity. The occasional prime minister notwithstanding, it is far rarer to encounter a female executive, top professional, or general officer in that mythologized, "more equitable" Europe than in the United States. Life in America may not be fair, but neither is it stagnant. What we lose in security, we more than compensate for in opportunity.

While Europe sleepwalks toward a 35-hour work-week, we are moving toward the 35-hour day. The intense performance of our economy would be unattainable without the torrent of energy introduced by competitive female job candidates. American women revolutionized the workforce and the workplace. Future social and economic historians will probably judge that the entry of women into our workforce was the factor that broke the stranglehold of American trade unions and gave a new lease on life to those domestic industries able to adapt. American women were the Japanese cars of business labor relations: better, cheaper, dependable, and they defied the rules. Everybody had to work harder and smarter to survive, but the results have been a spectacular recovery of economic leadership and soaring national wealth.

Change that men long resisted and feared in our own country resulted not only in greater competition for jobs, but in the creation of more jobs, and not in the rupture of the economy, but in its assumption of imperial dimensions (in a quirk of fate, already privileged males are getting much richer, thanks to the effects of feminism's triumph on the stock market). Equality of opportunity is the most profitable game going, and American capitalism has realized the wisdom of becoming an evenhanded consumer of skills. Despite serious exclusions and malignant social problems, we are the most efficient society in history. When Europeans talk of the dignity of the working man, they increasingly mean the right of that man to sit at a desk doing nothing or to stand at an idling machine. There is a huge difference between just being employed and actually working.

The math isn't hard. Any country or culture that suppresses half its population, excluding them from economic contribution and wasting energy keeping them out of the school and workplace, is not going to perform competitively with us. The standard counterargument heard in failing states is that there are insufficient jobs for the male population, thus it is impossible to allow women to compete for the finite incomes available. The argument is archaic and wrong. When talent enters a work force, it creates jobs. Competition improves performance. In order to begin to compete with the American leviathan and the stronger of the economies of Europe and the Far East, less-developed countries must maximize their human potential. Instead, many willfully halve it.

The point isn't really the fear that women will steal jobs in Country X. Rather, it's a fundamental fear of women--or of a cultural caricature of women as incapable, stupid, and worrisomely sexual. If, when you get off the plane, you do not see men and women sitting together in the airport lounge, put your portfolio or treaty on the next flight home.

It is difficult for any human being to share power already possessed. Authority over their women is the only power many males will ever enjoy. From Greece to the Ganges, half the world is afraid of girls and gratified by their subjugation. It is a prescription for cultural mediocrity, economic failure--and inexpressible boredom. The value added by the training and utilization of our female capital is an American secret weapon.

Blaming Foreign Devils

The cult of victimhood, a plague on the least-successful elements in our own society, retards the development of entire continents. When individuals or cultures cannot accept responsibility for their own failures, they will repeat the behaviors that led to failure. Accepting responsibility for failure is difficult, and correspondingly rare. The cultures of North America, Northern Europe, Japan, and Korea (each in its own way) share an unusual talent for looking in the mirror and keeping their eyes open. Certainly, there is no lack of national vanity, prejudice, subterfuge, or bad behavior.

But in the clutch we are surprisingly good at saying, "We did it, so let's fix it." In the rest of the world, a plumbing breakdown implicates the CIA and a faltering currency means George Soros--the Hungarian-born American billionaire, fund manager, and philanthropist--has been sneaking around in the dark. Recent accusations of financial connivance made against Mr. Soros and then against the Jews collectively by Malaysia's Prime Minister Mahathir only demonstrated that Malaysia's ambitions had gotten ahead of its cultural capacity to support them. Even if foreign devils are to blame--and they mostly are not--whining and blustering does not help. It only makes you feel better for a little while, like drunkenness, and there are penalties the morning after.

The failure is greater where the avoidance of responsibility is greater. In the Middle East and Southwest Asia, oil money has masked cultural, social, technical, and structural failure for decades. While the military failure of the regional states has been obvious, consistent, and undeniable, the locals sense--even when they do not fully understand--their noncompetitive status in other spheres as well. It is hateful and disorienting to them. Only the twin blessings of Israel and the United States, upon whom Arabs and Persians can blame even their most egregious ineptitudes, enable a fly-specked pretense of cultural viability.

On the other hand, Latin America has made tremendous progress. Not long ago, the gringos were to blame each time the lights blinked. But with the rise of a better-educated elite and local experience of economic success, the leadership of Latin America's key states has largely stopped playing the blame game. Smaller states and drug-distorted economies still chase scapegoats, but of the major players only Mexico still indulges routinely in the transfer of all responsibility for its problems to Washington, D.C.

Family Values

After the exclusion of women from productive endeavors, the next-worst wastage of human potential occurs in societies where the extended family, clan, or tribe is the basic social unit. While family networks provide a safety net in troubled times, offering practical support and psychological protection, and may even build a house for you, they do not build the rule of law, or democracy, or legitimate corporations, or free markets. Where the family or clan prevails, you do not hire the best man (to say nothing of the best woman) for the job, you hire Cousin Luis. You do not vote for the best man, you vote for Uncle Ali. And you do not consider cease-fire deals or shareholder interests to be matters of serious obligation.

Such cultures tend to be peasant-based or of peasant origin, with the attendant peasant's suspicion of the outsider and of authority. Oligarchies of landed families freeze the pattern in time. There is a preference for a dollar grabbed today over a thousand dollars accrued in the course of an extended business relationship. Blood-based societies operate under two sets of rules: one, generally honest, for the relative; and another, ruthless and amoral, for deals involving the outsider. The receipt of money now is more important than building a long-term relationship. Such societies fight well as tribes, but terribly as nations.

At its most successful, this is the system of the Chinese diaspora, but that is a unique case. The Darwinian selection that led to the establishment and perpetuation of the great Chinese merchant families (and village networks), coupled with the steely power of southern China's culture, has made this example an exception to many rules. More typical examples of the Vetternwirtschaft system are Iranian businesses, Nigerian criminal organizations, Mexican political and drug cartels, and some American trade unions.

Where blood ties rule, you cannot trust the contract, let alone the handshake. Nor will you see the delegation of authority so necessary to compete in the modern military or economic spheres. Information and wealth are assessed from a zero-sum worldview. Corruption flourishes. Blood ties produce notable family successes, but they do not produce competitive societies.

That Old-Time Religion

Religion feeds a fundamental human appetite for meaning and security, and it can lead to powerful social unity and psychological assurance that trumps science. Untempered, it leads to xenophobia, backwardness, savagery, and economic failure. The more intense a religion is, the more powerful are its autarchic tendencies. But it is impossible to withdraw from today's world.

Limiting the discussion to the sphere of competitiveness, there appear to be two models of socio-religious integration that allow sufficient informational and social dynamism for successful performance. First, religious homogeneity can work, if, as in the case of Japan, religion is sufficiently subdued and malleable to accommodate applied science. The other model--that of the United States--is of religious coexistence, opening the door for science as an "alternative religion." Americans have, in fact, such wonderful plasticity of mind that generally even the most vividly religious can disassociate antibiotic drugs from the study of Darwin and the use of birth-control pills from the strict codes of their churches. All religions breed some amount of schism between theology and social practice, but the American experience is a marvel of mental agility and human innovation.

The more dogmatic and exclusive the religion, the less it is able to deal with the information age, in which multiple "truths" may exist simultaneously, and in which all that cannot be proven empirically is inherently under assault. We live in a time of immense psychological dislocation--when man craves spiritual certainty even more than usual. Yet our age is also one in which the sheltering dogma cripples individuals and states alike. The price of competitiveness is the courage to be uncertain--not an absence of belief, but a synthetic capability that can at once accommodate belief and its contradictions. Again, the United States possesses more than its share of this capability, while other societies are encumbered by single dominant religions as hard, unbending--and ultimately brittle--as iron. Religious toleration also means the toleration of scientific research, informational openness, and societal innovation. "One-true-path" societies and states are on a path that leads only downward.

For those squeamish about judging the religion of another, there is a shortcut that renders the same answer on competitiveness: examine the state's universities.

Learning Power and Earning Power

The quality of a state's universities obviously reflects local wealth, but, even more important, the effectiveness of higher education in a society describes its attitudes toward knowledge, inquiry-versus-dogma, and the determination of social standing. In societies imprisoned by dogmatic religions, or in which a caste or class system predetermines social and economic outcomes, higher education (and secular education in general) often has low prestige and poor content. Conversely, in socially mobile, innovative societies, university degrees from quality schools appear indispensable to the ambitious, the status-conscious, and the genuinely inquisitive alike.

There are many individual and some cultural exceptions, but they mostly prove the rule. Many Indians value a university education highly--not as social confirmation, but as a means of escaping a preassigned social position. The privileged of the Arabian Peninsula, on the other hand, regard an American university degree (even from a booby-prize institution) as an essential piece of jewelry, not unlike a Rolex watch. In all cultures, there are individuals hungry for self-improvement and, sometimes, for knowledge. But, statistically, we can know a society, and judge its potential, by its commitment to education, with universities as the bellwether. Not all states can afford their own Stanford or Harvard but, within their restraints, their attempts to educate their populations still tell us a great deal about national priorities and potential. Commitment and content cannot fully substitute for a wealth of facilities, but they go a long way, whether we speak of individuals or continents.

Any society that starves education is a loser. Cultures that do not see inherent value in education are losers. This is even true for some of our own sub-cultures--groups for whom education has little appeal as means or end--and it is true for parts of Latin America, Sub-Saharan Africa, and the Arab world. A culture that cannot produce a single world-class university is not going to conquer the world in any sphere.

America's universities are triumphant. Once beyond the silly debates (or monologues) in the Liberal Arts faculties, our knowledge industry has no precedent or peer. Even Europe's most famous universities, on the Rhine or the Seine, are rotting and overcrowded. We attract the best faculty, the best researchers, and the best student minds from the entire world. This is not a trend subject to reversal; rather, it is self-reinforcing.

Yet there is even more to American success in education than four good years at the "College of Musical Knowledge." The United States is also far ahead of other states in the flexibility and utility of its educational system. Even in Europe, the student's fate is determined early--and woe to the late bloomer. You choose your course, or have it chosen for you, and you are more or less stuck with it for life. In Germany, long famous for its commitment to education, the individual who gains a basic degree in one subject and then jumps to another field for graduate work is marked as a Versager, a failure. In the US system, there are second, third, and fourth chances. This flexible approach to building and rebuilding our human capital is a tremendous economic asset, and it is compounded by the trend toward continuing education in mid-life and for seniors.

A geriatric revolution is occurring under our noses, with older Americans "younger" than before in terms of capabilities, interests, and attitudes--and much more apt to continue contributing to the common good. We are headed for a world in the early decades of the next century when many Americans may hit their peak earning years not in their fifties, but in their sixties--then seventies. This not only provides sophisticated talent to the labor pool, but maintains the worker as an asset to, rather than a drain upon, our nation's economy. For all the fuss about the future of social security, we may see a profound attitudinal change in the next generation, when vigorous, high-earning seniors come to regard retirement at today's age as an admission of failure or weakness, or just as a bore. At the same time, more 20-year-old foreigners than ever will have no jobs at all.

Investments in our educational system are "three-fers": they are simultaneously investments in our economic, social, and military systems. Education is our first line of defense. The rest of the world can be divided into two kinds of societies, states, and cultures--those that struggle and sacrifice to educate their members, and those that do not. Guess who is going to do better in the hyper-competitive 21st century?

Workers of the World, Take a Nap!

Related to, but not quite identical with, national and cultural attitudes toward education is the attitude toward work. Now, everyone has bad days at the office, factory, training area, or virtual workplace, and the old line, "It's not supposed to be fun--that's why they call it `work,'" enjoys universal validity. Yet there are profoundly different attitudes toward work on this planet. While most human beings must work to survive, there are those who view work as a necessary evil and dream of its avoidance, and then there are societies in which people hit the lottery and go back to their jobs as telephone linemen. In many subsets of Latin American culture, for example, there are two reasons to work: first to survive, then to grow so wealthy that work is no longer necessary. It is a culture in which the possession of wealth is not conceptually related to a responsibility to work. It is the get-rich-quick, big-bucks-from-Heaven dream of some of our own citizens. The goal is not achievement but possession, not accomplishment but the power of leisure.

Consider any culture's heroes. Generally, the more macho or male-centric the culture, the less emphasis there will be on steady work and achievement, whether craftsmanship or Nobel Prize-winning research, and the more emphasis there will be on wealth and power as the sole desirable end (apart, perhaps, from the occasional religious vocation). As national heroes, it's hard to beat Bill Gates. But even a sports star is better than a major narco-trafficker.

Generally, societies that do not find work in and of itself "pleasing to God and requisite to Man," tend to be highly corrupt (low-education and dogmatic-religion societies also are statistically prone to corruption, and, if all three factors are in play, you may not want to invest in the local stock exchange or tie your foreign policy to successful democratization). The goal becomes the attainment of wealth by any means.

On the other hand, workaholic cultures, such as that of North America north of the Rio Grande, or Japan, South Korea, and some other East Asian states, can often compensate for deficits in other spheres, such as a lack of natural resources or a geographical disadvantage. If a man or woman has difficulty imagining a fulfilling life without work, he or she probably belongs to a successful culture. Work has to be seen as a personal and public responsibility, as good in and of itself, as spiritually necessary to man. Otherwise, the society becomes an "evader" society. Russia is strong, if flagging, on education. But the general attitude toward work undercuts education. When the characters in Chekhov's "Three Sisters" blather about the need to find redemption through work, the prescription is dead on, but their lives and their society have gone so far off the rails that the effect is one of satire. States and cultures "win" just by getting up earlier and putting in eight honest hours and a little overtime.

If you are seeking a worthy ally or business opportunity, go to a mid-level government office in Country X an hour before the local lunchtime. If everybody is busy with legitimate work, you've hit a winner. If there are many idle hands, get out.

Using this Knowledge to Our Advantage

Faced with the complex reality of geopolitics and markets, we must often go to Country X, Y, or Z against our better judgment. Despite failing in all seven categories, Country X may have a strategic location that makes it impossible to ignore. Country Y may have an internal market and regional importance so significant that it would be foolish not to engage it, despite the risks. Country Z may have resources that make a great deal of misery on our part worth the sufferance. Yet even in such situations, it helps to know what you are getting into. Some countries would devour investments as surely as they would soldiers. Others just demand savvy and caution on our part. Yet another might require a local ally or partner to whom we can make ourselves indispensable. Whether engaging militarily or doing business in another country, it gives us a tremendous advantage if we can identify four things: their image of us, their actual situation, their needs, and the needs they perceive themselves as having (the four never connect seamlessly).

There are parallel dangers for military men and businessmen in taking too narrow a view of the challenges posed by foreign states. An exclusive focus on either raw military power or potential markets tells us little about how people behave, believe, learn, work, fight, or buy. In fact, the parallels between military and business interventions grow ever greater, especially since these form two of the legs of our new national strategic triad, along with the export of our culture (diplomacy is a minor and shrinking factor, its contours defined ever more rigorously by economics).

The seven factors discussed above offer a pattern for an initial assessment of the future potential of states that interest us. Obviously, the more factors present in a given country, the worse off it will be--and these factors rarely appear in isolation. Normally, a society that oppresses women will do it under the aegis of a restrictive dominant religion that will also insist on the censorship of information. Societies lacking a strong work ethic rarely value education.

In the Middle East, it is possible to identify states where all seven negatives apply; in Africa, many countries score between four and seven. Countries that formerly suffered communist dictatorships vary enormously, from Poland and the Czech Republic, with only a few rough edges, to Turkmenistan, which scores six out of seven. Latin America has always been more various than Norteamericanos realized, from feudal Mexico to dynamic, disciplined Chile.

Ultimately, our businesses have it easier than our military in one crucial respect: business losses are counted in dollars, not lives. But the same cultural factors that will shape future state failure and spawn violent conflicts make it difficult to do business successfully and legally. We even suffer under similar "rules of engagement," whether those placed on the military to dictate when a soldier may shoot or the legal restraints under which US businesses must operate, imposing a significant disadvantage vis-à-vis foreign competitors.

As a final note, the biggest pitfall in international interactions is usually mutual misunderstanding. We do not understand them, but they do not understand us either--although, thanks to the Americanization of world media, they imagine they do. From mega-deals that collapsed because of Russian rapacity to Saddam's conviction that the United States would not fight, foreign counterparts, rivals, and opponents have whoppingly skewed perceptions of American behaviors. In the end, military operations and business partnerships are like dating--the advantage goes to the player who sees with the most clarity.

We are heading into a turbulent, often violent new century. It will be a time of great dangers and great opportunities. Some states will continue to triumph, others will shift their relative positions, many will fail. The future will never be fully predictable, but globalization means the imposition of uniform rules by the most powerful actors. They are fundamentally economic rules. For the first time, the world is converging toward a homogeneous system, if not toward homogenous benefits from that system. The potential of states is more predictable within known parameters than ever before.

We have seen the future, and it looks like us.


Lieutenant Colonel Ralph Peters (USA, Ret.) was assigned, prior to his recent retirement, to the Office of the Deputy Chief of Staff for Intelligence, where he was responsible for future warfare. Career and personal travels have taken him to 45 countries. He has published and lectured widely on military and international concerns. His seventh novel, The Devil's Garden, was recently released by Avon Books. This is his tenth article for Parameters.


Reviewed 17 February 1998. Please send comments or corrections to: usarmy.carlisle.awc.mbx.parameters@mail.mil