Fukuyama's Mittelstand This is a blog of happenings in my family, with my kids, and with the politics of the world. If you don't get satire you should probably stop reading right now. I tend to ramble on, and on, and on...

It's not often that I begin a book where the first page would include a line like "There has, of course, been a great deal of Sturm und Drang following the collapse of communism, with apparent instability and much pessimism in Europe concerning the that continent's political prospects." Pessimism!?!?! I may have only been 10, but I distinctly remember watching the joy manifesting itself in the streets as the wall came down in Berlin and then as Gorbachev was unwilling to use the force of violence to quell the protests elsewhere as the Iron Curtain tumbled. This paradigm of the triumph of the human spirit for freedom over one's lives rather than being controlled by the state was the bedrock of my political upbringing. But Fukuyama begins his book on Trust with the contrary notion, the notion that, with the all-powerful state gone and literally no intermediate organizations between the family and the state for people to function in, there could be pessimism. I guess he forgot about the role of the church, especially in Poland. Sadly Fukuyama thereafter completely ignores Eastern Europe and focuses on the loci of liberal democratic society: the US, Western Europe and East Asia. On the one hand he puts high trust societies exemplified by the US, Germany and Japan, while on the other he places low trust societies exemplified by Korea, France, Italy and various Chinese countries. He groups them based on the criteria of the ease which intermediate-sized organizations (sports teams, clubs, service organizations, etc.) spontaneously form within a culture. The more of these organizations, the more social capital (i.e.. trust) a society has available. Fukuyama then makes a compelling argument that this trust is critical to formation of large private businesses. While Fukuyama makes his case fairly well, there are some definite holes. Korea is classified as a low-trust society and yet it's got some pretty huge companies. Fukuyama tries to explain this away by saying that state-sponsored protectionism rather than social capital was what really allowed these firms to grow so big. But anyone familiar with US history knows that the tariff played a large role in protecting American business so that it could grow fat on the home market without having to compete with foreign firms. Indeed, in studying the Krupp family of German industrialists a number of years ago I was surprised to discover that their steel went mainly to American railroads until they were priced out of that market by the tariff after the Civil War. It was only then that the Krupps turned their focus to munitions and became the primary armaments dealer to the Prussian army, fueling Bismarck's desire to conquer all of Germany through Blut und Eisen. But I digest... Lastly Fukuyama discusses the loss of trust, providing examples of the absolute monarchs of France and the stultifyingly Confucian emperors of China. He argues that these states saw intermediate-sized organizations as a threat to their power and so either destroyed or co-opted them. At this point I sat waiting for Soviet examples of similar short term trust destruction or historical examples of slower long term eroding like that which occurred in the Venetian Republic, but I was not to receive satisfaction. And while Fukuyama makes passing references to other Western European countries like Britain and Sweden, one is left wondering how general Fukuyama's thesis really is; if it just fits nicely to the hand-picked examples in the book. Flaws aside, this book obviously got me thinking about a number of issues. I found Fukuyama's lauding (in 1995) of the Japanese corporate model over that of the French especially ironic having also recently read a biography of Carlos Ghosn, the Renault executive who came in to run Nissan (in 1999) and saved that company from the keiretsu which so tied it down. I can also see his worries about Americans losing the ability to spontaneously form groups was unfounded. If anything, the internet has made us more effective at it; witness the meet-ups, then tweet-ups, barcamps, the Tea Party and Occupy Wall Street. Church membership may continue to keep falling, but we still have no trouble finding like-minded fellows to associate with. Similarly, Fukuyama's pessimism about company size being limited to family size in mainland China like it has historically been in other Chinese societies like Taiwan and Hong Kong has proved unfounded. He might argue that is artifact of their explosive growth, but time will tell. I would definitely pick up another book by Fukuyama.