The Cold War was nothing but a conflict between two extreme versions of progressivism--socialism and neoclassical capitalism. Both ideologies set a rapid increase and fair distribution of material welfare as their goal. According to socialists, the way to achieve such a goal is state planning; according to neoclassicists, the market.

In 1989, after the fall of the Berlin Wall, RAND analyst Francis Fukuyama and economic historian Robert L. Heilbroner separately pronounced the end of history and the victory of capitalism. But history has not quite ended. With the demise of socialism and the end of the Cold War, this rosy neoclassical dream has been tarnished. The reasons are primarily twofold: globalization and environmental constraints. Instead, what we seem to be witnessing today is the end not of history, but progressivism, the belief that there is only one ideal end, the unique path to which human beings can recognize.

The former Soviet Union and the United States could be classified together as experimental states, which provided the world with clear-cut alternative ideologies for progress. The dominance and severe military confrontation of these ideologies during the Cold War relegated cultural and historical diversities in all countries to a relatively secondary position and transformed almost all major political problems of the world into ideological confrontations. As political scientist Samuel Huntington appropriately pointed out in the Summer 1993 issue of Foreign Affairs, "The conflicts between princes, nation-states and ideologies were primarily conflicts within Western civilization, 'Western civil wars' as William Lind has labeled them. This was as true of the Cold War as it was of the world wars and the earlier wars of the seventeenth, eighteenth, and nineteenth centuries." The Cold War was nothing but another civil war within the West or, more precisely, within the Western ideology of progressivism. The demise of socialism and the end of the Cold War released the world from a Western civil war over differing versions of progressivism to confront the more fundamental issues of environmental pollution and the peaceful coexistence of different civilizations.

The 21st century will be an age in which multiple civilizations compete, interact, coexist, and confront the need to admit the rights of nature. Indeed, clashes will be possible if the principles of tolerance and moderation are not practiced by civilizations. And cohabitation of human beings with nature becomes possible only when tolerance rather than impetuous belief, balance rather than progress, are respected. In this regard, progressivism, which has been the dominant ideology for the past 200-odd years and particularly the past 50 years, has to be and is, in fact, ending. In premodern times, when progressivism was not the dominant ideology, the coexistence of vastly diverse civilizations was the norm, and the destruction of nature by human beings was relatively limited. This does not, of course, imply that we should go back to the premodern age. Universal modern technologies, institutions, and organizations should be retained and fully utilized. Civilizations of the postmodern age can and should share these neutral technologies and institutions while retaining diverse cultures and traditions.


The events unfolding in the 1990s do not bear out the end of history. Modern Western civilization, with the explosive increase in productive capacity accompanying the Industrial Revolution, has succeeded over the past century in radically transforming social and economic systems in both developed and developing countries, but it has also seriously affected global ecological systems.

With such material and political success, progressivism, particularly neoclassical capitalism, seemed to have become the dominant world ideology. But leading democratic capitalist countries of Europe, the United States, and Japan have experienced prolonged economic slumps and political instability. These issues seem chronic, and recent economic recoveries in some countries are not likely to solve structural problems. Income and wealth are polarizing as the rich get richer and the average family loses ground. Even the remarkable comeback staged by corporate America has only been possible at the expense of household America. European unemployment, despite some improvement, still hovers between 8 and 12 percent. Japan, muddling its way out of asset deflation, is now confronted by potential and hidden unemployment.

Moreover, various forms of political corruption plague these countries. Money scandals have toppled Japanese and Italian governments, while scandal-triggered resignations by key cabinet members are an almost everyday occurrence in most of the Group of Seven. Journalist Kevin Phillips proposes a fundamental overhaul of the present American political system, and French Ambassador to the Western European Union Jean-Marie Guéhenno has declared that the nation-state in this global and borderless networking age has become so powerless that democracy is obsolete, and some imperial arrangement is needed to replace it. Moreover, events in the former Soviet Union seem to have shattered the extreme optimism of 1989. Russia's experiment in shock therapy, which was aimed at swiftly establishing democracy and neoclassical capitalism, has been an utter failure.

Paths to democracy and neoclassical capitalism are not necessarily unique and depend upon the historical phase that the particular economy happens to be in. As such, policies may be modified and, for example, a more gradualist approach adopted. However, a more fundamental issue is whether or not democracy and neoclassical capitalism are the only or ultimate goals, or even whether any goal needs to be established. China has set its sights on establishing a socialist market economy and, relative to Russia, has so far succeeded in introducing many facets of market mechanisms without major economic or political upheaval. While it may still be too early to pass final judgment on the recent Chinese experiment, it does at least provide a realistic alternative goal and methodology. Vietnam, India, Myanmar, and Central Asian countries following in China's wake seem to be searching for such alternative goals and paths that fit their own historical and cultural backgrounds.


Many Western philosophers and historians have subscribed to the belief that there has been only one civilization, namely the Western civilization, because of its dominant position in modern history. Other civilizations have either disappeared in the sand or flowed into the mainstream of modern Western civilization.

The advent of the Cold War and the relatively smooth economic performance of the developed countries of the West and Japan seemed to have rendered non-progressivist thinking out of fashion. What emerged in its place were the neoclassical theories of capitalism that made over the classical model with esoteric sophistication in mathematics and statistics. On the surface, this face-lift looked scientific, mimicking the methodology of natural science. The United States played the leading intellectual role in this process of reformulating the neoclassical paradigm in economics and related social sciences. U.S. dominance in both politics and economics contributed to this intellectual leadership, and the singular nature of the United States as a relatively new country of immigrants made it possible to experiment somewhat freely in abstract and simple principles of progressivism.

The neoclassical paradigm postulated as the antithesis of socialism after World War II had some obvious attractions and was thought by many to have solved the problems of classical capitalism. Through the mass production of such consumer goods as automobiles, appliances, and electronics and turning workers into consumers, mass consumption markets were created. The emergence of consumers at the center of the socioeconomic system laid the basis for a middle-class society, providing the necessary stability for society as a whole. Neoclassical capitalist economies emphasized consumer sovereignty as the basis of democratic choice of the mix and quantity of economic goods against the bureaucratic economic decision-making under socialism. The same consumers constituted the centerpiece of democracy, casting votes to ensure their political sovereignty.

In the United States, luxuries that had once been available only to European aristocrats were now within the reach of many Americans. A pleasant suburban house with a car and a garden were now feasible for a vast number of consumers. This American dream quickly spread throughout the noncommunist developed countries of Europe as well as Japan. Although Europe retained some aspects of its elitist tradition, mass consumption and mass democracy made it possible to construct welfare states to the satisfaction of the general public. Japan too very quickly Americanized its economic and political systems and became, in some ways, more American than the Americans in creating a mass-consumption, mass democracy, middle-class society, while at the same time retaining some elements of traditional culture.


Economic prosperity seemed everlasting, and human progress toward equitable material welfare seemed feasible. Economics, dedicated to the efficient allocation of resources or the optimization of material welfare, has come to occupy a central position in the various disciplines of the social sciences. Mechanical and electronic engineering have also significantly improved their relative status among disciplines of the natural sciences. Technological innovation and economic growth became the key concepts in this neoclassical mass consumption world. National income statistics centering on the flow of goods from production to consumption have been compiled in all the major developed countries, and economic policies have focused their attention on GNP and its components. As long as engineers and corporations continuously churned out technological innovations, and policy authorities properly managed macroeconomic matters, the everlasting progress of the neoclassical capitalist regime was thought to be guaranteed.

But this model has two major shortcomings. First, the notion that essentially laissez-faire economic management leads to consumer sovereignty is based on various assumptions, the most important of which is that factors of production, labor and capital, do not move across borders. The globalization of financial capital as well as the relatively free movement of what Secretary of Labor Robert Reich has called "symbolic analysts" directly violate this assumption. This globalization with economies of scale leads to oligopolization of the world market, inviting strategic trade rather than free trade. More important, the interests of multinational corporations and those of workers and consumers start to diverge, and the cohesion of the nation-state as an economic unit disintegrates.

In a regime where movements of factors of production are relatively scarce, gains obtained by trading corporations are distributed to a certain degree to workers and consumers. Even under globalization, oligopolistic competition takes place despite some economic concentration, and one can argue that consumer benefit remains. However, the outcome is uncertain, and even with consumer benefit, the new polarization is a major blow to the stability of mass consumption societies. Consumers essentially have to earn income by working, and the loss of income by some workers divides consumers into two categories, the affluent and the poor, thus undermining middle-class society. According to the 1994 Organization for Economic Cooperation and Development jobs study, unemployment in OECD countries was below 10 million in the 1950s and 1960s but started to climb in the mid-1970s, reaching 25 million in 1990. By 1995, unemployment is expected to reach 35 million. In the mid-1970s, the share of wages in GNP in Europe, the United States, and Japan started to decline. The European Union share in 1995 is projected to stand at 62 percent as opposed to 75 percent in 1975. Wage discrepancies between skilled and unskilled laborers has widened in the United States, Canada, and Australia, and real wages for unskilled workers in the United States declined more than one percent between 1980 and 1989.

The second problem is that environmental constraints have become visibly binding, and a further explosion in population and geometric increase in energy consumption seems unsustainable. Although environmental damage is said to have started approximately 10,000 years ago with ancient agricultural civilizations, the speed and extent of the damage accelerated geometrically after the Industrial Revolution, particularly in the twentieth century. World population was only 500 million in 1650, and its annual rate of growth was 0.3 percent, reaching 800 million in the eighteenth century before the Industrial Revolution. With Western industrial civilization this number doubled in the following 100 years to 1.6 billion and tripled in less than 100 years in the twentieth century to 5.5 billion. World population is now expected to reach 10 billion by the middle of the 21st century. When world population tripled during the twentieth century, world production jumped from $0.6 trillion in 1900 to $15 trillion in 1990, a 25-fold increase. Consumption of fossil fuels also surged 11-fold from 0.7 billion tons in 1900 to 7.8 billion tons in 1990. This precipitous quantitative increase in resource consumption has been matched by the adverse impact of technological innovation and new materials such as plastics and fluorocarbon gases, which are destroying the ozone layer.

Optimists argue that the causality between greater human activity and environmental destruction is not well established, and that environmentally friendly technological innovation will eventually solve these problems. This is a typically arrogant progressivist view. The knowledge that humans have accumulated about nature and human beings themselves is quite limited. Because natural science tries to understand vast systems from only minute observations, it will never be able to assess accurately the impact of human activity on the environment, much less solve environmental problems through technological innovation. Technological progress may, in a small way, compensate for some human impact on nature or, at best, delay the destruction for a very short time.


The progressivists' confidence in human competence and technology could properly be termed a myth because there is no logical reason to believe such path-breaking technological change will occur. It is akin to believing that someday the savior will come down to earth in the form of technological innovation and for some reason reverse all the problems that past progress has wrought. This myth of technological innovation parallels unswerving faith in economic growth. Despite the structural nature of the problems of inequality and pollution at hand, many economists and politicians paradoxically believe or try to convince themselves that economic growth can solve them. But is this really a logical proposition? It is precisely because of economic growth that the population explosion, rapacious energy consumption, and environmental destruction have proceeded so rapidly and that polarization of the world population into the affluent, poor, and abjectly deprived seems to be reaching its limit. Rather than relying on myths and blind faith, it is time to face up to the reality of the situation and reexamine environmental problems in a more diffident and logical manner.

The rapid erosion of the neoclassical paradigm throws us back to the pre--World War II situation where people and nations tried to identify themselves with civilizations rather than progress. Huntington is right when he says that "civilization identity will be increasingly important in the future, and the world will be shaped in large measure by the interaction among seven or eight civilizations." But the reemergence of civilization consciousness is directly related to deep disillusionment with the ideology of progressivism.

Civilizations do indeed rise and fall and often clash with each other, but more important, they have interacted and coexisted throughout most of history. The universality of technology is often seen as the universality of Western civilization. But it is now well known that black gunpowder, the compass, and typeset printing, which were thought of as inventions of the Western Renaissance, originated in Sung China. This view that Western culture is singular while some technologies are universal was widely adhered to by Japanese intellectuals in the late nineteenth and early twentieth century who advocated modernization through "Western technology and Oriental philosophy." It should also be noted that a modern standing army and well-organized bureaucracy existed in the eighth-century Abbasid Islamic empire.

Not universality but domination has produced the ascendance of the West. The clash of civilizations is not the unavoidable result of coexisting civilizations, but rather the result of contact with Western progressivism. In the past, civilizations have peacefully coexisted. The Abbasid and following Islamic empires were relatively tolerant regarding the cultures and religions of the peripheral parts of their empires: for example in India, Hinduism and the caste system were retained to avoid confrontation with Indian tradition. Muslim merchants engaged in global trade from Africa to China. The Abbasid and following Islamic empires were probably the first civilizations where the commercial activities of merchants occupied a central place in society, along with the wide use of money and joint-venture corporate organizations. The Asian continent was therefore characterized for a period of more than 1,000 years by the interaction and coexistence of various civilizations. The major dominance-subjugation relationship emerged only when these Asian civilizations encountered modern Western civilization.

Similarly, the progressivist dominance of nature, or anthropocentrism, must be confronted head-on. Given the severity of environmental constraints, harmony and cohabitation with nature rather than conquest and development should be respected. The urbanization that started with the rise of civilization created an artificial environment detached from nature and encouraged an anthropocentric attitude. The large-scale destruction of nature started with the advent of agricultural civilization and urbanization. Destructive activities accelerated dramatically after the Industrial Revolution and the emergence of modern Western civilization. Cartesian rationalism reemphasized human beings as the center of nature, culminating in Marx's extreme anthropocentric belief in natural science and everlasting progress.

By contrast, premodern philosophies and religions, particularly Eastern ones, respect nature and the environment. In Japanese Shintoism there is no clear-cut demarcation between nature and human beings. In certain sects of Buddhism, forests and woods are considered sacred places, and many temples are built deep in the forests where monks undergo spiritual training.

The premodern Asian experience of relatively peaceful coexistence between civilizations as well as with the environment should be remembered. Moreover, conflicts or clashes between various civilizations must be avoided in view of the detrimental impact of modern wars, possibly including nuclear and chemical weapons, on the environment. In view of this more than 1,000-year experience, it seems possible that diverse civilizations can coexist peacefully if tolerance and moderation are practiced.


Asia, which has the oldest and most diverse civilizations in the world, will probably become the main stage for action in the 21st century. It is well suited for this experiment because it has the longest history of such competition and interaction. The coexistence of diverse civilizations before the eighteenth century was possible due to the global networking of Islamic, Indian, and Chinese merchants--in other words, a system of exchange akin to global capitalism encompassed a large number of very diverse civilizations. In this sense, globalization amid diversity is nothing new, and the prospects for success are not unduly small.

However, civilizations such as the West and Islam must practice tolerance. In particular, the West must abandon sectarian progressivism in favor of respect for the environment and tolerance for other civilizations. Today's ongoing globalization is quite different from past versions in that, as a result of revolutionary technological progress in information and communications, it involves simultaneous or real-time transfers of information and technology. This contributes to the acceleration of changes due to globalization and may cause substantial difficulties for the adaptation of cultures to technology. Compared to past periods of globalization with cultural diversities, environmental constraints are more absolutely binding.

These constraints will make mutual accommodations between civilizations more difficult, particularly between the affluent and less affluent. To the extent that these new conditions exist, this is a new experiment in again making globalization compatible with cultural diversity. During the Cold War, two versions of progressivism suppressed the most important process of history, interaction and accommodation between diverse civilizations. After some 50 years, the normal process of history has started to move again. What we are witnessing is not the end of history but a fresh start.

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  • Eisuke Sakakibara is Director-General of the International Finance Bureau, the Japanese Ministry of Finance. The views expressed here are strictly personal and do not represent those of the Ministry of Finance or Japanese government.
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