S+B: I thought that the American military had already changed quite a bit, especially since Vietnam.
BOBBITT: No, the two campaigns they just fought, in Iraq and Afghanistan, were very innovative tactically. But, from a strategic point of view, we’re still following the principles set by Ulysses S. Grant, William Tecumseh Sherman, and Dwight Eisenhower. We still rely on tremendous amounts of force. We have 150,000 troops in Iraq right now. Only a fraction of them actually use munitions, a tank or a gun. The rest are there as support personnel. We know how to defeat the leadership of a country, but only at great expense; and we are finding it harder to follow up. In many respects, we’re still geared to fight the battles of Germany and Korea.
That’s why I think you may see more diplomatic efforts like the North Korean framework agreement — where you’re essentially bribing some miscreant, rather than going for a slightly more moral but extremely more expensive and risky effort to coerce change through violence. Most likely, you will see coordination between economic incentives and the background threat of coercion. That is what has brought the new Iran agreement and the recent Libyan concessions into being. Other states, and the European Union, will follow the same course. The E.U. has been very successful at getting repressive regimes to change their human rights practices as the price of joining the Union, rather than by coercing them with threats of violence, because these countries want access to markets.
To be sure, the use of market diplomacy is nothing new. That’s been going on for ages. But the shift in the state away from moral nationalism toward the more amoral efficiency that we associate with business and commerce — that’s a change, with implications for diplomacy and warfare, as well as national security.
Welfare State Redux
S+B: I mentioned your book to a friend who is Canadian. He said, “Well, we’re moving in the opposite direction, back toward the welfare state.” And he asked me: “Is this just a description of the U.S., or does it apply elsewhere as well?”
BOBBITT: There will be fits and starts in these developments — one step forward, two steps back in some cases. These are still very early days. Maybe there could be a period where the trend is reversed. But my hunch is that no developed state will escape this. Canada is so much a part of NAFTA and other trading groups, and it is also subject to the political culture of the West. The current trends there are more likely to be related to the last election, rather than a trend that will last for 25 or 50 years.
S+B: Which is the time frame you’re thinking about.
S+B: But somebody at the top of a large business, like GE or Shell, might also be looking out 25 or 50 years. And if they’re planning for
a market-state, they’re effectively placing a bet that it will indeed come to pass. What would you say to such a person, to offer some confidence that this bet will, in fact, pay off?
BOBBITT: I would tell them that the great fortunes are made in periods of turbulence and change, like the one we’re just entering. Neglecting the new responsibilities this world will impose on business will eventually hurt their bottom line.
Reprint No. 04109
Art Kleiner (firstname.lastname@example.org) is a columnist for and contributing editor to strategy+business.