Commanding Heights: The Battle for the World Economy is a book by Daniel Yergin and Joseph Stanislaw , first published as The Commanding Heights: The Battle Between Government and the Marketplace That Is Remaking the Modern World in 1998. In 2002, it was turned into a documentary of the same title, and later released on DVD.

Overview

Commanding Heights is a pro-globalization book which attempts to trace the rise and fall of free markets during the last century. It takes its title from a speech by Vladimir Lenin, who used the phrase "commanding heights" to refer to the segments and industries in an economy that effectively control and support the others, such as oil, railroads, banking and steel.

The authors take the thesis that, prior to World War I, the world effectively lived in a state of globalization, which they term the "First Era of Globalization." They define globalization as periods where free markets predominate, and countries place few if any limits on imports, exports, immigration and exchanges of information. Overall, they see globalization as a positive movement that improves the standard of living for all the people connected to it, from the richest to poorest.

They argue that 1914 and World War I ended this first global era. The rise of fascism and communism, not to mention the Great Depression, nearly extinguished capitalism, which rapidly lost popularity.

After World War II, the authors believe the work of economist John Maynard Keynes came to be accepted as gospel around the world. While a capitalist, he also believed in government regulation of the economy, and Keynes's great influence and prestige also hindered the rise of another era of globalization. The so-called "commanding heights" were often owned or severely regulated by governments, in line with Keynes's ideas.

However, this trend changed when Margaret Thatcher became prime minister of the United Kingdom, and when Ronald Reagan was elected President of the United States. Both these leaders supposedly parted ways with Keynesian economics. Rather, they supported the work of Friedrich von Hayek, who stridently opposed government regulation, tariffs, and other infringements on a pure free market, and Milton Friedman, who emphasized using monetary policy to influence rates of economic growth.

While Thatcher, Reagan, and their successors made sweeping reforms, the authors argue that the current era of globalization finally began around 1991, with the collapse of the Soviet Union. Since then, they argue, countries embracing free markets have prospered, while those adhering to central planning have failed.

While strongly in favor of this trend, the authors worry that globalization will not last. More specifically, they believe that if inequality in economic growth remains high, and if Third World nations are not offered the proper opportunities and incentives to support capitalism, the movement will end just as the first era did.

The reason the authors place so much emphasis on narrowing economic gaps is because they believe, against many of the people they interview, that there is no ideological support for capitalism, only the pragmatic fact that the system works better than any other. As they remark:

The market also requires something else: legitimacy. But here it faces an ethical conundrum. It is based upon contracts, rules, and choice -- in short, on self-restraint -- which contrasts mightily with other ways of organizing economic activity. Yet a system that takes the pursuit of self-interest and profit as its guiding light does not necessarily satisfy the yearning in the human soul for belief and some higher meaning beyond materialism. In the Spanish Civil War in the late 1930s, Republican soldiers are said to have died with the word "Stalin" on their lips. Their idealized vision of Soviet communism, however misguided, provided justification for their ultimate sacrifice. Few people would die with the words "free markets" on their lips.

Controversy

Because the book supports capitalism, globalization and unfettered free markets, it is naturally criticized by those partial to Marxism and other forms of socialism, as well as by the anti-globalization movement.

The Commanding Heights concentrates on economic developments since World War II. Critics contend that the authors ignore the history of colonialism, as many of the countries they examine only became independent after the war.

Published in 1998, Yergin and Stanislaw have been roundly criticized for failing to foresee and take account of problems that were in the making at the time. Some examples of things the book missed because of its date of publication:

• The so-called "Tiger Economies" of Southeast Asia collapsed within a year of the book's publication - the "Asian financial crisis". These economies, which embraced free markets, are used by the authors as examples of globalization's benefits.

• The world and U.S. economy went into a recession. In particular, the U.S. stock market suffered an extended period of marked decline.

• The anti-globalization movement rose and gained power, most notably during the World Trade Organization meeting in Seattle, Washington in 1999.

• Terrorists who oppose globalization are being held accountable for the September 11, 2001 attacks on the World Trade Center and the Pentagon.

The largest criticism leveled against the book is that it failed to foresee the massive corporate scandals that began a few years later. The authors quote Kenneth Lay and cast him as an entrepreneur who was victimized by India's governmental regulations, but since then Lay's company, Enron, has collapsed, and Lay himself has been indicted on fraud charges.

After the September 11 attacks, a new edition was released. In the new edition the authors take note of these issues, but do not modify their fundamental thesis.

Documentary

In 2002, PBS aired a six-hour documentary based on the book. This documentary was later sold on DVD, and is available for viewing free at PBS' web site for those with high-speed Internet connections.

Thanks to its later date, the documentary film is able to address many of the items Yergin and Stanislaw missed in their original book, including the recession, the collapse of Asian economies, the anti-globalization movement, and the attack on New York City. All told, two of the documentary's six hours — the entire final third — address things that happened since the original book was published.

Like the book, the documentary attracted more support and criticism. One example is the anti-globilization movement, which argued they were portrayed unfairly. In the documentary, a WTO representative is interviewed and says point-blank that such protesters are so ignorant of economics that they should not be protesting in the first place.

The documentary is also accused of further oversimplfying the so-called "Battle of Ideas" between Keynes and von Hayek. For example, in the DVD version, Keynes is named together with Karl Marx and Lenin as supporters of controlled economies, which Keynes' supporters hold is an unfair ad hominem attack.

External Links

Official Commanding Heights Site at PBS