It's easy to mock The Golden Arches Theory—the idea that if two countries have McDonalds, they won't go to war—but let's do it anyway.
The idea was first proposed back in 1996 by Thomas L. Friedman, The New York Times columnist, and he was hardly the only person who bought it. The capitalism=democracy thinking that underpinned the theory had been in vogue since the Cold War, and its proponents were ascendent in the 1990s following the collapse of the Soviet Union. Once someone got a taste of American business, then they'd have to support American democracy, the thinking went. Free markets make free men, right?
Wrong.
Nearly 30 years later, the Golden Arches theory looks like a particularly foolish American triumphalism. Just ask Luka Safronov.
Safronov chained himself to Moscow's last McDonalds in a futile attempt to prevent it from closing. The burger company—along with nearly every American airline, retailer, and bank—shuttered its Russian operations after Russian President Vladimir Putin started dropping bombs on Ukraine, where there are, for the record, more than 100 McDonalds.
This is the geopolitical truth: Capitalism might be a force for spreading democracy, but it is not a one-way street.
In the decades since the end of the Cold War, the very same financial tools credited with helping capitalist democracies win the conflict have been widely embraced by countries that no one would mistake as free states. Russian oligarchs use the private sector to pillage their country's wealth, transferring the proceeds through Cypriot banks before parking their money in Miami high-rises. Chinese firms with ties to the ruling Communist Party invest in American startups, pirate their technology, then use it to strengthen their own country and its military, as China has legal access to any corporate data of interest.
Autocratic regimes have been stealing intellectual property on an industrial scale. Estimates put the damages to America's startups and leading technology companies between $225 billion to $600 billion annually in what General Keith Alexander, the former director of the National Security Agency, called the "greatest transfer of wealth in history."
For the United States and its allies, it is time to stop thinking like it is 1989. Democracy can no longer just exist to promote capitalism. Capitalism must be a force for democracy, and the private sector needs to take the lead. Companies and investment firms need to take a hard and discriminating look at where, how, and with whom they do business. Corporate executives, especially those in the tech industry, need to start making a distinction between democratic and autocratic money, and step up to hard truths.
That is the mission of Future Union. Our team represents a cross-section of thought leaders ranging from former White House officials, national security experts, venture capitalists, and business leaders. We are launching a comprehensive effort to end the autocratic exploitation of free markets. The initiative is intended to be a catalyst for the investment world, both the funds and capital allocators, to avoid tainted, toxic capital.
It is time that we drop the pretense that executives and investors are ignorant of the Faustian bargain in China, and the aims of the Chinese government. For anyone wanting to invest in China, the deal has been clear for years: You get to do it only under terms that all but guarantee technology and know-how will be transferred to Chinese firms.
The results have also been clear for years: American and European investment has been directly responsible for helping Chinese companies become serious competitors, and indirectly helping China build an advanced and powerful military.
There is no changing what is already done. But going forward, every business leader should be asking themselves: What will be better for my company, my fund, my startup—and my family and friends—in the 2030s? A world where democracy is flourishing? Or one where autocracy is on the march?
Those of us who have come together to create Future Union know the answer, and know that it is time for us to act on it. We intend to make sure everyone else does, too.
Andrew King is an early-stage venture capital investor investing in geopolitical democracy and working to inspire the next generation to get involved, after previously investing across two funds and writing about democracy, investing, and veterans. Andrew's prior legal and finance career included general counsel of the Dallas Stars and Pittsburgh Penguins NHL teams, investment bank, JPMorgan, and hedge fund, Solas Capital Management.
The views expressed in this article are the writer's own.
Uncommon Knowledge
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
Newsweek is committed to challenging conventional wisdom and finding connections in the search for common ground.
