Invading Ukraine makes no sense for Russia’s economy

What lessons can be learned from current events about the synergy between business and democracy?

For the past generation, the world economy has operated on the theory that success in the knowledge economy depends on increasing democracy.

After this consideration:

• The Soviet Union and its satellite countries could not compete with the democratic West (plus the Asian tigers like Japan and South Korea) in the knowledge-based economy. That was a major factor in the collapse a generation ago.
• The integration of capitalist economies into China, even at the expense of domestic jobs, has been worthwhile in giving China financial incentives to open up its society. It was thought that as China moved up the value chain towards more knowledge-based work, freedom of expression would logically flow from the freedoms needed to run globally integrated companies to civil society.
• No two countries with McDonald’s franchises have ever been at war. In the slang of New York Times columnist Thomas Friedman, any society advanced enough along the road to global integration and conspicuous consumption would find ways other than war to resolve its differences.

With Russia’s invasion of Ukraine, these assumptions have been proven wrong, or at least incomplete:

• Whatever concerns Vladimir Putin may have about NATO allies sneaking up on Russia’s borders, it is unimaginable for Western minds to destroy its economy and long-term viability by invading Ukraine. But he did it for reasons that don’t make sense in a spreadsheet.
• China has spent much of the past few decades expanding its economy and links with the West, but its policies are now making the country more economically isolated and expanding its political influence around the world. It has repeatedly stated explicitly that it will invade Taiwan as the island moves toward independence. This, too, would not serve China’s interests economically.
• Unfortunately, McDonald’s external relations theory does not tally with the current state of affairs. And now McDonald’s has closed all of its Russian restaurants.

Capitalism is still a force of logic and openness, but historical drivers and the conceits of autocratic leaders are still able to disrupt the seeming inevitability of peaceful global competition.

Isaac Cheifetz, a Twin Cities Executive Recruiter, can be reached at Catalytic1.com.