Putin says that Western market sanctions are akin to an act of war. Is he right?
There are common misconceptions about global markets; what they are, how they work, who has the right to participate in them and under what conditions, if any.
Global markets, and especially global financial markets, are extremely complex mechanisms based on the civil society.
What is the civil society?
According to the World Bank: “Civil society ... refers to a wide array of organizations: community groups, non-governmental organizations [NGOs], labor unions, indigenous groups, charitable organizations, faith-based organizations, professional associations, and foundations.”
The civil society is often referred to as the “third sphere” independent of government. Since it is not a physical thing or place you can see, it is easy to underestimate its importance as Putin has.
Global markets are based on the civil society. Participants in global markets over centuries have contributed to, and benefited from, their development. Global poverty is being eradicated due in large part because of global markets. Without the civil society it is impossible to have global markets and the wonderful benefits that they produce, which are manifold.
Adherence to the norms of the civil society is required to develop a modern economy, and a modern economy is required to produce the benefits of modern life for a country’s citizens. The benefits of modern life for ordinary citizens often provide a life of miracles beyond anything a potentate of yore could have imagined. Putin sees it differently.
The word “civil” means polite, courteous, mannerly, established by law. This as opposed to discourteous, use of force, ignoring law and community convention.
Without the civil society there are no global markets. There is chaos, war, death, and destruction focused on one’s perceived self-interest without regard to the larger community and others.
The civil society harnesses the impulse of personal as well as sovereign self-interest into a delicate balance that produces an outcome that is much more beneficial to all parties rather than the outcome of war and destruction sought for the benefit of oneself or one’s country without regard for other countries.
Enlightened leaders suppress their darker impulses of self-interest and commit their countries to the civil society in order to be part of the global trading system.
Unprovoked destruction one country by another country is contrary to the norms of civil society and ipso facto the aggressor country must be barred from access to global markets.
The answer is obvious. The global trading system cannot function if a country seeks to participate in it to obtain the benefits of membership while not abiding by the agreed rules of common civility. Gaming the system is bad enough. Taking the stance that a country may launch an unprovoked attack on another country and still have the right to participate and be connected to the international trading grid of civilized society is risible.
Participation in global markets is a privilege with responsibilities to act in accordance with the norms of the civil society and the rules of the trading game.
Mr. Putin made his choice to play by his own rules, and is correctly being disconnected from the international trading grid. Not as an act of war as Mr. Putin contends, but as an act of peace for the rest of the world.