ARE WE AT THE END OF HISTORY? Yes, contends the author of a much discussed essay. The ideological wars are over, and liberal democracy has won. Responsible capitalists can do a world of good.
By Francis Fukuyama REPORTER ASSOCIATE Frederick Hiroshi Katayama

(FORTUNE Magazine) – ''Bold and brilliant,'' trumpeted Chicago philosopher Allan Bloom when his former student Francis Fukuyama published ''The End of History?'' in the neoconservative journal The National Interest last summer. ''Sophomoric,'' retorted Harvard political scientist Stanley Hoffmann. Fukuyama advanced his sweeping argument for the triumph of liberal democracy -- liberal in the classical sense that it is based on political and economic liberty -- before the regimes of Eastern Europe began falling apart en masse. Here he summarizes his thesis and explains what it means for the economic future. Fukuyama, until recently deputy director of the State Department's policy planning staff, speaks for himself, not for the government. While the suddenness of Communism's collapse in Eastern Europe in 1989 * surprised many of us, the fact that it occurred in the first place should not have. The fall of the regimes in Poland, Hungary, East Germany, and Czechoslovakia was the direct result of the death of Marxism-Leninism in the original homeland of the world proletariat, the Soviet Union. That death was not one of concrete institutions, but of an idea, and it is in turn part of a larger phenomenon -- the remarkable consensus that has developed in the past couple of centuries over the viability and desirability of economic and political liberalism. It is this consensus around liberal democracy as the final form of government that I have called ''the end of history.'' The notion of the end of history is not an original one. Its best known propagator was of course Karl Marx, who believed that historical development was purposeful and would come to an end only with the achievement of a Communist utopia. But Marx borrowed from his great German predecessor, Georg Wilhelm Friedrich Hegel, the concept of history as a dialectical process with a beginning, a middle, and an end. We owe to Hegel the notion that history is propelled forward through the overcoming of contradictions between thesis and antithesis. ''History,'' for Hegel, can be understood in the narrower sense of the ''history of ideology,'' or the history of thought about first principles, including those governing political and social organization. The end of history, then, means not the end of worldly events but the end of the evolution of thought about such first principles. That evolution comes to rest in the liberal-democratic states descended from the French and American revolutions and based on the principles of liberty and equality. In the past century, there have been two major challenges to liberalism: fascism and Communism. Fascism was destroyed as a living ideology by World War II. Communism's challenge was far more severe. Marx asserted that liberal society contained a fundamental and unresolved contradiction, that between capital and labor. This has been the chief accusation against liberalism ever since. But surely the class issue has been successfully resolved in the West. The egalitarianism of modern America represents essentially the attainment of the classless society envisioned by Marx. The economic inequalities that persist and in some cases have grown worse in recent years are not an outgrowth of the legal and social structure of our society but the legacy of a preliberal past that includes slavery. Surely the most remarkable changes have occurred in Asia. In Japan, the fact that the essential elements of political and economic liberalism have been so successfully grafted onto unique national traditions and institutions guarantees their survival in the long run. More important is the contribution Japan has made to world history by following in the footsteps of the U.S. to create a truly universal consumer culture, both the symbol and the underpinning of what followers of Hegel have termed the universal homogenous state. We might summarize its contents as liberal democracy in the political sphere combined with easy access to VCRs and stereos in the economic sphere. Political liberalism has also developed in connection with economic liberalism in unexpected places from South Korea to the Philippines. But the power of the liberal idea would seem much less impressive if it had not infected the largest and oldest culture in Asia, China. In the past 15 years Marxism-Leninism has been almost totally discredited there as an economic system, and the post-crackdown resurgence of ideological language now sounds positively archaic. The tragic repression in Tiananmen Square was in a way less remarkable than the massive pro-democracy movement that brought it on, and it is likely to prove less enduring. The People's Republic can no longer act as a beacon for illiberal forces around the world, whether guerrillas or middle-class students. Far from being the pattern for Asia's future, Maoism has become an anachronism. It is the developments in the Soviet Union under Mikhail Gorbachev, however, that have driven the final nail into the coffin of Marxism-Leninism. Although formal institutions are changing only now, what has happened in the realm of ideas is a revolutionary assault on the most fundamental principles of Stalinism. The Soviet Union could not be described as a liberal or democratic country at present, though it has made important strides in the past year. But at the end of history it is not necessary that all societies become successful liberal democracies, merely that they end their ideological pretensions to represent different and higher forms of human society. Despite his tactical invocations of Lenin, Gorbachev has permitted people to say what they have privately understood for years: that the magical incantations of Marxism- Leninism were nonsense, that Soviet socialism was not superior to the West in any respect but was in fact a monumental failure. What are the implications of the end of history for international relations? Suppose for a moment that Marxism-Leninism ceases to be a factor driving the foreign policies of Russia and China -- a prospect that the past few years have made a real possibility. How will a de-ideologized world change at such a hypothetical juncture? The most common answer is -- not very much. Many observers of international relations believe that under the skin of ideology is a hard core of great- power national interest that guarantees a fairly high level of competition and conflict between nations. Believers in this line of thought take the 19th- century European balance of power as a model for what a de-ideologized contemporary world would look like. For example, the syndicated columnist Charles Krauthammer recently contended that if the U.S.S.R. is shorn of Marxist-Leninist ideology, its behavior will revert to that of 19th-century imperial Russia. In fact, the notion that ideology is a superstructure imposed on a substratum of permanent great-power interest is a highly questionable proposition. Since Hitler's fiery defeat, the legitimacy of any kind of territorial aggrandizement has been thoroughly discredited. European nationalism has been defanged and shorn of any real relevance to foreign policy, so the 19th-century model of great-power behavior has become a serious anachronism. The most extreme form of nationalism that any Western European state has mustered since 1945 has been Gaullism, whose self-assertion has been confined largely to the realms of nuisance politics and culture. International life for the part of the world that has reached the end of history is far more preoccupied with economics than with politics or strategy. To take the ''neo-realist'' theory seriously, one would have to believe that ''natural'' competitive behavior would reassert itself were Russia and China to disappear from the face of the earth. For example, West Germany and France would arm themselves against each other as they did in the 1930s, and the U.S.-Canadian border would become fortified. Such a prospect is, of course, ludicrous: Minus Marxist-Leninist ideology, we are far more likely to see the ''common marketization'' of world politics than the disintegration of the European Community into 19th-century competitiveness. Indeed, as our experience in dealing with Western Europe on matters such as terrorism or Libya proves, it is much farther than we down the road that denies the ) legitimacy of the use of force in international politics, even in self- defense. The automatic assumption that a Russia shorn of expansionist Communist ideology should pick up where the czars left off is therefore a curious one. It assumes that the evolution of human consciousness has stood still in the meantime, and that the Soviets, while picking up currently fashionable ideas in the realm of economics, will return to foreign policy views a century out of date in the rest of Europe. This is certainly not what happened to China after it began its reform process. Chinese competitiveness and expansion on the world scene have virtually disappeared: Beijing no longer sponsors Maoist insurgencies or tries to cultivate influence in distant African countries as it did in the 1960s. The real question for the future, however, is the degree to which Soviet elites have assimilated the consciousness of the universal homogenous state that is post-Hitler Europe. From their writings and from my personal encounters with them, the liberal Soviet intelligentsia rallying around Gorbachev have undoubtedly arrived at the end-of-history view in a remarkably short time, owing in no small measure to contacts since the Brezhnev era with the larger European civilization around them. ''New political thinking,'' the general rubric for their views, describes a world where economic concerns are dominant, where no ideological grounds exist for major conflict between nations, and where, consequently, the use of military force becomes less legitimate. This post-historical consciousness represents only one possible future for the Soviet Union, however. The strong and persistent current of Russian chauvinism has found freer expression since the advent of glasnost. Unlike the propagators of traditional Marxism-Leninism, ultranationalists in the U.S.S.R. believe in the Slavophile cause passionately, and one senses that the fascist alternative has not played itself out entirely there. The Soviet Union, then, is at a fork in the road: It can start down the path that was staked out by Western Europe 45 years ago, a path that most of Asia has followed, or it can insist on its own uniqueness and remain stuck in history. The passing of Marxism-Leninism first from China and then from the Soviet Union will mean its death as a living ideology of world historical significance. For while there may be some isolated true believers left in places like Managua, Pyongyang, or Cambridge, Massachusetts, the fact that + there is not a single large state in which it is a going concern undermines completely its pretensions to occupy the vanguard of history. The death of this ideology means a lessened likelihood of large-scale conflict between states. This in no way implies the end of international conflict per se. For the world at that point would be divided between a part that was historical and a part that was post-historical. Conflict would remain possible between states still in history, and between those states and the others at the end of history. There would still be a high and perhaps rising level of ethnic and nationalist violence, since those impulses are incompletely played out, even in parts of the post-historical world. Palestinians and Kurds, Sikhs and Tamils, Irish Catholics and Walloons, Armenians and Azerbaijanis, will continue to have unresolved grievances. This implies that terrorism and wars of national liberation will continue to be important. But large-scale conflict must involve large states still in the grip of history, and they appear to be passing from the scene. The victory of political and economic liberalism suggests the vastly greater importance of economics to world politics. Indeed, the meaning of ''great power'' will be based increasingly on economic rather than military, territorial, or other more traditional measures of might. But the consensus that has formed around economic liberalism and market principles is only in part a victory of producers. Consumers, not producers, have the upper hand in the definition of national political goals; it is certainly consumers (or more correctly, potential consumers) who are driving the democratic revolution in Eastern Europe. Producers in the developed world have been deregulated, taxed at lower rates, and generally liberated to operate more efficiently -- not because their interests are regarded as paramount, but only because such a course seemed the best way to satisfy the demands of consumers. Consumers do not always want what can be measured in GNP: They also demand things like clean air and a safe environment for their children, and it is this broader set of goals that will shape the political agendas, both domestic and international, of the post-historical world. For the moment, however, the potential consumers of Eastern Europe seem to want to liberate producers to create the prosperity they see in the West. Even Gorbachev recently redefined the essence of socialism to mean that the weak should get out of the way of the strong and efficient. The reforms announced in Poland suggest that the newly democratizing governments in Eastern Europe will not opt for some kind of democratic socialism, but will move quickly to relatively unrestricted market economies. We are not quite yet on the other side of history. The spread of liberal democracy does not happen automatically or in a linear fashion. Individuals and governments will have to intervene actively to bring it about. The interdependence of politics and economics has never been more evident than in the delicate process of rebuilding liberal political institutions and market economies in the countries of Eastern Europe. American business can play an extremely important role in helping them over this transition. What Eastern Europe lacks, like Western Europe in 1945, are infrastructure and capital, which Western governments can supply only in part. It is American and European business, acting in its own long-term self-interest, that will have to provide the East with the wherewithal to rejoin us at the end of history.